Mark here. There's been a lot of talk recently about Bitcoin and I thought it might be valuable to have an insider's perspective on the topic. So, I asked my friend Paul Rosenberg to weigh in.
He's the CEO of the well-known and highly respected online privacy service Cryptohippie, as well as the author of a very informative newsletter called Freeman's Perspective. He's also an expert in the area of Bitcoin, as you'll see below.
Is Bitcoin Becoming the Anti-Dollar?
By Paul Rosenberg
Little by little, Bitcoin is winning individual users all across the planet. But something else is happening at the same time: Bitcoin is emerging as the anti-dollar.
To the many countries and businesses that have been abused by dollar tyranny, Bitcoin provides a path of escape.
We've been living through an era where the US dollar (primarily through the oil trade) has forcibly ruled over all other currencies and those who use them. This has allowed the US to skim vast amounts of wealth to Washington and New York, and has been an impediment to many non-US traders.
The Dollar Versus the World
Almost every government outside of the US sphere sees the dollar as their enemy. (A lot of nations inside that sphere see the dollar as an enemy, too.)
The dollar is a tool of US supremacy and, honestly, abuse. Since nearly all oil transactions are forced to use dollars – and since all of those dollars are forced through New York banks – every international dollar transaction is both monitored and skimmed from.
But the tables are turning. The Chinese, for example, don't like the skim and are now able to do something about it. In 2012, they forced the US to sell them Treasuries without going through Primary Dealers. Simply put, they refused to pay the usual skim to the New York banks, and the US government capitulated.
To put this simply, the bully got his nose bloodied. And please believe that everyone else on the playground noticed.
More recently, Putin bloodied Obama's nose twice by denying him a war in Syria and by protecting Edward Snowden. Again, the other players noticed.
If this continues – and it likely will – trading networks will want to use something other than dollars to settle their import/export deals. Bitcoin is ideal as a settlement currency, and businesses may just start using it if they can.
But Can They?
International businessmen feel very vulnerable to central banks and governments. Sure, the big operators buy plenty of politicians, but they are a long way from standing against a full US government onslaught. To defy the US and its dollar regime, they'd need something big to hide behind.
Enter China.
The Chinese have been encouraging their people to buy gold for a couple of years now, and massive amounts of gold are being moved from the West to China. The reason for that is to fill the country with real money. It's an anti-dollar move, and a strong one.
The big news, however, is that the Chinese establishment is tacitly endorsing Bitcoin. On November 21st, Yi Gang, the deputy governor of the People’s Bank of China and director of the State Administration of Foreign Exchange, said people are free to participate in the Bitcoin market.
Yi also said, “It’s no longer in China’s favor to accumulate foreign-exchange reserves.” That is a bombshell, and bodes ill for the dollar.
It would appear that China is ready to start chopping away at the dollar, even if slowly and quietly. And that provides a hedge for international businesses to hide behind.
Why Not Gold?
Gold should have been the anti-dollar, but it has a problem: it is more or less controlled by the central banks and their friends. (You can find US Treasury memos from the 70s discussing the necessity of controlling gold.)
These people control the majority of the world's gold. They lease gold to each other and to their friends. They control the exchanges and the regulations.
Worse, it is relatively easy to seize gold when shipped internationally… especially when shipped by “law abiding” people who fearfully obey every rule.
Eventually, gold will escape cartel control, but not right away. For the moment, it is contained.
Bitcoin, however, is not contained. There is no center to grab, no warehouse that can be seized. Bitcoin resides outside of the usual channels, and controlling it is no trivial chore.
So, for better or worse, Bitcoin stands as the one internationally effective anti-dollar.
What's Next?
Ah, if only we knew for sure…
It's not impossible to attack Bitcoin, but the effort to do so isn't trivial. Plus, there are ten thousand bright, young, adaptive people working on the technology every day, and their numbers are rising. If these people adapt and cooperate, any attacks will have temporary effects. (Even a full shut-down of the Internet wouldn't stop it for long, but I'll leave that discussion for another time.)
If the Chinese, and/or Indians, and/or Russians start using Bitcoin as a way around the dollar, the world will change, and quickly. And that's looking more and more likely.
These are interesting times. Those who maintain their emotional investment in stasis will be run over, in one way or another. On the other hand, those who break their stasis – who act and adapt – will not only thrive, but will find adventure and satisfaction along the way.
Time to get active.
