Those of us involved in the Bitcoin world are all too familiar with the consistent hyperbolic, fear-mongering so pervasive in the mainstream media’s coverage of Bitcoin. None of that should be surprising since many of them simply do not understand it, and when you couple ignorance with a natural reflexive response to defend the status quo, you get some pretty terrible reporting.
The death of Bitcoin has been greatly exaggerated many times, including last fall when the Silk Road was shut down. Yet rather than being destroyed by the episode, it came out far stronger. Something I expect to be the case again after the Mt. Gox situation (read my thoughts on it) is behind us.
Meanwhile, if you are sitting on a lot of BTC and want to directly move it into other assets, such as gold and silver (which have been moving sharply higher in 2014), it is really easy to do. Amagi Metals is a Denver precious metals dealer and one of the first to accept BTC.
Now from Ledra Capital is a amusing article demonstrating how the mainstream media might portray cash if it were invented today. The piece is titled “Bizarre Shadowy Paper-Based Payment System Being Rolled Out Worldwide”, and I have provided some excerpts below:
World governments announced a plan today to allow citizens to anonymously carry parts of their wealth on their person and exchange it with others using small pieces of colorful paper printed with nationalistic and Masonic imagery along with numbers that purportedly represent the amount of wealth each piece of paper represents (if the paper is not a counterfeit). These pieces of paper are formally a “note” from each nation’s central bank, but they are also called “cash” by many – this is a technical matter that is too complex to cover in our basic primer; Suffice it to say, that it is representative of the complexity and user-unfriendliness of this new system.
The launch of cash has provoked an immediate reaction from law-enforcement agencies worldwide that universally condemned the development.
“Cash is a 100% anonymous and untraceable payments technology. It is like a weapon of mass destruction launched against law enforcement,” said Mike Smith, the recently confirmed FBI Director. “It is the perfect payment mechanism for criminals, drug cartels, terrorists, prostitution rings and money launderers. We don’t know how we will be able to combat such a technology and fully expect that a new generation of super-criminals will emerge, working in the shadows of a world where they can conduct their illicit affairs without leaving a trace.”
Banking Superintendent of New York State, Mike Smith had the following to say: “I can’t think of any reason that a law-abiding individual would want to use cash. At a bare minimum, we believe there should be a licensing procedure for individuals or businesses that plan to use cash, a ‘Cash-License’ as it were. This license will limit ‘cash’ to trust-worthy individuals who keep detailed auditable records of all their cash transactions in order to keep New York safe from criminals.”
Though hard to imagine, cash operates with no consumer protection at all. If your ‘bills’ are stolen or lost, they are gone forever.
“I just don’t understand why there is nobody that I can call to reinstate my cash if I lose it,” says Mike Smith, a businessman from Toledo. “What type of idiotic wealth and payment system doesn’t maintain transaction and ownership records?”
Mike Smith, a leading economics blogger for the NY Times said “This is a sad day for macro-economics. If cash ever catches on in any meaningful sense, it will reduce our control over the levers of the economy significantly by providing a mechanism for depositors to opt out of negative interest rates. Given the fact that it might keep us from preventing the next depression and will definitely reduce tax collections, one could even consider it ‘evil.’”
Environmentalists expressed concerns about the impact of cash on the environment. “You would have thought that in 2014, we would have moved beyond pesticide and water intensive cotton farming [retracted: cutting down trees], treating the cotton with dangerous inks and transporting it with fossil fuels, only to represent a value like “20” that can be represented electronically at effectively no cost. When will we ever learn?” said Mike Smith, recently appointed Executive Director of the Sierra Club.
Public health officials also warned that cash could be an excellent vector for disease transmission. “We tested several ‘bills’ in our labs recently and discovered that the average bill has 20x more bacteria than a toilet seat,” said Mike Smith, a VP of Research at the Mayo Clinic. “Our advice is that people should avoid cash in general and only handle it if absolutely necessary. Children, the elderly and immuno-compromised individuals should not handle cash under any circumstances.”
We try to keep an open mind at this publication toward new technology, but, to date, we have a hard time seeing the positive case for cash. Certainly criminal groups will take advantage of cash’s perfect anonymity to wreak havoc on law enforcement and tax collection, something that is deeply undesirable. Among law-abiding citizens, we can envision some possible adoption in dense urban hipster communities like Williamsburg where ‘wallets’, ‘cash’ and ‘making change’ could be yet another reflection of their tongue-in-cheek view of modern societal systems.
Other than that, it would be hard to recommend that the average consumer or merchant becomes involved in what is still today a very buggy system, filled with risk, inconvenience, high transaction costs, and possible disease transmission. Even if handled perfectly, cash will certainly tar your business and personal life with the seedy reputation of the drug dealers, terrorists, money launderers and anti-establishment anarchists who use it today, threatening business and banking relationships and raising eyebrows among law enforcement and your community.
Well done. The full piece can be read here.
In Liberty,
Michael Krieger
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What about introducing cash backed by gold? Satire is a wonderful thing for getting across a point of view — if it is accurate. This piece ignores the history of cash backed by gold when consumer prices declined and prosperity was on the rise. This piece focuses on the idiocy of trusting government action, which anyone with a functioning brain does not trust. So where exactly is the satire?
What should probably be mentioned as well is that bitcoin is backed by nothing just as government cash is. And if savings is the engine of prosperity, and gold has proven itself for thousands of years as a good thing to hold to maintain purchasing power, and bitcoin gyrates all over the place because of threats to its existence, what might one conclude?
Cash backed by gold can be lent out. Credit and entrepreneurial ambition create a prosperous society. It’s when the banks and gov’t get involved in fractional reserve banking and cash backed by nothing that the nightmares begin.
Bitcoin has no history and I think it will be a long time before it can be trusted even to exist from one month to the next when insane monoliths like the USG exist. On the other hand, the USG itself may be forced (emphasis) to back cash with gold at which time gold will be priced in the many thousands in today’s dollars. Hard to see bitcoin playing out to be anything but a bit player for as long as it lasts.