Payette’s issue seems to be that the Senate Committee on Bank, Trade, and Commerce recommended a light touch on Bitcoin regulation as a way to prevent the in-depth study of two other bills that might have been affected.
That the Senator is advising people to approach Bitcoin cautiously and learn about it before taking the plunge is laudable. Bitcoin is certainly new and innovative and all the ramifications of its use and abuse have not been fully worked out yet. That she’s doing so with seeming lack of facts is less laudable.
Her first criticism of Bitcoin is that it has an “expiry date given the maximum limit of 21 million bitcoins.” True = Bitcoin rewards those verifying the ledger with a set amount of Bitcoins every ten minutes or so. The reward started at 50 BTC and is programmed to halve every four years or so until the ‘block reward’ becomes too minuscule to really matter – it will never be truly zero. False = There is no expiry and all bitcoins ever mined will remain available for use as long as someone knows the private key of the address they sit on.
This, it turns out is a feature, not a flaw of Bitcoin. Right now, central banks around the world are trying to print money to get out of or stave off recessions. One of the reasons for the seriousness of the current Greek financial crisis is that as a member of the Euro, they have no central bank that they can order to print more money. If they could, they could print Drachma and pay their loans, though this would devalue the currency and thus the wealth of all Greeks.
Bitcoin is no solution for the problems of Greece the nation, but it could be a savior for millions of individual Greeks. Since no more bitcoins can be produced than are programmed for, as the demand for bitcoins will increase and as such the wealth of all those holding bitcoins. Further, Bitcoin will eventually be a deflationary currency, which means that those holding it will be assured that their savings, their retirement funds will continue to accrue rather than wither away as they do now.
But of course, it’s the inflationary money scheme that the senator wishes to protect and promote. Why? Because inflationary money benefits those closest to the presses the most – bankers and politicians. It is a silent tax that diminishes the wealth of the populace for the benefit of the rich.
Which brings us to the senator’s next point: that Bitcoin is used by criminals and makes criminal enterprises easier. She has a point. Just like with cash, Bitcoin can be used without permission and nearly anonymously. It has been tied to darknet sites and has been used with ransomware.
On the other hand, according to Kaspersky, the use of Bitcoin for criminal activities is falling. And even if it wasn’t, Bitcoin’s 3 billion market capitalization positions it to be a mere footnote on the massive fraud perpetrated every day both by criminal enterprises and ‘legitimate businesses like the investment banks that wrecked the economy in 2008.
Finally, the senator claims that Bitcoin has been hacked. False. The blockchain and the basic technology of Bitcoin have never been hacked. It certainly is possible to hack wallets, especially if people are not careful with their security – and that legitimately is one of the things that need to improve about Bitcoin going forward. Still, the statement that Bitcoin was hacked is false and isn’t a mistake that a lawmaker, whose decisions affect millions, should make.