Let the Free Market Regulate Bitcoin – Bitcoin Magazine
This is an opinion editorial by Kelly Slaughter, an associate professor of professional practice at the Neeley School of Business at Texas Christian University.
With elections coming up next month, finding common ground between liberals and conservatives is nearly impossible. But there is one issue that should unite red and blue voters: keeping bitcoin free from government regulation.
To make this case, compare bitcoin to a potential central bank digital currency (CBDC), which is currently being explored according to a recommendation from a recent White House report. A CBDC fails to provide all the benefits of bitcoin while introducing new risks.
The attraction of bitcoin and other cryptocurrencies is that they are not subject to central decision-making. With a CBDC, the government could freeze digital accounts. As a replicated system, transactions between bitcoin holders cannot be restricted. Inspired by the same fear of having the availability of your assets at the whim of whichever party is in power, red and blue should accept the benefits of a platform without a selective “off” button.
The White House report says a CBDC can promote financial inclusion and equity by providing access for a broad set of consumers. Bitcoin is better positioned to do this. About 5% of US households are “unbanked,” meaning they have no savings or checking accounts. The two most important reasons for being without a bank are the inability to meet minimum requirements and a lack of trust in the banks. Bitcoin requires no minimum balance and does not require trust in a governing institution.
In fact, bitcoin’s main use is in poorer countries with high proportions of unbanked households and high institutional distrust. The social benefits of direct transfers are enormous. Liberals and conservatives may come at this topic from different perspectives, but both see the value in providing an economic infrastructure for those without.
Bitcoin is the most transparent financial system ever introduced, and no central authority decides what is transparent and what is not. Anyone can access historical and current Bitcoin data. Even the code that runs Bitcoin is open to public review, including what changes were made and when.
The possibilities for exploiting this openness are enormous. What if you paid your taxes to a government bitcoin address? What if suppliers were paid in bitcoin? What if the government and suppliers had to share their addresses publicly? We would have the most fiscally transparent government ever executed, accountable to both blue and red sides of the aisle.
There are a number of legitimate criticisms leveled at bitcoin. When it comes to energy use, advocates and critics alike agree that a reduction in energy use is a worthwhile endeavor. We can then recognize the progress being made in the transition to green mining.
What about the cruelty and illegal activities? Bitcoin supporters are keen to wring this kind of activity out of the system (but to be fair, what is the standard for an honest system? Are we asking more of Bitcoin than other systems?). Although transparency alone can discourage dishonest activity as seen in the legal seizure of cryptocurrency, many Bitcoin supporters want to work with the government to introduce reasonable regulations.
Bitcoin experiences significant volatility and speculation. This is not behavior we want in a currency and a problem recognized by all bitcoin advocates. But we analyze bitcoin from a 2022-based perspective as if the nature of money is static. In our country’s history, we have accepted foreign currency for official expenses and allowed the banks to print their own currency. The idea of what money does and how it behaves is evolving. Bitcoin is just over a decade old and, if allowed, will also evolve based on our technical, economic and social preferences.
Bitcoin is not a replacement for the US dollar, it is an alternative. We accept that USD is an alternative currency, official and custom, worldwide. Bartering with no currency at all is still legal. We recognize a number of ways in which people can act. Both red and blue parties recognize the value of having financial options – bitcoin is another option with unique advantages.
Bitcoin opponents argue that bitcoin has no intrinsic value, unlike a government-backed fiat currency. But what is our government but an agreement between citizens? Consequently, citizens have the power to agree to recognize bitcoin as a means of doing business. With supporters on the right and the left, let’s agree to let bitcoin continue to evolve as a voluntary way for parties to choose to do business.
This is a guest post by Kelly Slaughter. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
