Regulations and Bifurcated Bitcoin Economy – Bitcoin Magazine
This is an opinion editorial by Thibaud Marechal, builder of Knox bitcoin escrow provider.
There has been a lot of coverage surrounding the catastrophic FTX failure, with current developments and warning signs from the past. Will this have an influence on bitcoin for years to come? I don’t care about shitcoin casinos as most of them will probably be regulated like stock exchanges or shut down due to outright fraud or insolvency. This is almost a done deal. But what about bitcoin?
Let’s play and play and speculate on the effect FTX will have on the future of bitcoin.
Bitcoin usage is going to split – gradually and then suddenly. It has been in the works since the genesis block was produced on January 3, 2009. There will be two ways to use bitcoin: as a black market commodity or as paper bitcoin on regulated exchanges. This future has almost always been true, but the distinction will soon become clearer. What do I mean by that?
Regulators are going to regulate; that’s what they do. Bitcoin cannot be regulated, but custodians such as exchanges, brokers and lenders can and will be attacked. Self-storage will most likely be regulated out of the market for most buyers. It will be very difficult to buy bitcoin and take full custody of it in these arenas – perhaps even almost impossible. This date is coming soon.
Quick, anon! You still have time before the ramps close, but how much? Three years or six months? The timeline is unclear. It will soon be impossible to buy bitcoin on an exchange and move that bitcoin to self-custody where you have your own keys. Most custodians – which are trusted third parties – will be prevented from allowing users to withdraw under the guise of regulatory compliance and consumer protection. You want to buy paper bitcoin, aka fake bitcoin: These are IOUs to gain artificial exposure to the price of bitcoin. You will not be able to claim that IOU and redeem it. Want to keep that bitcoin with keys you control? Forget it, because it will be very difficult. Few exchanges will allow users to have self-storage and fewer will fight for the right to financial sovereignty. All they want to do is sell paper bitcoin or stop operations for most businesses.
At one end, people will buy bitcoin IOUs at custodians that provide full KYC (know-your-customer) details, automated tax reporting and zero privacy. Bitcoin is going to be used as the underlying asset of the global financial surveillance network, the likes of which we have yet to see. Regulated companies will form a network of compliance on top of Bitcoin and prevent you from keeping what could truly be yours. Maybe they’ll even wrap it in a central bank digital currency (CBDC) to protect you from the volatility of bitcoin. You will buy paper bitcoin and you will be satisfied.
On the other end, bitcoin will flourish as the tool it should always be: black market money. This will be the beginning of a new era for Bitcoiners who have zero fiat, i.e. Bitcoiners who run full nodes, have full privacy and pay peer-to-peer for things with their hard-earned stakes. CoinJoins will be the norm for most users to only share what they want with whomever they want to protect their personal information from being monitored by chain analytics companies. Some will call it a circular economy, others will call it the black market. It will operate 100% online out of trust. Bitcoin will be purchased without peer-to-peer KYC, using cash or bank transfers whenever possible. It will be a breath of fresh air in an age of digital surveillance, and it will last until the rest of the fake Bitcoin network, suffocated by regulation, eventually collapses under its own weight due to massive amounts of fractional reserves. Bitcoin will have succeeded in freeing itself from any government intervention and economic parasites, but that road will be long and tortuous.
Until then, the bitcoin price may be heavily suppressed for years, and self-storage may be demonized, with high fines and government-sponsored threats similar to Executive Order 6102. Are you ready, anon? Don’t miss it. This is your chance to redeem yourself and choose what is right for you and your family. Until then: tick tac, next block.
This is a guest post by Thibaud Marechal. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc Bitcoin Magazine.
