GOVERNMENT AUTHORITIES OUT TO KILL DECENTRALIZED BLOCKCHAIN CURRENCIES. A year ago, or even six months ago, the warning signs about a possible clampdown on Bitcoin and other decentralized digital currencies weren’t exactly headline news. COVID, lockdowns, BLM, Antifa riots, and the presidential election were all front and center.

But an acceleration of stimulus policies that saw 40 percent of all money ever printed in the U.S. happen in 2020 alone has put the focus on markets, economies, inflation... and Bitcoin, the most widely-held decentralized digital asset.

Bitcoin briefly topped $1 trillion in total valuation in February before comments by Treasury Secretary Janet Yellin threw cold water on its months-long rally. Others, including Bill Gates, the second richest man in America and self-styled authority on everything, chimed in with remarks that digital currencies are especially vulnerable to use for criminal activities.

Even before that, authorities were stepping up attacks against the blockchain. In January, European Central Bank governing council member Gabriel Makhlouf, not exactly an unbiased observer, said in a Bloomberg TV interview, “Personally, I’m not sure why people invest in those sorts of assets, but they see them as assets clearly. Our role is to make sure that consumers are protected.”

ECB President Christine Lagarde derided Bitcoin as a “highly speculative asset.” At that time, Bitcoin was trading at around $40,000. In February, it surged to more than $58,000 before Yellin’s calculated remarks.

Since then, digital currencies as a whole have been sharply down, with Bitcoin itself trading in the $48,000 range as of Friday.

Cue Congress and Wall Street lobbyists. In a 24 February interview with Bloomberg, Rebecca Patterson, a senior analyst with asset management firm Bridgewater, posited that “regulation” was required to make Bitcoin an acceptable asset for institutional investors. She said,

“Right now Bitcoin can move 10% on a tweet, that’s not exactly a store of wealth for most institutional investors. So the volatility of Bitcoin is about 10 times that of your dollar, it’s still double that of the Venezuelan bolivar.”

With a new $1.9 trillion COVID stimulus just passed by the House, monetary inflation, and wild swings in the markets, Patterson might be whistling past a looming graveyard of the dollar as the world reserve currency. And the comment drawing a comparison of Bitcoin to Venezuela could charitably be described as disingenuous. According to the BBC, at one point during that currency’s death spiral, in 2018, 14,600,000 bolivars could buy you a 2.4kg chicken.

While Patterson didn’t mention any ideas of regulatory specifics, she characterized an “ecosystem” that would apply to all digital currencies: 

“The more you get a real regulatory ecosystem developing around Bitcoin and other currencies, the more other types of investors are going to be comfortable coming in, that’s going to bring liquidity, that’s going to reduce the volatility. So I guess if there was one thing I were watching first, it would be seeing more regulatory certainty. I'm not sure when that’s going to come in the U.S.” 

One of the biggest reasons decentralized blockchain currencies were devised was precisely to avoid control and manipulation by authorities. It’s also why they have been seen as a desirable asset to hold against inflationary actions of central banks and governments, which appears to only be accelerating.

Patterson did acknowledge that reality, saying many investors have been looking to Bitcoin over concerns about inflation triggered by central bank money printing. She said Bitcoin was more like gold, acting as an asset hedge, than a workable currency.

  1. andrej 1 month ago

    Can Governments Stop Bitcoin?

    The “two-Bitcoin” problem is perhaps the biggest existing threat to Bitcoin users today.

  2. Paul Sacco 1 month ago

    I wonder if it’s possible for bitcoin or another cryptocurrency to be backed by a precious metal like gold or silver.

    I don’t know who would hold that gold or how much gold it would take but if that happened it would give it more legitimacy as a currency seems to me.

    On the other hand, the powers-that-shouldn’t-be wouldn’t allow it.

  3. Richard McKenzie 1 month ago

    Why would anyone invest fiat currency, worthless, into a cyber currency that has no intrinsic value, worthless? Nothing begets nothing is nothing. Cash has value and has survived every human crisis and catastrophe. Article 4 of our Constitution directs what our cash should be.

  4. Ismael Quinones 1 month ago

    If people have used salt, beads and other items as a form of material exchange why can’t cryptocurrencies serve that purpose this century? Man can use anything he/she values as a form of financial exchange. You just have to get people to believe in it, just like believing COV 19 is going to get us all if we don’t vaccinate.

  5. Paul Sacco 1 month ago

    Thank you George Pejic and Cat Ockman.

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