by Daniel Carter
Bitcoin, along with many other cryptocurrencies, has recently taken the world by storm. Bitcoin’s devoted investors believe that the blockchain technology behind the currency will usher in an era where currencies are free from government manipulation. However, large governments of the past and present have not taken kindly to competitors of any sort. A competitor to the government’s greatest mechanism of power (currency issuance) is a threat the government will not ignore.
There are numerous examples of the US government going to great lengths to make sure the US dollar is the most used currency in the world. If the US dollar is the most used (I.e. Global Reserve Currency), it allows the US government to print large amounts of money and run very large deficits. The power of the Global Reserve Currency allows the US to maintain its world hegemony. The US government has attacked Iraq, Libya and Syria to protect its currency, and it doesn’t plan to stop there. To learn more about how US foreign policy is related to protecting the US dollar, you can visit this article that I wrote: The Only Reason The US Goes To War.
The US has the most powerful economy and the most widely used currency, but it is not the only government that will go to great lengths to protect its currency. China and South Korea are two of several countries that have already banned cryptocurrencies. With China set to take over as world’s most powerful nation soon, their government is already taking proactive steps to stifle its currency’s competitors.
Russia has recently gone with the “if you can’t beat them, join them” strategy. Russia’s state-owned bank has recently signed a deal with Bitcoin rival, Ethereum. This deal will very likely lead to the Russian government using Ethereum as its state currency. I believe the US, China and other major countries will take the path that Russia is taking and move to a digital currency. However, the cryptocurrency environment will be radically different once governments take control.
Even though they currently represent a decentralized, economically free system, cryptocurrencies could be a government’s best friend. If governments were to use cryptocurrency, they could easily devalue your buying power with the push of a button and track every transaction you make. Instead of representing economic freedom, cryptocurrencies in the wrong hands could further economic enslavement.
If governments embrace digital currency, they will destroy all other competitors in the process. Again, for a government to maintain the utmost power, they need to make sure their currency is widely used around the world. To destroy the credibility of competing cryptocurrencies, the state-controlled mainstream media has begun connecting them to terrorist organizations. A major crash in the cryptocurrency market could also perpetuate the credibility damaging narrative. Once it becomes easier for investors to short cryptocurrencies, expect governments to heavily manipulate the price downward.
Bitcoin has absolutely crushed its competition this year, but will it maintain its edge once governments become more active in discrediting it? Only time will tell, but I believe Bitcoin and other cryptocurrencies have a tough road ahead. As we have seen in the past, governments don’t take competition lightly, especially when it comes to currency. We should all hope that the decentralized model wins, but we should expect a fight against very powerful institutions in the near future. Enjoy the skyrocketing price now, but don’t be fooled into being overly optimistic.
by Daniel Carter