By: Kyle Rearden

The Last Bastille blog

November 28th, 2015


Concessions and compromises are impossible to negotiate with the State. Reformist sophistry deceives libertarians into believing that direct action is avoidable. The truth of the matter is that tyrants will never be satisfied until all principled opposition to their rule becomes chilled dissent.

Two years ago, Elizabeth Ploshay wrote an article published by Bitcoin Magazine, which openly admitted that there were secret behind-closed-doors meetings that took place between the Bitcoin Foundation and federal regulators. Ploshay writes:


“Monday’s meeting with regulators was spearheaded by an invitation to a private conference held by FinCEN in Washington, D.C. Regulators included high-level representatives from FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, Department of Homeland Security and more. Foundation attendees included [Marco] Santori, Patrick Murck, Peter Vessenes, Brian Klein, and Jim Harper. Foundation attendees spoke for an hour on Bitcoin the protocol, bitcoin the currency, regulatory challenges, enforcement and investigation methodologies and took questions…Foundation leadership views this first meeting as one to develop a relationship in lieu of pushing for particular policy in the present. As Bitcoin continues to develop, we can hope that this strategy for relationship building will buy time prior to any further regulatory action on behalf of FinCEN and additional regulatory agencies.” [emphasis added]

When I tried to bring this to the attention of Derrick Horton and other libertarians this past January (more than a year after the fact), it appeared to fall on deaf ears.

Last June, Jerry Brito wrote an article published by Coin Center, which boasted of a briefing about Bitcoin that was held for over 50 senior congressional staff. As Brito put it:


“Much of the work at Coin Center does is educating policymakers about cryptocurrencies, the blockchain, and the consequences of regulation. Sometimes that means a major briefing event like today’s, but typically it means building one-on-one relationships with policymakers interested in the ecosystem. There’s not a week that goes by that we’re not on Capitol Hill or at an executive or independent agency, sitting down with staffers and political appointees, answering their questions about Bitcoin and helping them think through the best course for policy.” [emphasis added]


How is this in any way fundamentally different from what Ploshay had mentioned two years prior? Where did this notion of getting all chummy (“building relationships”) with the federal government come from, exactly? Working inside of the system, much?

The latest development came earlier this week when Jason Donnelly’s article mentioned that although the European Union superstate wants to “crack down on Bitcoin” (right on the heels of the Paris attacks) regulators and lobbyists think that kneejerk regulation is not the solution, but rather, thoughtful regulation. Donnelly says:


“Bitcoin is pseudonymous in that all that is shown on the public ledger is a public address. However, once a law enforcement officer is able to identify who owns that public address, he would then be able to track every transaction that went to and from that address. If the Islamic State of Iraq and the Levant (ISIL) were to transfer bitcoin, and a law enforcement officer knew it was their address, he could track each transaction and start building a case accordingly.”


Doesn’t this precisely describe the emerging cashless society I wrote about over a year ago? Not long after, Robocoin was putting in palm-vein biometric authentication into their Bitcoin ATMs (although they don’t advertise that anymore). Donnelly also wrote:


“Cash, on the other hand, is completely anonymous. An individual in ISIL could take envelopes of cash across state borders and easily pay for the necessary assets for committing an act of terror. A law enforcement official would have no way of verifying how the funds were used. [David] Long gave an example where a trade-based money-laundering scheme using dollars or euros conducted by professionals could be virtually undetectable.”


Well, as least those Federal Reserve Notes (FRNs), in that form, are useful for something, aren’t they? The fact of the matter is that Bitcoin lobbyists are selling their cryptocurrency out to the federal government, and most Bitcoiners don’t seem to give a damn.

Thankfully, Cody Wilson has steadfastly opposed these reformists (video above), especially the Bitcoin Foundation. The whole point of Dark Wallet was to truly anonymize Bitcoin, but unfortunately, it seems to have been abandoned as of last February due to lack of R&D funding. All previous attempts to work inside of the system, in order to “reform” something that is still brand new (relative to FRNs), have all been in vain, as Chris Cantwell discovered earlier this year with his “Anarcho-Lobbyist” series, especially considering his advocacy for the “reasonable regulations” mentioned in HB 356 and HB 552, both of which were inexpedient to legislate.

Any Bitcoiner should be rather skeptical of these attempts to “mainstream” Bitcoin by seeking the government’s blessing. Right now, I think it is awfully too soon to begin practicing crypto-agorism, much less assassination politics, simply because public-key encryption is integral to any truly viable cryptocurrency, which Bitcoin does not have. In light of the fact that the federal government is the single largest holder of Bitcoins ever since the Silk Road takedown, I’d suggest that if the anybody wants to take the altcoins seriously, then the single best thing any of them can do in order to become truly competitive is to deliver on the original promise of Bitcoin by becoming a truly anonymous cryptocurrency.

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