There is no war on all cryptocurrencies instead there is a limited battle against Bitcoin being waged by certain governments and financial institutions.
Hackernoon’s Daniel Jeffries made the provocative argument that the Chinese government’s decision to shut down Bitcoin exchanges and a stage crackdown on initial cryptocurrency offerings (ICOS) marked the beginning of such a war. That’s a terrible and hysterical ideologically motivated misreading of the situation.
Neither the Chinese government; nor the People’s Bank of China (PBOC), is noticeably hostile to cryptocurrency. The PBOC is actively researching the possibility of a national cryptocurrency that would replace paper money, Bloomberg reported. There is even speculation that an ICO called NEO might be the template for such an altcoin. That means there is no war on cryptocurrency in China instead, its government actually likes the idea.
Instead, the moves against exchanges and ICOs seem to be rooted in sound economic policy. The People’s Republic had very good reasons to take the actions it did. It can actually be argued that the PBOC and Chinese regulators were acting to protect cryptocurrency from itself with their actions.
China Might have been Right to Shut down Bitcoin Exchanges and Crack Down on ICOs
Bitcoin is in the middle of a dangerous speculative bubble, as anybody who has visited Coinbase lately knows. The granddaddy of all altcoins hit an all-time high of $4,933 on September 1 before falling to $3,072.93 on September 14, before recovering to $3,779.98 on 23 September 2017.
There were legitimate reasons for the Chinese government to shut down those exchanges. Such as to prevent working-class Chinese from spending their life’s savings; or the money they should be spending on rent or groceries, on Bitcoin.
ICO’s are also at the beginning of an equally dangerous bubble that has some disturbing similarities to the dot.com stupidity in the United States at the beginning of the 21st Century. Burger King Russia even issued a Whopper.coin ICO to promote its hamburgers – which is both frightening and preposterous.
Did the Chinese Government Just Save Cryptocurrency from Itself?
Perhaps Americans should be asking our authorities, “why are you not following China’s sensible lead?” An ICO or a Bitcoin crash would harm untold millions of innocent people and thoroughly discredit cryptocurrency.
A big reason why the PBOC is cracking down hard is to prevent a Bitcoin crash from discrediting the whole idea of cryptocurrency. It might be impossible for the PBOC to issue a national cryptocurrency if tens of millions of average Chinese lose their shirts in Bitcoin or ICOs.
If there is some evil cabal of bankers that’s out to destroy cryptocurrency; as Jeffries believes, it would want a Great Cryptocurrency Bubble to burst and thoroughly discredit the technology. Interestingly enough, the PBOC might be trying to head off regulators elsewhere from trying to ban cryptocurrency by regulating it.
An interesting possibility here is that the Chinese government is planning to launch some sort of official or tightly regulated altcoin exchange. For such a market to work it will have to shut down the Wild West of amateur exchanges online.
Blinded by Libertarian Ideology
Okay so the PBOC and the Chinese government might be the good guys here, so can’t people like Jefferies see it? The answer is rooted in the ideology that they are promoting Libertarianism.
American-style Libertarianism is a very simple set of beliefs based on a stark and rather naïve worldview. Like Marxists, the Libertarians see everything through their ideologically-tinted glasses and view all existence as a simple good vs. evil struggle.
Some of the simplistic beliefs that underpin this imbecilic worldview include:
- All government is evil therefore any government action is bad.
- Governments exist only to serve the elite and its interests.
- Mr. Market is sane.
- All human beings are rational actors that always make the right decisions.
- The market price is always an accurate reflection of value. If this was true, Warren Buffett would be living off his Social Security.
- People are intrinsically good, so law and law enforcement are totally unnecessary.
- The market will always meet everybody’s needs so no government services are needed.
- The market is totally rational, so regulation or government intervention is totally unnecessary.
- Human history is nothing but one long battle between evil centralizing tyrants and virtuous individualists.
- Any suggestion that government regulation, intervention, or control might be required is totally wrong.
- All government regulation and intervention is an evil plot hatched by the elite to screw the average person.
The current state of cryptocurrency completely refutes such fantasy thinking. The overinflated bitcoin price proves Ben Graham’s old canard that “Mr. Market is Insane” and makes people like Jefferies look foolish. If the market was rational; Ethereum the better cryptocurrency product would the most valuable.
Like most idealists, the cryptocurrency libertarians refuse to see the truth and go looking for bad guys to blame the failure of their worldview upon. Bankers, the rich, China, and the media make great scapegoats, so guess who gets blamed.
Why Cryptocurrency Geeks Should be Afraid of Libertarians
Disturbingly, there is also an ugly element of antisemitism to this thinking. Jefferies goes out of his way to attack JPMorgan Chase (NYSE: JPM) CEO Jamie Dimon who is Jewish.
That is perhaps a coincidence but a bothersome one, traditional anti-Semitic thought focuses on cartels of evil Jewish bankers that secretly run the world. Nazi Propaganda Minister Dr. Joseph Goebbels even made a movie about the subject.
Dimon is being attacked because he correctly pointed out that Bitcoin is in a dangerous bubble and governments might shut cryptocurrencies down if they get too big. Cryptocurrency geeks should be taking notes when Dimon speaks, not attacking him.
One has to wonder if cryptocurrency can be saved from the libertarians and other extremists. They and not the central bankers might be its greatest enemies.
Libertarians like Jefferies are among the best foot soldiers that cryptocurrency’s enemies have. By spreading ridiculous conspiracy theories, insulting critics, attacking regulators and central bankers for simply doing their jobs, and trying to preserve a totally unregulated market they are doing more damage to blockchain than any cabal of bankers could.
The big challenge for cryptocurrency supporters right now might be to defend this technology from its so-called friends. These “friends” might succeed in discrediting a useful technology that could improve the lives of billions of people in the name of a childish ideology that has been totally discredited by history.