Who is trying to control, manipulate or destroy Bitcoin?

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In this article, Marquez Comelab discussed many competing groups who are trying to influence, manipulate or control Bitcoin. He also explores what their motives, incentives, and possible motivations are.

Bitcoin is an electronic cash system that operates without a centralized authority. It allows you to send cash to anyone worldwide for a small fee. When such a powerful tool and invention comes along, you can bet people will try to influence, manipulate or control it. Those who see it as a threat will seek to destroy it.

It is vital to know the different people and their possible motives and incentives because their plan will not be apparent in most cases. Who are these people? What are their incentives and possible motivations?

Criminals

One of the first major digital currency users were criminals who bought and sold drugs, guns, weapons, child pornography, stolen credit card details, and even assassination services in dark markets on websites like Silk Road. Early headline news about BTC gave the impression that “Bitcoin” was a boon for criminals, fraudsters, and corrupt officials. They gravitated towards digital currency and what they perceived as “Bitcoin” because they thought it provided them with the anonymity they needed to get away with their crimes.

Indeed, by not revealing the identities of individuals, Bitcoin provides people a level of privacy. However, as it turns out, Bitcoin is a terrible currency for illegal transactions because all the transactions are visible in cleartext on the blockchain. This information stays there for as long as the Bitcoin blockchain exists. They are accessible to investigators around the planet to study, and eventually, evidence will turn up that will link a Bitcoin address of interest to a specific identity.

No other story exemplifies this point other than that of Katie Haun’s. She was a federal prosecutor who the U.S. government asked to investigate Bitcoin and shut it down. Soon she discovered that Bitcoin was not what needed probing. She said that being asked to investigate and shut down Bitcoin is like being asked to investigate and prosecute cash. It is silly. Instead, Bitcoin helped her and her team solve crimes using the blockchain. In 2015, she formed a task force to teach other prosecutors and agents how to use Bitcoin to track criminals¹. She later became an investor in digital currencies².

Despite this, there remains a push for BTC, other digital currencies to be more anonymous. However, we should all be aware of the dangers of people acting in complete anonymity and be critical of the motivations behind those who so desperately want it.

Governments or political regimes who perceive Bitcoin as a threat

History is littered with examples of ignorant and incompetent governments who destroyed their economies and inflicted suffering on the very people they were supposed to care for. We have had corrupt dictators, oligarchies and military juntas, and other kleptocrats who steal the wealth of the people they govern. There were brutal and tyrannical groups like the Khmer Rouge. They confiscated everything their citizens had before forcing them to work in fields, and afterward, killed millions of them, disposing of their bodies in thousands of mass graves.

Not all governments are trustworthy. The last century provides sufficient examples of atrocities and injustice against millions of human beings who were unfortunate enough to be born in a country ruled by tyrants or incompetent leaders. Many still exist today. Such governments may perceive Bitcoin as a threat because it provides ways for their citizens to circumvent their ability to monitor and control their citizen’s capital, money, and other assets. Governments who fear Bitcoin want to find a way to weaken it somehow, subvert it, make it unusable, or forbid its use. Be critical with whatever rationalization they provide to defend their policies.

Ideologues

This group is driven by various ideologies inspired by economic theories advocating for a completely free market in producing, distributing, and managing money to end banks’ monopoly. Some anarchists and libertarians believe that Bitcoin allows them to limit or remove power and control from the government and the state. These people want a cash system that is difficult for governments to regulate or control.

The author wishes to make clear he believes there is a role for governments to play in Bitcoin. They can set up mediation procedures to settle disputes to enforce contracts, for example, as they currently do for transactions denominated in fiat currencies and other assets. However, it is vitally important that a planetary system like Bitcoin be incorruptible by a government or governments. You never know when a political group changes from being trustworthy and competent to one that is incompetent, or worse, despotic. Therefore, having users and miners spread worldwide helps ensure that Bitcoin remains politically neutral.

‘Rent’ Seekers / Privilege Seekers

One concept of ‘rent’ in economics is ‘it is the payment to a factor of production in excess of what is required to keep that factor in its present use.’ Asking for a raise is a type of rent-seeking, and ordinarily, rent-seeking is not a concern because, like this example, an employer decides whether your services are worth the extra payment. In its current use, however, ‘rent-seeking’ is a term economists use to mean ‘privilege-seeking’³. It is usually used to refer to companies and organizations looking to extract taxpayers’ money and other favors from their government without adding extra wealth to the economy. Examples of privilege-seeking activities would be lobbying, bribery, and corruption. They are attempts to obtain a benefit by manipulating the social or political environment in which economic activities occur rather than creating wealth.

The author applies this concept to Bitcoin because he believes it is already happening with BTC. Most readers will probably find this contrary to what they currently believe. We explore this deeper in another article, but for now, it is sufficient to ask you, the reader, to consider who controls the BTC code and what are they doing with that privilege? Those who control the BTC code keep the blocks intentionally small to limit Bitcoin’s capacity to 7 transactions per second. Why would they do such a thing? So that they can say to the rest of the world, ‘Bitcoin does not work as it is’ and then sell us a solution from which they and their partners control and profit—a solution that is not needed if they allow Bitcoin to run as it was initially designed. This behavior is Rent-Seeking. Privilege seeking. They are trying to profit by keeping BTC in the crippled version that it is today.

The Bitcoin Satoshi Vision (BSV) network is different. It restored the Bitcoin protocol to follow closely Satoshi’s vision of Bitcoin described on its Whitepaper and Satoshi’s early writings and emails to those who helped grow Bitcoin. This allowed the Bitcoin blocks to grow as big as they need to ensure that Bitcoin can handle the transaction throughput the world needs. Developers and entrepreneurs can profit from the apps, tools, and solutions they develop on top of the Bitcoin protocol. But the protocol itself is set in stone so that developers and those who financially incentivize them can no longer have the power to change the Bitcoin code to benefit themselves and their partners alone.

Conclusion

With so many competing groups with different interests trying to influence, manipulate, control, or destroy Bitcoin, all vying for our attention on news and social media about what Bitcoin is and should be, how can we protect ourselves from well-meaning misinformed opinions, false narratives, or flat-out lies? How can we know the truth about what Bitcoin is? We will explore this next in a follow-up article titled: “Bitcoin is not made for crime or to tear down government, it is made for you and me.”

[1] Article: “Meet the former prosecutor asked to investigate bitcoin who became the face of crypto VC investing”, by Kate Rooney, CNN, https://www.cnbc.com/2019/10/06/meet-the-former-prosecutor-who-became-the-face-of-crypto-vc-investing.html, published 6 Oct 2019, last accessed 15 Feb 2022.

[2] Article: “Crypto investor Katie Haun is leaving Andreessen Horowitz to launch her own fund”, by Kate Rooney, CNBC, https://www.cnbc.com/2021/12/15/crypto-investor-katie-haun-leaves-andreessen-horowitz-to-launch-fund.html, published 15 Dec 2021, last accessed 15/02/2022.

[3] Article: “Rent Seeking” by David R. Henderson, Econlib.Org (https://www.econlib.org/library/Enc/RentSeeking.html), last accessed 12 Feb 2022. David R. Henderson is the editor of The Library of Economics and Liberty (Econlib) Encyclopedia. He is a research fellow with Stanford University’s Hoover Institution and an associate professor of economics at the Naval Postgraduate School in Monterey, California. He was formerly a senior economist with President Ronald Reagan’s Council of Economic Advisers.