Monday, January 27, 2014

Feds Focusing on Bitcoin's Weak Spot

Well surprise, surprise, the government is going after Bitcoin's weak spot. Who would have ever thought that?

Vocative writes:
A coalition of U.S. prosecutors from the Drug Enforcement Agency, the Internal Revenue Service and the U.S. attorney general’s office arrested him [Charlie Shrem] today. The prosecutors allege that Shrem, along with a co-conspirator Robert Faiella, “schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site Silk Road.”
[...] with the arrest of Shrem, it’s becoming abundantly clear that federal prosecutors are ramping up efforts to crack down on online exchanges where Bitcoin is the currency of choice[...]

Although we’re likely weeks away from trial, the indictment is a good indicator for law enforcement’s strategy on fighting online drug dealing. Rather than targeting individual drug dealers, who are often difficult to find, law enforcement will likely continue to target the consumer-facing exchanges and the people behind them, which are much easier to investigate.
The same thing is going to happen when the Bitcoin regulations come. The government is going to enforce it at the exchanges and at the point of retails sales. What the government wants Bitcoin to be it will be and nothing more.


  1. Government is ALL about suppressing competition. The wealthy ruling class wants a static system that ensures they stay on top. The last thing they want is for you to have the ability to accumulate capital. No store of value allowed for the little people.

  2. I do think that the degree to which the government can regulate a thing depends on its nature. A centralized thing is amenable to regulation. The Soviet Union could regulate all the newspapers and TV stations without trouble.

    But during Glasnost when a Soviet Relative visited me in NYC she purchased two things to take back - blue jeans and a xerox copier. The copier was very valuable because it fueled a network called samizdata, a system of clandestine publication of banned literature in the USSR. The Soviet Union could not control samizdata as well as it could control newspapers and TV. The nature of the thing, distributed instead of centralized was not as amenable to control.

  3. "The same thing is going to happen when the Bitcoin regulations come. The government is going to enforce it at the exchanges and at the point of retails sales. "


    "What the government wants Bitcoin to be it will be and nothing more."


    The state will not be able to contain a pseudonymous borderless inflation-proof currency. They have enough trouble trying to contain drugs. Bitcoin is a million times more difficult to contain than a kilo of cocaine.

  4. and we grow closer and closer to the downfall of shitcoins. I bet some people are happy they bought in at $1200. They should have spent that on an ounce of gold. even keeping that money in cash would have been better in the long run. get out now. the light at the end of the tunnel is the front of an oncoming train.

  5. U.S. Lies To Its People

    I'm taking a deep breath and telling you what I really think. I think the Fed and the US government are embarked on a campaign to tell the American people that the US economy is a lot better than the people think it is. This is a way of boosting Obama's legacy.

    I think that the US is fighting the forces of deleveraging and deflation, and I think the Fed is losing its battle against deflation. After spending trillions via quantitative easing, the Fed has still been unable to push inflation to its desired level of 2%.

    I think the Fed's QE has flowed to the rich 1%, sending tangible items at auction and collectibles through the roof. The Fed's QE has ironically shifted the items that the middle class uses progressively higher -- college tuition, food, insurance, energy, medical, etc. I think the middle class is suffering hugely and a fringe of the middle class has dropped into poverty.

    I think inflation of the daily items that the middle class depends on is really running near 10%. I think the Fed's and the US government's efforts to defame gold have been a disaster. While the Fed and the US are bad-mouthing gold and driving it lower, their anti-gold campaign has been a boon for China. While the US denigrates gold, China, which understands gold, is accumulating all it can. I think that the US does not have the gold that it pretends to have.

    I think China is intent on making its yuan the world's reserve currency. I think we will see a powerful gold-backed convertible yuan become the world's new reserve currency. I see China's Communist leaders literally begging its populace to accumulate gold. I see the Federal reserve intent on making its fiat currency the only accepted money, while gold, its competition, is scorned.

    I see the Federal Reserve and its fiat money as the single greatest enemy of the US. Which would you rather own, a gold-backed yuan or a debt-backed Federal Reserve note? That's the question the world will be faced with.”

  6. As Stephan Molyneux once said, "I wouldn't bet against the combined genius of thousands of geeks." Bitcoin is a tech that isn't going away... Barring a Carrington Super Flare, then all bets are off.