Monday, May 19, 2014

My Bitcoin Related Prediction

Last night at a dinner-discussion group in San Francisco, I made the following prediction:
There will be a second wave of Bitcoin-related arrests that will include some very big names beyond the tech-libertarian world that has most closely been associated with Bitcoin.

As Blood, Sweat and Tears might put it:

What goes up must come down
spinning wheel got to go round...
Someone is waiting just for you

Unfortunately, it will be the government that will be waiting.

2 comments:

  1. I actually believe the govt. will first try to co-opt crypto-currency schemes like Bitcoin for their own (and external overseers) purposes. If this fails, then they may do what you suggest, or they may do it to those that do not 'fall in line' with them (or to eliminate competition to ‘Made’ selectees). You are seeing quite a bit of reported investment money piling into outfits like Bitpay, The Circle, Coinbase, etc., the Fed Election Commission has indicated Fed Elected Officials may accept Bitcoin(Rep. Polis is soliciting such, a few others). So a lot of insiders want cryptocurrency/payment methods to happen (so long as they benefit and have control). In the case of Bitpay, Coinbase, and other money exchanges, it is interesting how they are less playing up Bitcoin, but simply touting they can convert fiat to digital, believing it needs to be simple for the masses and media. They would be more than willing to cozy up to banks, card companies, any large entity that wishes to write a large buyout check. Also, Bitpay 'somehow' enables merchants to convert Bitcoin (and other alt-currencies) to fiat at a set fixed fiat amount, a giant enticement for the merchants (seeing little risk to themselves by not having to hold the digital loot). It would be interesting to be able to look under the hood (so to speak) as to exactly how this is all handled by outfits like Bitpay, what the risk is to them, how they handle such risk. A lot of money has recently flowed into Bitpay from connected, well heeled players (ex. Richard Branson), that are not used to losing. This is for now a 'Made' company.

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    1. This, "the govt. will first try to co-opt crypto-currency schemes like Bitcoin for their own (and external overseers) purposes" seems likely.

      It is what I thought in August 2013, when UGH Larry Summers was talking negative interest rates with his unholy trinity of Tyler Cowen, Noah Smith and Miles Kimball (a nice professor of econ from U Michigan), but even verbalizing such concerns sounded like paranoid schizophrenia, so I shut up. Izabella K., the FT writer, came to a similar conclusion in March this year. Unfortunately, that only helps minimally, as she is wrong a lot too. My old touchstone, The Market Oracle, agrees though. I am a stranger here, will not intrude with links unless asked.

      "What goes up must come down
      spinning wheel got to go round..."

      Very nicely phrased. The Grateful Dead (no favorite of mine) had a similar song, only in concert. Fortuna is implacable, and ultimately, she is fickle.

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