PBS News Hour clip: The currency known as Bitcoin, which made headlines earlier this week when the FBI seized Silk Road, the popular online black marketplace for drugs and other contraband, payable by Bitcoin had done over a billion dollars worth of business in just the last two years.
Kurt Wallace for Rare: Bitcoin has made headlines on PBS News Hour, sparked by an online Bitcoin drug trafficking site. Mainstream companies are popping up all over the place, big time investors are getting involved in this emerging sector and there are crypto-currency conferences monthly and sometimes weekly all over the world. Even Canada has introduced their own government-backed digital currency called mint-chip. What is the future here in the United States regarding Bitcoin and digital currency? Here to help us out is registered patent attorney Stephan Kinsella, founder of Libertarian Papers and former adjunct professor at the South Texas College of Law. Good to have you on Stephan, thank you for joining us today.
Stephan Kinsella: Thank you very much glad to be here.
Rare: Silk Road is this online black-market that was shut down by the FBI last week. Should people be worried about using Bitcoin in the United States?
Kinsella: I don’t think using Bitcoin itself is a big concern. Silk Road itself might be a different issue. You have to consider your own risks in using Silk Road, but Bitcoin itself … no, you can use Bitcoin without being implicated with the Silk Road issues right now.
Rare: What’s happened with Silk Road, is that a benefit for Bitcoin or it that bad for Bitcoin?
Kinsella: I think it’s good and bad, if you think about. Everything that people accuse Bitcoin of being bad for is true of the U.S. dollar. People are saying that Bitcoin is used for drug transactions. Well the U.S. dollar is used for that too. All the bad things that people accuse Bitcoin of are being used by the U.S. dollar. It’s just an alternative currency that people use. As long as you are careful and as long as you don’t use it for illegal transactions you should be OK.
Rare: The U.S. government has the War on Drugs and the War on Poverty and the War on Terror and we were at this crypto-currency conference in Atlanta over the weekend, there were a lot of Libertarians there. A lot of people concerned about their freedoms and their ability to live their lives without government interference. Do we see a possibility of the United States government declaring a war on Bitcoin?
Kinsella: Yes, I think there is a concern there, and the concern is that if the U.S. government sees a significant threat to its hegemony over the currency of the U.S. dollar, or the world monetary system. They will try and crack down on it. But we have seen this in the internet as well. I don’t believe the U.S. government, if they had known in the early 1990s what the internet would evolve into, I don’t think they would have allowed it. But it’s a little too late for them to stop it, I hope. I’m puzzling the same is true of Bitcoin and similar currencies.
Rare: What part is Bitcoin going to play in the future of legal tender in the United States, with the rest of the world already embracing Bitcoin like in Europe and again Canada having their own digital currency?
Kinsella: The legal tender is just another tool in the toolbox at stake that they can resort to when they need to, to try and crack down on people that threaten their systems. The dollar, the dollar estimate and the interest system of the world monetary order, and really doesn’t need to crack down to far right now, other than counterfeiting and things like this. As Roosevelt and other charlatan authorities, they will seize gold, they will outlaw gold clauses and contracts, and they will do what they have to do to protect their monetary system. If Bitcoin emerges as something that threatens the dollar supremacy, you can expect the state to try and react, and try to ban transactions with Bitcoin using legal tender law and whatever provisions they have available to them.
Rare: What if the Federal Reserve thought this was to overwhelming for them on the world market and tried to hedge by creating their own crypto-currency, will they do that?
Kinsella: I think its possible that the world currencies will try to modernize and use digital methods, but what they are trying to do is use technology to basically track and implement their own currency system. They don’t have the advantages that Bitcoin does, which is a fixed limited supply, and free of government intervention, so they are always going to be inferior in that sense. There is really little difference between Bitcoin and the dollar except that there is no limit on the U.S. government inflating the dollar as much as they want. But Bitcoin has a 21-million currency unit limit. So they can never compete with Bitcoin really, because they don’t want to be limited by these shackles.
Rare: But what about regulating digital currency?
Kinsella: Well I think that regulations could start creeping in, using tender laws or other laws. So they can start saying that if you pay in Bitcoins it is going to be regulated, or you have to pay sales tax. There is a danger of that. The advantage for Bitcoin is that it is highly encrypted. I view Bitcoin like Esperanto. Esperanto is this artificial language, which was not intended to be a substitute for regular language, but a universal second language. Bitcoin doesn’t have to be the dominant monetary currency to survive. It just has be a currency. If it is in the background, if it is used for some things, even if it is only used by certain people who are savvy enough to use it, that may be good enough for it to survive.
Kurt Wallace lives in Atlanta and has been active in new media since 2007 specializing in strategic content. As a podcast host he has interviewed hundreds of guests in politics, business, economics and entertainment. Wallace has served over 20 national political campaigns as a fundraising consultant and producer for online fundraising broadcasts including Rand Paul 2010 and Ron Paul 2012 campaigns. His most important role in life is being a father to an incredible son. He’s a football fan and an amateur poker player.
Attorney Stephan Kinsella, Executive Editor of Libertarian Papers and former professor at South Texas College of Law.