Bitcoin provides an opportunity to expose financial regulation as political favoritism and not consumer protection

Bitcoin is, at present, almost entirely unregulated, save for a few vague guidelines from FinCEN.  The only real regulations imposed upon the exchange markets are those of supply and demand, at least for now.

This is not the case regarding the large conventional markets that we are more accustomed to dealing with. Muddled among the actual consumer sentiments are layers upon layers of structures, rules, and hidden costs that obscure the information that the market is trying to convey.

In many ways, financial regulation for the sake of stability is like damming a river. You may succeed in stopping the yearly flood that ruins a couple of houses, but you also ensure that when it does eventually flood, that the river will probably wipe out the whole village.

For lack of a better term, investors have been coddled into complacency with regards to their financial decisions. When was the last time that you checked the solvency of the bank where you leave your deposits? Do you even care about its financial health? Of course not, because your deposits are insured. Surely, you would never have to take a haircut like our friends in Cyprus did. That is, of course, until the flood.

When you deal in Bitcoin, you have to wear your big-boy pants. Nobody is there to help you if you make a poor decision. You have to do your own research and sink or swim on those terms. For instance, I keep a small but non-trivial amount of Bitcoins on the securities trading platform Havelock Investments. Recently I reached out to the owner, James, to inquire about his security precautions. He was gracious enough to describe his protocols (by the way, they are top-notch) and put my mind at ease. Conversely, I have no idea at all how imprudent that Bank of America may or may not be with my US dollars.

When the markets go bonkers, and Mt. Gox begins to lag, remember that people can only manipulate you if you let them. The panic selling that ensues after a DDOS attack has become less and less pronounced because Bitcoin owners are wising up. We don’t need an uptick rule, we just need experience. We’re learning all sorts of things that we never could with the Dow, the FTSE, or the Nikkei.

Take, for instance, the Bitcoin-only gambling game Satoshi Dice. It pays a monthly dividend in the form of 13% of net profits. In the world we are accustomed to living in, SD would be subject to all sorts of reporting and insider trading regulations. But in the Bitcoin world, the story is refreshingly simple. There are no rules to follow or break, no guarantee that insiders won’t trade the stock for certain periods of time. Personally, I love it. It means that I can trust the current price a lot more assuming that people in-the-know have affected it already. I get more information from the price and can therefor make better decisions about whether I think it is a good time to buy or sell. As a bonus, the absence of regulatory cost burdens means higher profits and more money in my pocket.

If you follow the regulatory paper trail, you will often end up at the doorstep of large banks such as JP Morgan Chase or Goldman Sachs. This is because they have very effective lobby groups that know how to get legislation passed. Regulations are sold to the public as necessary for the protection of consumers and the ferreting out of fraud and money laundering. But you shouldn’t be surprised to notice that the side effects of many bills serve to make large financial institutions larger and to raise the barriers to enter and thus compete.

So how can we show the world that Bitcoin doesn’t need regulating? At the very least, don’t ask for it. Don’t blame anybody but yourself if you lose money trading, or your coins are stolen because you were careless. Become your own financial advocate. Do your research, learn about the companies you choose to trust with your money, and when the trading bots start flittering around the Mt. Gox order book, or somebody sells a big chunk of coins, go for a walk. You’ve got your big-boy pants on, and big boys don’t panic.

If bitcoin works without regulation, then it will have the potential to invalidate many claims that “regulation is for your own protection,” leaving the alternative explanation that regulation in general is little more than a blunt anti-competitive tool.

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13 comments on “Bitcoin provides an opportunity to expose financial regulation as political favoritism and not consumer protection

    • uma says:

      Gullible zombie. Bitcoin will not save you. Only organized action as a cohesive white community. will. this is not an ideological battle of left vs right, GOP vs Dems, Socialism vs liberty. This is war against White people.

      Why do hostile globalist elite defend Israel as a Jewish ethnostate with Jewish only immigration, but ravage White majority Europe/North America into a multi-ethnic, multi-cultural Gulag with dystopian non-White colonization?

      East Asia is 99% yellow. Africa is 90% Black. West Asia is 99% Brown. But 3rd world colonizers are aggressively advancing their agenda by annihilating gullible Whites, just as China annihilates Tibet.

      Why do gullible Whites cuckold for murderous anti-White elite, who confiscate our guns, infiltrate/subvert our banks & espionage agencies, indoctrinate White kids in academia/mass media, plunder White jobs/wages, & butcher White soldiers in bankrupting wars?

      “Native” Americans are not native. They invaded from East Asia. Yellow & Brown races committed 10-times more genocide, slavery, imperialism than Whites. Since Old-Testament, Whites have been victims of Jewish/Crypto-Jewish, Turkic, Muslim, N.African imperialism, slavery, genocide.

      Gullible Whites should reject subversive anti-White ideologies – libertarianism, feminism, liberalism, & reject hostile slanders of racism. Love to all humanity, but White people must organize to advance their interests, their fertility, their homelands. Spread this message. Reading list: goo.gl/iB777 , goo.gl/htyeq , amazon.com/dp/0759672229 , amazon.com/dp/1410792617

  1. AJ Denver says:

    Nearly all of these claims are unsupported speculation. The only facts in this article are about satoshi dice… That’s not to say they aren’t true, but without facts it’s just some guy ranting an opinion at this point.

  2. Erik Voorhees says:

    One of the best pieces of Bitcoin commentary I’ve read in a while. Excellent job :)

  3. Great observations. It is the alleged freedom from the need for personal responsibility with which the state bribes the masses. Yet paradoxically it is in the long-term picture inflatable political monies themselves that create such economic instability that people are always having to obsess about “investing,” whereas with the presence of any kind of sound money option at all, most people could simply _save_ instead of having to “play markets” and “watch the Fed,” etc.

  4. Tobias Remington says:

    Unfortunately, the world is overstocked not with men with boy’s pants on, but Xenomen, damaged by exposure to oestrogen in the tap water they were weaned on.

    These weaklings run to the State reflexively, their blubbery flesh wobbling, crying like babies because their Windows XP laptop got “haaaacked” and their Bitcoin is gone. They understand nothing about the world, about the true nature of risk, about liberty and right and wrong. 

    Unlike the author, who clearly gets it, and is a true man.

    These subhumans want to drag everyone down to the level of a scumbag slave with their KYC Anti Money Laundering rules and anti liberty compliance. They are cowards of the first order, scared little boys frightened of imaginary rules and monsters under the bed. We cannot allow them to set the tone and the agenda when it comes to Bitcoin or any new technology that is purely voluntary. If we allow them to win, it will mean the stifling of innovation, the poison of crony capitalism weakening the Bitcoin ecosystem and hurting customers world-wide and bad news from top to bottom.

    Thankfully, the legislatures around the world are slow to understand and even slower to act. Also, they have the very real problem that will arise if they concede that Bitcoin is money that is regulatable and taxable as Canada has just done; it will mean that anything anyone claims is money can be money, and their monopoly on it’s production vanishes in a puff of smoke.

    This new technology is a very great threat to the State. Whether they recognise it as money or not. Bitcoin entrepreneurs should work quietly and diligently solving the significant business problems that face them, rather than running to be legitimised by “regulators”. Running to the State for licenses that don’t exist is stupid, cowardly, counter productive and un-manly.

    All it will take is for a few Bitcoin businesses in a handful of unregulated jurisdictions to change the world. The shorts wearing, fraidycat, wussdified, pantywaists that want regulation are for sure going to lose this battle and the race.

    As the Bitcoin economy grows and best practices strengthen and become the norm, it will become clear that regulation serves no purpose and adds nothing to security. Bitcoin businesses will join voluntary associations pooling security practices (for example) and all manner of other voluntary checks and balances will spontaneously emerge. The entrance of the State onto the field will distort this natural process and may even prevent it from happening, and the pro regulation retards are doing everything they can to make it so.

    Nobody needs these idiots. PERIOD.

    • Anon says:

      Exactly what I was going to say, albeit in something of an opposite tone:

      Happily, the proposed experiment will never be conducted at any large scale, because the majority of the people – even of those select few who got on the Bitcoin train this early – have at least a basic sense of how much security is needed in their lives and are not wide-eyed fanatical believers in the magical powers of the absolutely-free-market. Anytime they feel they’re being cheated or robbed of their precious BTC or the value they symbolize they will sic the state on the culprits or ragequit the experiment, as well they should.

  5. Brandi says:

    First article I’ve ever seen about bitcoin that draws on the entire socio-economic and geo-political context, yet presents a focused analysis that is strangely bereft of the usual taint of ego, self promotion or other agenda. I’m not surprised Jon tweeted this. There is extraordinary insight and also humanity here. I find it a little embarrassing that I seem to be best informed and guided by Canucks on these issues.

  6. bitcoinfly says:

    Very well written!

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