My last two posts cast doubts on the near-term prospect of Bitcoin as a payment system for everyday purchases and even for large ticket purchases. Today is a haunting reminder why it is still valued.
Eighty-eight years ago, US President Franklin D. Roosevelt signed Executive Order 6102, prohibiting the “hoarding” of gold. If I had been smarter, I would have started working on this post weeks ago, delving into contemporary newspaper articles, and interviewing some historians. But the anniversary crept on me. To cut a long story short, Americans were given less than a month to “give all but a small amount of gold coins, gold bars, and gold certificates they own to the Federal Reserve,” or face heavy fines and jail sentences, according to Wikipedia .
Sane people cannot agree on monetary issues, but the impact of order on civil liberties, which was only abolished in 1974, is undoubtedly appalling.
“Less than 100 years ago, hoarding gold was ILLEGAL in the United States. It was ILLEGAL to have a shiny stone in your home. I find this fact amazing, ”Bitcoin user and educator 6102Bitcoin said on Stephan Livera’s podcast last year.
That this happened in the land of the free along with recent abuses of civil asset forfeiture laws underscores a reason why Bitcoin and other cryptocurrencies, even though they are “unsupported” and have no “intrinsic value” (the words of the critics, not mine) are worth something: they are difficult to confiscate as wallets are controlled by cryptographic private keys and not by a central administrator who can be subpoenaed.
Marc Hochstein, CoinDesk’s editor-in-chief, owns Bitcoin, and if he were smarter he would have bought it more years ago. This article is an excerpt from The knot, CoinDesk’s daily recap of the key stories about the future of money and Web 3.0 Here you can subscribe to the full newsletter.
Not impossible, but difficult. As I wrote almost four years ago:
Inb4 the straw men: I am not claiming that users of cryptocurrencies are “above the law”. A person who refuses to give up their private keys by court order can still be thrown in jail.
The point is that the government has to throw this person in jail or maybe hit them with the proverbial rubber hose to get them to comply. It cannot unilaterally seize its money. …
In this way, the cryptocurrency scrapes back a minimum of power for the individual.
It’s not for nothing that Satoshi Nakamoto, the mysterious creator of Bitcoin, listed April 5th as his birthday.
Can it happen again?
This begs an interesting, if disturbing, question: could Uncle Sam try pulling a 6102 on Bitcoin? Ray Dalio, the hedge fund manager and (shill alert!) Upcoming speaker at Consensus 2021, agrees.
“Every country values its monopoly on controlling supply and demand,” said the billionaire in a recent interview with Yahoo Finance. “They don’t want other funds to operate or compete because things can get out of hand. So I think the very likely you will have [bitcoin]banned the way gold was banned in certain circumstances. “
Dalio noted that India could already be headed in that direction and that the public transaction book could allow a government to find out who is holding the asset.
What a die-hard bitcoiner might answer: come and take it.
Here is 6102Bitcoin from the same podcast interview:
I cannot imagine that these regulations or attempted seizures would be particularly effective for a number of reasons. First, Bitcoin can move at the speed of light (with a 10 minute delay). Regulations take time to develop, and a vote would be required in most countries to seize Bitcoin. Even before the vote takes place, most Bitcoin owners would have transferred ownership outside of the country out of legal reach.
Second, Bitcoin can be controlled by numerous parties operating under different regulations, making such seizure impossible. After all, Bitcoin can be hidden from the public, and owners can build a plausible denial into the scheme used to hold Bitcoin.
For example, some hardware wallets allow the creation of a “hidden account” with a second passphrase so that a user can forcibly give a blackmailer the primary passphrase that can only be used to unblock part of the crypto.
Perhaps appropriately, the anniversary of Executive Ordinance 6102 falls shortly after the last night of the Jewish Passover. Even if Bitcoin is never accepted in the supermarket or in the dry cleaner, if the only thing is to give individuals a bulwark against uncontrolled seizure, then dayenu would be – that would be enough.