Bitcoin: Anonymous Unregulated Image Seems a Clever Marketing Ruse

BitcoinBitcoin has been the talk of the town for some time now. Whenever the subjects of currency, technology, and politics seems to creep into the same conversation in a kind of twisted three-way venn diagram, the famous crypto-currency is usually at the center of it. Bitcoin’s anonymous, decentralized, and unregulated image however, nowadays looks like it may have just been a clever marketing ruse to gain public acceptance for what looks like a coming totally digital economy.

Bitcoin has been touted for many of the things that the current financial system has been criticized for. When ultra conservatives gather together and begin to lament the lost days of gold and silver coin, almost non-existant inflation, and a decentralized banking system, invariably somewhere in the conversation the topic of bitcoin is found. Bitcoin is praised for being unregulated and totally digital, meaning to believers that in theory the central government, or a government appointed central authority cannot simply manipulate its value at will. Supporters also praise, though not as heavily, the fact that it is somewhat anonymous, almost in the way that physical coin used to be. Of the two characteristics, it appears that supporters are more proud of the decentralized unregulated nature of bitcoin however. What has yet to be definitively answered though, is whether bitcoin actually is and will remain all of these things, or if these characteristics are just a clever ruse to seed and gain acceptance in the public mind for a coming totally digital economy.

Is bitcoin truly anonymous? The crypto-currency has been able to exist thus far using a complex structure and self-regulated approach that has allowed users to enjoy a somewhat anonymous status while trading in the digital dough. Although chat rooms and comment boards are full of statements from “bitlievers” (die hard supporters of the currency) about why government acceptance is not needed for its success, it became clear in the big “China-snub” that while acceptance may not be needed, rejection can certainly hurt.

Essentially, after China said no-no, it became obvious that a “live and let live” attitude from big governments was probably the best that bitcoin could hope for if it desired continued growth into legitimate markets. When considering that most, if not nearly all, governments on the planet have some type of central banking system in place, it seems unlikely that bitcoin would be simply allowed to increasingly creep into the legitimate marketplace without heavy regulatory attacks. The attacks would likely continue until either bitcoin became co-opted into a State-run or directed currency, or was regulated into the fringes of society and left essentially as a black-market option for exchange.

The touted anonymous status of bitcoin appears to be quite questionable in light of the recent arrests, beginning with the Silk Road affair. The Silk Road drama was the catalyst for the heavy media attention which began to associate bitcoin with drugs, money laundering, and other less than savory illegal activities. For the lifelong skeptic, this would appear to have been the perfect assist to regulators who could then approach users and the public with the idea that bitcoin existed in some kind of digital wild west which needed a Sheriff and many deputies to keep the action above board.

The alleged founder of Silk Road, Ross Ulbricht, was arrested by federal authorities and accused of starting and running the infamous Silk Road. The website was a type of anonymous candyland of evil, where users could obtain drugs, launder money, and possibly even shop for assassins. Ulbrich was also accused of attempting to arrange a hit using the website. Apparently Ulbrich, alleged to have gone by the handle “Dread Pirate Roberts,” was caught because this enterprising you genius who managed to start an underground website which grew into a billion dollar criminal superstore, then haphazardly put his personal gmail address into an online message board. So goes the story, from that point forward, and many moves later, Ulbricht was in custody and now awaits his fate in the matter. Whether Ulbricht was in fact the kingpin behind the Silk Road affair is difficult to determine based on the evidence available to the public.

Bitcoins anonymous status also is called into question with the recent arrest of BitInstant CEO Charlie Shrem. Shrem is accused of being involved in a complex 3-way money laundering dance using bitcoin in connection with another man who was linked to the infamous Silk Road. Again, the specific details of the Shrem arrest are difficult to make rock-solid sense of from the public point of view, however his arrests highlights that bitcoin may not be as anonymous as some tout it to be.

As for bitcoin being unregulated, that claim for now still appears to hold some water. Some structural issues were discussed withe the self regulation model, when it was shown that in theory, a monopoly on the mining process could grant de-facto control of the crypto-currency to the controller of any mining bloc which managed to gain a mining monopoly. The scare however was avoided as miners jumped ship the last time that a single block appeared to be nearing a monopoly. Even the unregulated status of the digital dough however is being brought into the spotlight. Recently, hearings were begun in New York, by New York’s Department of Financial Services to see if some level of regulation can be decided upon when it comes to bitcoin. Moves like this may suggest that bitcoin’s independent “totally unregulated” status may, in the near future, be anything but.

When combining all of this with the fact that many big-league corporations such as IBM, GM, Google, and others have laid down heavy investments into areas which directly or indirectly would be involved in a totally digital economy and world, one might be led to question whether bitcoin was ever really “against the grain.” When some of the world’s largest companies look to be betting the farm that sometime in the future there will be an internet of things, with totally digital money, to which most of the worlds human will also be connected, then bitcoin looks to be more of a marketing ruse for that future and less of a contrarian independent idea.

Ultimately, only time will be the test of what’s to come. For now though, bitcoin’s touted characteristics of anonymity and decentralized unregulated status seem, if ever so slightly, like they may be a clever, and for the time being lucrative, ruse.

Editorial By Daniel Worku

Business Insider

Washington Post

NY Times

Leave a Reply

Your email address will not be published.