Government Fears Bitcoin Will be As Awesome as Bitcoin Fans Hope It Will Be


Via Reason

For a half-decade or so, crypto-anarchists, libertarians, and freaks of all varieties of anticipated that bitcoin will upend all the powers and principalities of banking both government and privatecredit, and perhaps even the legal systemIP systemrideshare system, and stock market via innovative use of the blockchain technology underlying it.


This week a bunch of federal sources decided to tell Newsweek that they agree, though they are nervous as hell about it, not excited.


The story, by reporter Leah McGrath Goodman, begins with a bizarre and pointless lede about a southern African portmanteau currency made by white nationalists exclusively for whites, that is irrelevant to anything about the story and I’m not sure why it was mentioned at all.


From there, she reports via voices such as Juan Zarate, a senior adviser at Washington think tank Center for Strategic and International Studies; Joshua Baron of the Rand Corporation; Yaya Fanusie, a former counterterrorism analyst for the CIA; Bala Venkataraman, global chief technology officer of banking and capital markets for Computer Sciences Corp; and sources unnamed that:


hundreds of experts inside the nation’s defense and intelligence agencies, as well as private-sector researchers in finance, technology and various think tanks across the country—some of them under contract with the U.S. government—are now investigating how virtual currencies could undermine America’s long-standing ability to disrupt the financial networks of its foes and even permanently upend parts of the global financial system.


“Feature not bug” the cryptoanarchist edge of the bitcoin community—who are clearly becoming a smaller percentage of that relevant community since it’s beginnings—might say. But Zarate lets us know federal law enforcement never wants to lose the ability to cut off its enemies via cutting them off from the legitimate banking system.


The creation of an all-computerized, potentially anonymous, electronic banking system via blockchain makes this harder, and makes the feds upset and nervous.


Rand’s Baron told Newsweek that:


America’s enemies appear to have far more access in recent years to the kinds of advanced technology and encryption tools that would allow them to potentially design a virtual currency that could circumnavigate the global financial system. “We are seeing a trend toward increasingly sophisticated cyberservices being put into the hands of unsophisticated players,” he says. And while this may be handy for privacy-savvy Americans, it can make it much harder for the government and law enforcement to fight terrorists and criminals, he says.