Thoughts about “Bitmoney”

“Airplanes are interesting toys but of no military value.”
– Marshal Foch, 1911

We have all seen or read them – those quotes from men of old who said it could not be done. Such sentiments abound in the ranks of bystanders who lived to regret their short-sightedness.

In 84 AD, Sextus Julius Frontinus predicted that the implements of war had reached their apex – they could not be further improved.

In 1878, Western Union opined that the telephone could never be considered a practical form of communication, and that it had no inherent value.

In 1932, none other than Albert Einstein concluded that nuclear energy would never be obtainable, because it required splitting the atom at will.

The list goes on.

Not wanting to be numbered among those whose inability to believe prevents them from fully exploring what is possible, I avoid opinions about what the future holds. Rather than concluding that something cannot be done, I find myself in the camp of those wondering whether it should be done. Granted, that requires the imposition of one’s moral judgments on the subject, but I am certainly willing to be the moral conscience of society. (Strangely, no one ever asks me!)

The topic at hand is alternative currency.

It comes in many forms, from simple barter to the latest newsmaker – Bitcoin. A digital currency that exists only in the electronic circuitry of the computer world, Bitcoin is one of the latest indicators that people long to be free from the ravages of governmental regulation and control. Rightly or wrongly, Bitcoin was created to be free from the dictates of any central authority, deriving its value from a global system of supply and demand, free of currency manipulation (otherwise known as legitimized theft).

Like neighbors exchanging a shaker of salt for a cup of sugar, Bitcoin crosses international boundaries at the speed of light, enabling the business world to instantly trade goods and services free of the dictates of a central currency system. Bitcoin has no Federal Reserve to mint more Bitcoins at a whim; no government authority to spend their value into oblivion. Although Bitcoin transactions leave an electronic trail, tracking the trail to an individual participant is an extraordinary challenge, even for hackers.

Like frantic shepherds who learn that the sheep somehow got out of the paddock, federal regulators pull their hair as they try to find ways to regulate and tax that which slips through their fingers. The dance is almost comical, were it not for the unintended consequences. Government does nothing well. And there are always consequences for everything it does. Some of them are intended. For those, our politicians will someday answer to their Maker. Some are unintended, and those are usually the hardest to stomach.

The question remains, do we need alternative currencies like Bitcoin? Do they add anything of real or lasting value? Aren’t the Dollar, Euro, Peso or Pound enough?

The answer is yes. Why? Alternative currencies reintroduce reason into an unreasonable world. They provide a means by which people of good will can live together, work together, and cooperate to make each other’s lives a little easier, at least until government closes the loophole.

Assume, for example, that Molly and John work in the same business. John offers to buy lunch if Molly will cover his shift. It is a simple enough exchange – a form of barter. That sort of thing takes place ten million ways, ten million times every day. Molly receives the benefit of a meal, something having economic value, in exchange for her time. Molly’s basis in time is zero. The IRS considers that a form of taxable transaction. John receives services from Molly, which, if done often enough, may subject him to the reporting of payroll taxes on the value of meals provided during the year, while Molly must report the meals as additional income.

(In the hush that follows, someone moans, “You’ve got to be kidding!”)

In a world in which almost every aspect of our lives is monitored and subjected to the scrutiny of agencies, prying eyes, and greedy hands, it is good to know that somewhere someone is bucking the system. It gives us hope, and reminds us that just beyond our earthly realm is an Eden over which the IRS has no jurisdiction.

P.S. I recently saw two neighbors exchanging a cup of sugar for a shaker of salt. Someone should send them a 1099.

Copyright © 2014 Gregory D. Lucas

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