How The Government Could Come For Your Bitcoin
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What does the path to hyperbitcoinization look like when governments worldwide start to notice their citizens adopting bitcoin?
This is an opinion editorial by Robert Hall, a content creator and small business owner.
The popular thought among Bitcoiners is that bitcoin adoption will be a seamless transition to a bitcoin standard. While I wish this were the case, governments will not give up their power to print money and control the economic affairs of what they consider to be their slaves without a fight.
Bitcoin as a monetary network grows by leaps and bounds every year. An estimated 106 million people worldwide own Bitcoin, and users make around 300,000-500,000 transactions today. Adoption numbers will continue to grow as bitcoin matures and solidifies itself in the marketplace of ideas.
I can assure you that governments are also closely monitoring these developments. As bitcoin adoption grows, you should expect governments to use several tactics to scare you away from owning it or create tax laws designed to punish bitcoin holders. You should also expect outright confiscation and the threat of being thrown in jail.
If bitcoin has been remotely on your radar, there is a high likelihood that you have heard negative stories about bitcoin in the mainstream press. The media spreads fear, uncertainty and doubt (FUD) about Bitcoin to stop you from being interested in learning more about it. The powers that be use sophisticated marketing techniques and narrative control to implant an idea about bitcoin in your mind before you have a chance to do your research.
Here are a few examples of FUD from well-known media publications:
“Why Bitcoin Is Bad For The Environment” (Fear)
“Cryptocurrency Fuels Growth Of Crime” (Uncertainty)
“The Brutal Truth About Bitcoin (Doubt)”
All this took was a quick search on the internet to find these stories. This is governments’ primary weapon to discourage bitcoin adoption, which has probably worked for a time — but this is no longer the case. With inflation raging worldwide and governments buckling under the pressure of currency debasement and a strong dollar, people will start looking for a better way to store their wealth.
This kind of economic environment is ripe for bitcoin adoption on a massive scale. This will lead governments to further put pressure on their citizens who own bitcoin. Once governments understand they can’t stop their citizens from adopting bitcoin, they most likely will try to profit from it by creating confiscatory tax laws to benefit from bitcoin’s price gains. Don’t think it could happen? It is already a policy in India.
Steal From The Middle Class
As recently as May, Democrats and the Biden administration were considering a tax on unrealized gains.
“Biden’s Tax On Unrealized Gains Will Hit Far More Taxpayers Than He Claims
India taxes digital assets at 30 percent.
“India’s Cryptocurrency Industry Reels As New Tax Hammers Trading”
“Philippine President Marcos Jr. Pushes Tax On Digital Services”
As you can see, this global trend looks like it will escalate in future years.
If You Can’t Beat It, Ban It.
Banning is the last, and most heavy-handed tool governments will use to discourage bitcoin adoption. This is when you can tell they are petrified of bitcoin. They will pass laws outlawing bitcoin ownership and criminalizing its possession. Numerous countries around the globe have gone this route, most notably China.
China has been the most aggressive and has a long history of banning bitcoin and other cryptocurrencies.
Nigeria is another example of how governments will attack Bitcoin. They can tell financial institutions to block any transactions related to bitcoin. This might disrupt bitcoin adoption for a while, but is unlikely to stall bitcoin adoption for long.
The situation that many Bitcoiners in America worry about is a 6102-type executive order that would ban the ownership of bitcoin.
Unfortunately, there is a precedent for something like this to occur. On April 6, 1933, President Franklin D. Roosevelt signed Executive Order 6102, “forbidding the hoarding of gold coin, gold bullion and gold certificates within the continental United States.”
This essentially banned the private ownership of gold in the United States. Executive Order 6102 demanded that every citizen surrender their gold to the Federal Reserve by May 1, 1933. Violators of this executive order were subject to a $10,000 fine, which amounts to $209,000 in today’s dollars, and a 5-10 year prison term.
This is the one thing that should keep every Bitcoiner up at night. What is stopping them from doing something like this in the future? The precedent has been set. I’m not sure they would need a pretext to seize your bitcoin other than we are going bankrupt and want to stay in power.
The government knows who owns bitcoin or could find out relatively quickly with the help of the cryptocurrency exchanges. The Know Your Customer (KYC) regulations make it easy to see where you live and how much bitcoin you have.
If you are not familiar with buying non-KYC bitcoin, now is the time to learn how to do so. There are a few platforms that make it easy to buy and sell bitcoin without the government seeing your every move.
HodlHodl and Bisq utilize the power of multisig custody to make this happen. You can also buy KYC-free bitcoin from ATMs as well. For an in-depth walkthrough on how to buy bitcoin from an ATM or to use Bisq check out this article by Bitcoin Magazine contributor Econoalchemist.
Bitcoin businesses have to abide by KYC regulations created by the federal government. These rules adversely impact the lives of innocent people they claim to be protecting. I’ve been personally impacted by KYC rules and regulations. I won’t name the companies in question but I have had accounts closed, or been unable to open accounts with certain businesses for reasons that were never explained to me. If this can happen to me, it can certainly happen to anyone.
The power of The State is real and should not be taken lightly. The Bitcoin revolution is real and happening in real time but there are questions that you need to ask yourself. My question to you is: What will you do if the government makes it illegal to own Bitcoin? Are you going to turn over your bitcoin to the state? Are you willing to risk going to jail for your bitcoin? Are you going to leave?
What will you do if they outlaw bitcoin and you need food and shelter for your family? Are you willing to work in a black market? I don’t think these are questions that the average Bitcoiner is asking themselves — but they should.
The world is unstable, and who knows what the future holds for any of us? It is better to have a plan now versus being caught flat-footed.
In the meantime, continue to stay humble and stack sats.
This is a guest post by Robert Hall. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.