I would see this area as something they would come after Bitcoin and other alternatives with force. ... You have to realize what direction the wind is blowing and that direction is more tracking and control. This is in exact contradiction of this policy.
Dalkore
Dalkore, I am not sure I agree with your underlying premise which is that the use of force can be applied
profitably against Bitcoin and alternatives. What we are seeing is a 'blow-off top' in a 500 year old cycle as the tectonic plates under all the current institutions are shifting. The
return on investment of violence is changing and with it everything else.
From an
old article:
During the Industrial Age the return on investment from engaging in violence was extremely high. For example, a factory, mine, railroad or skyscraper required tremendous amounts of capital for their construction and the barrier to exit was extremely high. This allowed governments or labor to organize and extort the holders of capital through strikes, collective bargaining agreements and other coercisive tactics.
Additionally, the barrier to exit geographically was likewise extremely high. How easy is it to move a mine, factory or skyscraper? This allowed governments or labor, which derive jurisdiction based on geography, to extort holders of capital through regulations, taxes and other legal tender laws. After all, politics is force and force is violence.
But in the Information Age the return on investment from engaging in violence is falling tremendously and in most cases going negative. While some economists would attribute the decline in violent crime to the legalization of abortion, implying that low-income crime destined babies are the majority being aborted, instead I would attribute it to the fact that engaging in violent crime profitably is getting increasingly difficult.
One reason is the cost of protection in the Information Age is so much lower. For example, if someone were to rob you how much valuable stuff will they get and what is the probability that they will be caught? Even nefarious criminals, whether strutting around in costumes or not, perform mental calculations of value to determine whether their behavior will be profitable. One example for why robberies have declined is like that so much less cash is carried while credit or debit cards can be quickly canceled leading to lower expected returns from the behavior.
Another example that illustrates the extreme disparities between protection costs and violence returns is a pure Information Age technology: encryption. TrueCrypt is free and it takes about 10 or 20 seconds to mount and close a volume which then protects your information against snoops, identity thieves or other nefarious individuals. TrueCrypt and Dropbox make a particularly potent duo. What are the costs to access the information against the will of the encryptor?
Sure, even strong encryption like 256-bit AES or Swordfish which meets Department of Defense standards and is used by TrueCrypt can be broken but it requires thousands of dollars worth of resources and lots of time. This creates an expontially expensive curve for the extortionar in terms of both time and money as you can create 100 encrypted volumes for free in less than 10 minutes for every volume that contains actionable useful information and then if someone were to try and access that information without your consent it would cost hundreds of thousands of dollars. Thus, the cost benefit analysis begins to weigh heavily in favor of the individual using encryption. And the more people who use encryption to protect their information against criminals the more likely it is that criminals will look for easier targets.
One result of the high return on investment from violence in the Industrial Age was the greater use of violence. The transition from the Agricutural Age to the Industrial Age, which took about 500 years, led to the rise of tremendously large nation-states that exercised tremendous amounts of violence because it was profitable and the elites needed their capital assets protected.
An unfortunate side-effect of these economics was that during the 20th century the leading non-natural cause of death was governments; Mao, Polpot, Stalin, Lenin, Hitler, Hiroshima, Nagasaki, Vietnam and etc. What do you expect when violence is so profitable?
But there is a new order of the ages that is rising like the sun and requiring the vampire squids that rely on violence to retreat into the increasingly scarce shadows. And unlike the 500 year transition into the Industrial Age we are already 15 years into a 40-50 year transition into the Information Age because of the rapid relentless advance of technology.
