Claim: Bitcoin is used by money launderers and other criminals.

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What is Bitcoin Good for?  > Claim: Bitcoin is used by money launderers

  • Bitcoin developed a reputation for money-laundering based off of criminal activity in its early years (2012-13) because the technology was new and unknown to law enforcement.
  • Today, savvy criminals have learned to avoid Bitcoin because the log of Bitcoin transactions (the Bitcoin ledger) is public and the FBI has learned how to analyze the transaction logs to find the illicit activity .
  • The FBI learned how easy it is to catch crime when they caught two of their own agents stealing (Ted-talk video) from the Silk Road, an early black market which used Bitcoin.  Government Agents who had authority to order Internet Service Providers to erase their logs failed to cover their tracks because they couldn’t delete the Bitcoin logs of their theft.

Former Government Prosecutor of the Silk Road black market: Kathryn Haun

How Does Illicit Bitcoin Activity Levels Compare to the Existing Banking System?

Digital Property Rules can be exercised without using Violence and Across Borders

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What is Bitcoin Good for?  > Digital Property Rules can be exercised without using Violence

  1. In the physical world, property rights are enforced through violence.
  2. In the digital world property rights do not have to be enforced with violence.
    • Bitcoin’s property registry (ledger) is mirrored on tens of thousands of computers around the world which makes it virtually impossible to steal.
    • Bitcoin can be configured to require multiple keys which may be distributed around the world.
      Gold can’t do this.
  3. You can give backup signing rights to people you trust, rather than your bank and government.
    • In the event that you get locked out of your house, you may keep a key with family or a neighbor.
    • Give people you trust backup keys to your digital money vault.
  4. Digital property rights apply across national borders.
    • People can send money to family that live in other countries.
    • People can flee war and bad governments with Bitcoin more easily than they can with gold or paper money.

Good Arguments to Debate about Bitcoin

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Bitcoin Info > Main

These and many others are genuine concerns about the future of Bitcoin that deserve intense debate and scrutiny, but they don’t fit into an outrage headline and don’t have clear answers so you won’t hear them everyday.

Optimism about Bitcoin

If you want some compelling optimism for why Crypto could change the world for the better (or be the investment of a lifetime) try these:

 

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How does the Cantillon Effect increase Inequality?

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The Cantillion Effect refers to the inequality that arises when some people get preferred access to newly “printed” money.

Cantillon also had a theory in which the beneficiaries of the state creating the currency is based on the institutional setup of that state. This essentially means, “he who was close to the king and the wealthy”, likely benefitted from the distributional choices of currency through the system.

As new money is created, the first recipients (known as cantillioinaries) are able to make purchases before the prices increases due to the purchases the cantillionaires make with the newly printed money.

The general rule is that those closest to to money printer benefit from a Cantillion Effect.

 

Example:

Blackrock receives a benefit when the Federal reserve purchases their bonds as part of Quantitative Easing.

Blackrock is able to buy up homes across the country at the old prices, before the price increases due to the purchases made with the new money.

To see the inequality at work, Blackrock then rents out the homes to young Americans (and others) who can’t afford to purchase a home at high prices.

The danger is that this inequality becomes entrenched when young people (and others) are unable to afford to buy a home.

 

Supply Chain

As supply chains deliver products, price increases are passed up the chain.

  • Chinese Supplier sells T-shirts to an American Supplier,for a $1 higher price
  • American Company sells T-shirts for $1 more.
  • American workers have to purchase the T-shirts at a higher price, but wait up to 1 year to get a raise.
  • In the meantime, the public are stuck paying higher prices at unchaged wages.

 

Who are the Cantillionaires?

Cantillionares are those people who benefit from their proximity of the money printer.

In a Bitcoin-based system, the Cantillion Effect would be eliminated because new Bitcoin is awarded through a competitive mining-process. Anyone can mine Bitcoin. There is not a special benefit from working for the finance industry or a company whose bonds are being bought by the Federal Reserve.

 

Since 2009, the Federal Reserve has bought or manipulated the market to support the issuance of more corporate bonds.  Rather than invest the proceeds in productive purposes, the CEOs of these companies divert the proceeds into stock buybacks.

They essentially go into greater debt (borrow money by issuing bonds) and use that money to inflate their stock prices.

The Fed “money printing” gives the CEOs and other corporate leadership an easy way to boost their stock price and “earn” their bonuses.

It also benefits stockholders, a group that dis-proportionally benefits the top of the income scale.