Anyone familiar with Bitcoin knows that the word “legitimacy” was widely used when referring to Bitcoin for years as a necessary step to boost acceptance and adoption. This word was dropped for other memes and now it seems it is back. As ususal, the State is twenty steps behind (this is a good thing) but this time, there is a twist to the push for “Bitcoin Legitimacy”. It isn't a matter of making Bitcoin legitimate this time, it is a push to replace it with something else.

If you know the recent history of money you’ll be familiar with the story of how the Federal Reserve was founded. The Federal Reserve is a private bank tasked with the management of the money of the United States. A secret meeting of cigar smoking fat men was held at a place called Jekyll Island, where the details where thrashed out. What this Daily Caller article is claiming is that there has been a “Jekyll Island 2.0” where soy drinking characters have planned in secret to replace Bitcoin with a totally crippled system stripped of privacy and economic soundness.

You might think that this comparison is totally wrong, and that in the 21st century of Open Source thinking, democracy, Wikileaks and inclusiveness, secret meetings are a thing of the past. If you believe that, you are naïve.

From the article:

The three offices looking at the issue asked not to be identified for this story because of the sensitivity of the issue and the complexity of the solution.

The three “offices” mentioned here are part of the United States Government. They are working on behalf of the people under oath, in a government of and by the people. It is totally unacceptable that legislation that will violate the First Amendment should be drafted in secret without consultation from any stakeholders in society; but this is exactly what they are doing, just as the Jekyll Island meeting was held behind closed doors and in secret.

When they say “sensitivity of the issue” this is not a legal pretext for refusing to draft this legislation in the open and under consultation. There are times where the State must keep secrets, and these circumstances are explicily laid out in law. If this proposed law is a matter of National Security, then they need to say that it is a matter of National Security, and cite the law they are using to keep this secret, otherwise, what they are doing is not correct, is extra legal and profoundly un-American.

Three Members of Congress are working on legislation to protect certain digital currencies from government interference

Only an insane person could characterise this as a Bill to, “Protect Cryptocurrencies from Government Interference”. You have to be a fully indoctrinated member of Orwell’s DoubleThink Newspeak team to characterise this story in those terms.

There are already laws in the USA to protect cryptocurrencies from government interference; The First Amendment of the Constitution.

Cryptocurrencies are text, and text is protected speech. This is established law, and any new legislation that tries to undermine this will be struck down if the system is working correctly. When we say Bitcoin is a profoundly disrupting tool, we actually mean it. Because it is text and protected speech and it mimics good money perfectly, it sits in a special place between two worlds where, in the USA that has guaranteed rights, it cannot be touched.

This story, if it is even true, is an account of a blatant attempt to subvert The Constitution and to stifle Bitcoin and render it useless. If the bill’s purpose is

to prevent them from being used by those engaged in illegal business practices like drug traffickers and terrorists

it can never ever succeed. That goal is impossible on top of being unreasonable, hysterical, computer illiterate and unrealistic. These people should be honest. The scourge of drug taking and other unpleasant things is not the problem they are addressing. The real problem this legislation addresses is the existence of Bitcoin, which has now been recognised as a real threat to fiat currencies. The IMF has stated this clearly in a recent report, where they talk of, “Dealing with Bitcoin by other measures”, a thinly veiled threat to use violence as a resort to destroy Bitcoin.

Now for the heart of the conspiracy theory. Who would the US Government turn to to create its own version of Bitcoin, “JekyllCoin”? They don’t have the skill to create their own version of Bitcoin, and would have to find developers to create one from scratch, which is impossible, in terms of competent software developers and the prohibitive cost of building of a huge network to support it’s hash requirements and climbing the mountain of first mover advantage Bitcoin has. The best way to do it would be to take the existing Bitcoin network and replace the reference client with a client that had a small change that seemed reasonable, then once Bitcoin Core are denied access to changing the source, change Bitcoin into JekyllCoin.

BTC1 is the is the obvious candidate.

Why BTC1? Once again, developing a bespoke system from scratch is bound to fail. The Canadian Mint Chip is an example and that failed before Bitcoin was as big as it is. The only possible candidate here is BTC1. It has vocal industry support from incumbents and it is not Chinese. Think about who is behind BTC1. Jeff Garzik already owns a Blockchain Surveillance Company that services Interpol and others, so he is “on side”. He has the minimum skills required to fork Bitcoin. Do not be overly shocked by a surprise return to Bitcoin of Mike Hearn, who will join Gavin Andressen and Jeff Garzick on JeckyllCoin as developers. Hearn will eat this dish of vengeance with ice.

Barry Silbert and his “Digital Currency Group” are rallying companies with large numbers of users behind BTC1, and so they will have an off the shelf user base in the millions, running on a version of Bitcoin which is indistinguishable from Bitcoin at this point.

When Congress anoints BTC1 as the official Bitcoin, the price will increase dramatically. Bitcoin will finally be “legitimised”. Banks will offer Bitcoin companies accounts and the ecosystem will burn white hot.

…but there is a catch.

What these people are offering is a classic fraudulent “Bait and Switch”

They will offer both legitimacy and a slightly higher capacity at first, and whopping great profit for Bitcoin holders, only later to inject lethal poison into Bitcoin, utterly destroying and wrecking its fundamental proposition.

There will be an increase in the total supply of Bitcoin beyond 21,000,000, Address Blacklists, KYC/AML, reversible transactions and everything else characters like Mike Hearn, half wit economists like Paul Krugman, un-American Police Men like Preet Baharaha and Federal Reserve central bankers think are necessary. Remember also, that the block size increase of BTC1 is just the first of many, making the private operation of a Bitcoin full node impossible, cutting off access to all but the most thoroughly vetted and incumbents from the legacy financial system.

It will be the death of Bitcoin. Using actual Bitcoin would need to be illegal the moment this law is passed. Starting an alt coin with the correct characteristics would need to be made illegal. Even if they were not made illegal, it would be very difficult to replace or even compete with a government anointed JekyllCoin.

Game Over for Bitcoin.

First, there is a new entity that is considering issuing a brand new digital currency that is compliant with anti-money laundering laws unlike any other in circulation.”

There is “A New Entity” what does this mean? If they do not mean BTC1, then they are talking about a new alt-Coin and they have absolutely no hope of succeeding against Bitcoin. The Bitcoin infrastructure is too big, too international, has first mover advantage and can never be stopped. The logical move is to use BTC1 as the Trojan Horse.

CoinCenter and DCG probably advised on this corruption of Bitcoin. Jerry Brito has been pushing this sort of anti-bitcoin nonsense for a long time, appearing before legislators and spreading the disease of FUD and KYC/AML across America, by misinforming everyone who would listen, all paid for by some very misguided and unethical VCs. He also has access to deep state insiders at the infamous Council on Foreign Relations where he has appeared as a guest of Foreign Affairs magazine. BTC1 is a dream come true for these bad people; a Bitcoin that is gelded, tamed, and put under their control.

There is a problem however.

A free and technically superior Bitcoin cannot co-exist with a crippled JekyllCoin; the market will always choose the superior option, especially on a global basis. No one in any country will accept JekyllCoin. This is their one chance to break away from US Dollar hegemony and make a fortune at the same time. Businesses outside the USA have no incentive to root for it either. Any businessman who has had the pleasure of filling out dozens of US government forms to transfer even a tiny amount of money knows what is at stake. Banks globally are rejecting American customers to get away from the US Governments insane regulations. There is no way they will accept JekyllCoin over Bitcoin; in fact, it will only serve to highlight Bitcoin’s superiority and increase its adoption.

Lets go through some important countries and see whether or not they would want to adopt JekyllCoin over Bitcoin.

The Japanese. Answer: “NO”

Bitcoin is already huge in Japan, and their exchanges are set for domination. Why should they make themselves subservient to the USA again?

The Russians. Answer : “нет”

Mother Russia is in a long term conflict with the west. Are they really going to accept a subverted cryptocurrency that will dominate them and the entire globe? Do you not think they will at the very least, support real Bitcoin or start their own “RuCoin”? They may not be able beat the USA by themselves, but they can join with every other country on earth to adopt Bitcoin, which is politically neutral. This happened before with the GSM mobile phone standard, and America lost.

The Nigerians. Answer: “A’ah?! NO!”

No citizen of any African country should want to be dominated by foreigners ever again. Bitcoin is culturally neutral, and all people living on the African continent should be predisposed to adopting it. Anything else is de facto subservience to the old Colonial Master, and is utterly undignified.

The Chinese. Answer: “LOL”

The Chinese already dominate in several areas; Bitcoin mining, software and services, and custom Bitcoin mining hardware, that is exported globally. They are the world leaders in Bitcoin, and are so powerful they can threaten Bitcoin itself. Only a totally idiotic, parochial, ugly-American, myopic Congressman thinks the Chinese are going to accept US domination of Bitcoin because they pass a law. LOL!

Once again, American domination of the global cryptocurrency standard will give back door access to the world’s money and economy in a way that is unprecedented. It will be far worse than the Federal Reserve controlling the form and supply of the world’s reserve currency. The US Government would be able to block the transfer of money to or from anyone in any country. It could even block entire countries from being able to use money both inside and outside of their country. This is a nightmare too terrifying to imagine, and yet it is absolutely achievable with a future version of BTC1.

Big blocks are the least of the problems with BTC1, obviously. KYC/AML is nothing more than a pretext for the creation of a global financial surveillance system that can watch literally every single human on Earth.

Members of Congress are working on legislation that would provide protections to currencies if they meet certain minimum conditions on preventing the currencies from being used by terrorists, drug traffickers, and others engaged in unlawful business practices.

MSM sock puppets sometimes repeat that Bitcoin must be brought “out of the shadows”. Obviously, Bitcoin is not “in the shadows” at all, and it is totally transparent. Furthermore it is not possible to prevent people from using any tool for a bad purpose. If the congressmen believed that what they were planning will be effective, they would pass a law requiring all kitchen knives to be registered. Knives kill more people than rifles in the USA. Why will Congress not ACT?!

There is no way to control Bitcoin once it moves from the wallet of the first purchase; that means that KYC/AML is totally pointless. The only way KYC/AML would make sense is if the entire structure of Bitcoin was changed, so that it was not permissionless. It would also mean all wallet software would need to be compliant. It would mean making sure that JekyllCoin was not interoperable with other Bitcoin variants, as Olaoluwa Osuntokun as shown is doable. It would mean making a private network.

You can see now, why this shabby, scabrous un-American plan is doomed.

They continued that “the law needs to be changed to protect digital currencies from federal government harassment to make sure that a complaint currency can be backed by value, the currency cannot be treated like a security or investment, and that transfers are protected against taxation. The bottom line is that Congress needs to remove all the obstacles to a vibrant digital currency that has voluntarily taken the initiative to keep the bad guys from using it.”

Congress…IS THE OBSTACLE. There is no need for a change in the law; the First Amendment already covers crypto currencies; they are speech. This line sounds like a Mafia threat. “We need to protect you from our own harassment — capish?” You can protect Bitcoin from taxation by issuing a decree that, “We do not tax Bitcoin”. It’s as simple as that. Federal government harassment can be stopped by simply issuing instructions that The Constitution must be followed. The problem is when you have foreigners who come from a different culture at the levers of government, their fundamental and irrevocably held perspective of the role of government is not American; it comes from their home lands. No real American is for any law that effectively nullifies the First Amendment.

When they say, “Can be backed by value” this is meaningless. What Bitcoin is or how it works is not within the gift of government to define. It was created outside of the government, and has nothing to do with them at all. The bottom line is that if the US Government wants Bitcoin to thrive, it needs to get out of the way and stop trying to help. If they don’t, and try to launch JekyllCoin, the rest of the world will be induced to join Bitcoin, as it will be clear that the Americans are trying to control the world with fraudulent “Super Money” a second time. It will be GSM vs CDMA all over again, and America will lose.

In the meantime, this project can be killed before it starts. It does not require you to do anything, in fact all that is required is that you do nothing. Do not run BTC1 or any version of Bitcoin other than Bitcoin Core. No matter what anyone says, no matter what happens. If no one is running their software, their project dies. They can scream all they like, just like the MPAA/RIAA screamed about BitTorrent for years to zero effect. There are too many BitTorrent users to ever take that system down, and if there are enough Bitcoin users, Bitcoin can never ever be stopped. And do not think that this will put you in the cross hairs of the Government. Two courts, one in Florida and the other in New York have both found two men did nothign wrong by exchanging Bitcoin for money, and that Bitcoin is not money, and is therefore not subject to money laundering regulations.

All States world-wide should take the advice we submitted to the British government. If you value your sovereignty, your dignity, peace and prosperity of the citizens of you your nation, you will adopt Bitcoin now, and start taking it in payment of taxes. Legislators in other countries are starting to wake up to this and so should you.

Of course, in this analysis I could be completely wrong.

Even if Garzik, CoinCenter, Silbert and his DCG have absolutely nothing to do with any of this, and it is as much a surprise to them as it is to the Ethical Bitcoin community, the nature of the proposal remains absolutely unchanged. It is pure anti-Bitcoin and should roundly condemned and rejected by all market actors on a global basis. As I mention above there are precedents for such rejections, from the doomed CLIPPER chip, to the ill fated Canadian Mint Chip; the market cannot be forced to accept anything, and the State is not powerful enough to force it. Remember; what they would have to make illegal is the running of a computer programme — just like the ones that run the BitTorrent protocol. And we all know how well trying to ban that turned out.

We knew this was coming. We are still going to win. They have no arguments, no software, the antipathy of the international community and math itself against them. They don’t even get marks for effort, because their thinking is so slipshod and shabby.

Their best way out is to embrace Americanism. This legislation, no matter what it says, should be totally rejected on principle. Secretly drafted legislation and unaccountable public servants are anathema to democracy.