Bitcoin: With Enemies Like Schumer, Who Needs Friends?

Charles Schumer, a charter member (along with Lieberman, Hatch and Feinstein) of the US Senate’s authoritarian moral scold caucus, is at it again. Schumer, for those who don’t recall, exemplifies the managerialist heart of darkness of 20th century liberalism. That ideology might be personified, in the colorful phrase of libertarian commentator Joe Stromberg, as “the body of Leviathan and the head of a social worker.” Schumer’s ideal government is a giant nanny that stomps around, like Godzilla in a gas mask and kevlar vest, saying “Momma don’t allow. Momma don’t allow.”

This time, his primary vendetta is against the online black market site Silk Road — but he has plenty of ire to spare for the encrypted e-currency Bitcoin as well, for facilitating such anonymous transactions. Silk Road — whose URL (http://ianxz6zefk72ulzz.onion/index.php) is accessible only through the Tor anonymizer — became a center of media attention after a story at Gawker.com on June 1 revealed that the anonymous marketplace hosts such goods for sale as hashish, weed, ecstasy, heroin and LSD.

Silk Road is a classic example of the kinds of rating and reputational mechanisms that emerge in a free market, absent the regulatory state. Although sellers’ real identities are unknown, their history of quality and reliability is tracked on the same user feedback model as Amazon and Ebay.

Schumer, naturally, is outraged. Besides suggesting legislation to prohibit unauthorized encrypted currencies, he’s called on the Justice Department to shut down Silk Road and seize the website. This last is a favorite strategy of his. In the past he’s co-sponsored legislation authorizing the AG to take the same action against sites engaged in “intellectual property piracy” [sic], and has been foremost among those cheering on the government’s seizure of the Wikileaks domain name.

But his experience with Wikileaks should have taught him this strategy has outlived its usefulness. Wikileaks has a number of domain names, including country-level domains, and is hosted by servers in countries all around the world — many of them beyond the reach of American law. And it continues to be accessible at its numeric IP addresses, which thousands of supporters around the world have defiantly posted and linked to online. Wikileaks is, as Schumer found out — or would have found out if he had more intelligence than an artichoke — simply impossible to shut down without shutting down the Internet.

As for Silk Road, its domain name can’t be seized — there is no domain name. It’s got a .onion URL, for which there is no registry. And what’s the point of outlawing encrypted e-currencies when you don’t know who’s using them and you can’t catch them doing it?

Actually, Schumer’s Barney Fife act could be the best thing that ever happened to Bitcoin. Back in March, an earlier target of Schumer’s grandstanding was Fuzz Alert, a smartphone application that alerts drivers to speed traps, speeding and red light cameras, and sobriety checkpoints. After Schumer drew attention to the app, its sales doubled.

Maybe he can do a similar favor for the darknet economy. The more he vents his impotent rage, the more public attention he draws to the fact that government attempts to suppress Silk Road and Bitcoin are, well, impotent.

A lot of people out there would like to engage in peaceful trade — even in violation of government commands to “touch not, taste not, handle not” — without the state’s permission, surveillance or taxation, who may not yet be aware things like Bitcoin and Silk Road exist. The more and more loudly you protest, Senator Schumer, the more economic activity will move beyond the reach of the corporate state. So by all means, bluster on! Command the waves to advance no further. Show people everywhere, beyond the shadow of a doubt, just how contemptible your so-called laws really are.

We don’t care what Momma don’t allow.