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Author: Yaël Ossowski

“Crypto” vs Bitcoin and Why It Matters for Policy

By Yaël Ossowski

One frequent social media criticism against our consumer organization is that we discuss smart policy on “crypto” more broadly rather than just Bitcoin.

Realistically, that means we focus on the significant regulatory hurdles to the general “crypto” economy rather than focusing solely on the merits of Satoshi’s invention of Bitcoin and a path to its universal adoption.

Whatever our thoughts on Bitcoin as the one and true asset, the political narrative is about a category of digital assets and digital cash. Regulators don’t care if you’re stocked up on DOGE or BTC, they just know that you have it, it has value, and they want a cut.

At this moment, there are thousands of online crypto services, wallets, and apps that are only available to you based on your passport or your street address.

And this only gets worse if we don’t push smart and innovation-friendly solutions that will keep the confiscatory and bureaucratic tendencies of national and supranational governments at bay.

That’s because the greatest impediment to any growth in the crypto economy, “hyperbitcoinization”, or whatever you want to call it, is the on and off-ramps. Fiat to crypto, crypto to fiat.

Until people independently charge and get paid in crypto, or create mining collectives in their communities, the on-off ramps will shape adoption, and because these ramps are governed by financial regulators, there will always be a bottleneck.

Or a threat that only certain countries with more relaxed rules will allow on-off ramps, which will necessarily limit market penetration and any crypto future.

The lower we can make the transaction costs (as an economic principle, not dollars and cents) to on-off ramping, the closer we can get to broad crypto adoption. And that means treating crypto as a category in any policy debate or conversation, whatever our personal preference

The arguments of the best cryptocurrencies can and should be fought, and coiners already vote with their wallets, their code, and their clicks. But regulation matters.

If you’re interested in learning more, check out our principles for smart crypto regulation here, and support our efforts to promote these principles at the legislative level by supporting our BTCPay server below, or with altcoins on our donate page.

Why Consumers Should Oppose the Latest Senate Antitrust Actions

By Yaël Ossowski

The U.S. Senate is considering two antitrust bills by Sen. Amy Klobuchar that would significantly harm both consumer choice and innovation.

Unfortunately, these bills have been co-sponsored by members of both political parties, creating what looks like a bipartisan consensus in the Senate chamber, but not one favored by the vast majority of American consumers.

Both the American Innovation and Choice Online Act and Platform Competition and Opportunity Act appear to be general antitrust regulations but are in fact targeted attacks on consumers who benefit from the services of a handful of tech companies.

While there are plenty of reasons to criticize certain tech companies and their business or moderation decisions, inviting the government to control, direct, or otherwise halt innovative goods and services from specific tech companies would create more problems for consumers than it would solve.

Don’t You Dare Sell Your Own Products

The first bill would aim to outlaw “discriminatory conduct” by the platforms targeted, mostly concerning their own products and applications. Think of the vast array of Amazon Basics products, Google’s services other than search, or even Facebook offering Messenger.

These goods and services are offered by companies because the firms have built up specialized knowledge and consumer demand exists for them. Even though these firms sell products and offer services from third parties, they also sell their own, similar to Walmart’s “Good Value” brand or even “George” clothing line.

When it comes to tech offerings, as noted by Adam Kovacevich of the Chamber of Progress, this would basically halt Amazon Prime, it would block Apple from pre-loading iMessage and Facetime, and require Apple and other phone makers to allow third-party apps to be “sideloaded” outside the traditional app store. Not only would this be inconvenient for consumers who like and use these products, but it would also make it harder to innovate, thus depriving consumers of better goods and services that could come down the line.

Don’t You Dare Acquire Other Companies

The second bill more radically alters existing antitrust law by basically baring large-capitalization tech firms from acquiring or even investing in other firms. Again, this

The rise of Silicon Valley has been an unadulterated success for American consumers, owing to the entrepreneurship of startups, companies and investors who see value in them, and the unique pollination of both talent and capital that has made American technology a dominant global player.

This bill purports to ensure consumers are protected from the “evils” of Big Tech, but in reality, it would put American entrepreneurs at a significant disadvantage globally, inviting companies from illiberal countries to offer products to consumers and reducing the options and choices for anyone who enjoys technology products.

Why Consumers Should Oppose

Rather than protect the consumer, these bills would have serious impacts on the overall consumer experience and consumer choice: 

  • They would restrict the innovative growth of US platforms while giving tech firms abroad an advantage
  • They would degrade the consumer experience by reducing the options and services firms could offer 
  • They would empower the federal government to pick the winners and losers of technological innovation rather than consumers
  • They would limit the potential for small businesses to use these platforms to provide goods and services to their customers
  • They would increase the cost of regulatory compliance with federal mandates, which would raise prices for consumers

The American people benefit from a competitive and free market for all goods, services, and networks we use online. Weaponizing our federal agencies to break up companies, especially when there is no demonstrated case of consumer harm, will chill innovation and stall our competitive edge as a country.

If Congress wants to update antitrust for the 21st century they should:

  • Establish more clear penalties for breaches of data or consumer privacy and empower the Federal Trade Commission to act where necessary
  • Punish companies that violate  existing antitrust provisions that harm consumers
  • Better define the scope of the consumer welfare standard in a digital age

The internet is the ultimate playground for consumer choice. Government attempts to intervene and regulate based on political considerations will only restrict consumer choice and deprive us of what we’ve thus far enjoyed.

The overwhelming majority of users are happy with online marketplaces and with their profiles on social platforms. They’re able to connect with friends and family around the world, and share images and posts that spark conversations. Millions of small businesses, artists, and even news websites are dependent on these platforms to make their living.

Using the force of government to break apart businesses because of particular stances or actions they’ve taken, all legal under current law, is highly vindictive and will restrict the ability of ordinary people to enjoy the platforms for which we voluntarily signed up. 

We should hold these platforms accountable when they make mistakes, but not invite the federal government to determine which sites or platforms we can click on. The government’s role is not to pick winners and losers. It’s to ensure our rights to life, liberty, and pursuit of happiness, as the Declaration of Independence states.

Usa, dopo venti anni torna a salire il tasso dei fumatori

Molto male. Poco piacevole inversione di tendenza negli Stati Uniti d’America.
Negli States, infatti, per la prima volta dopo circa venti anni, si sta assistendo ad una risalita nei numeri dei fumatori.
Questo quanto emerge nel raffronto tra i dati dei consumi di sigarette relativi all’anno 2020 e quelli dell’anno precedente.
Il numero complessivo di bionde vendute nel territorio Usa, ovvero 203,7 miliardi di pezzi nel 2020, è cresciuto di 0,8 miliardi di unità (corrispondente allo 0,4%) rispetto al 2019.

DATI IN RISALITA DOPO VENTI ANNI
Ed è, come detto, la prima volta che ciò si verifica da vent’anni a questa parte.
“Gli americani – fa presente Yaël Ossowski, numero due del Consumer Choice Center –
potrebbero aver fatto uso di un maggior numero sigarette per una moltitudine di motivi che potrebbero coincidere con lo stress causato dalla pandemia, con le risposte del Governo alla pandemia o, ancora, con la perdita di posti di lavoro.
O, forse, tutto questo si spiega perché è stato detto loro ripetutamente, da prestigiosi fonti di salute pubblica e organi di stampa, che lo svapo, un’alternativa che milioni di consumatori adulti stanno ora utilizzando per smettere di fumare, è altrettanto pericoloso del fumo.
Qualunque sia la motivazione, è certo che la tendenza di calo si sia arrestata.
E questo è un problema che non può che riguardare tutti noi”.

Read the full article here

Smoking is up for the first time in a generation. The public health lobby is to blame

By Yaël Ossowski

It often takes a long time for health policy influencers, advocates, and proponents to admit fault. 

When it is about topics such as diet fads, saturated fats, food pyramids, and sugar consumption, long-held consensus beliefs and government actions later proved erroneous have had a lasting negative impact.

But nothing has been more egregious and harmful in our current age than the public health lobby’s persistent denialism of the harm reduction value of nicotine vaping products and other alternatives to cigarettes.

That denialism has come in many forms: public information campaigns demonizing vaping devices, misinformation on lung illnesses caused by tainted cannabis cartridges, bans, restrictions, and taxes on flavored nicotine products (especially those without tobacco), Kafkaesque market authorization applications handled by the drug regulators, and a never-ending crusade to deny adult consumers from having access to life-saving products because of illicit and risky behavior by teens.

These public health bodies, anti-smoking groups, and allied journalists, whatever their intent, have sought to convince the public that not only is smoking bad and dangerous — an easy admission — but also that alternative nicotine devices like vaping products, nicotine pouches, and heated tobacco are just as or even riskier than a pack of smokes.

Those conclusions are easily debunked by the millions of passionate vapers who have long since put down cigarettes and taken up customized tanks, vaporizers, and flavored liquids that give them a familiar nicotine sensation without the tar and combustible byproducts of tobacco.

David Butow for Rolling Stone

The public health mission to muddy the popular perception of nicotine alternatives such as vaping — even though it is scientifically proven to be 95% less harmful than cigarettes — is causing actual damage to American public health. And now we have the proof.

That proof is found both in the increased sales of cigarettes nationwide and also in a highly concentrated study on teen smoking in a jurisdiction where flavored nicotine vaping was outlawed.

According to the sales figures collected by the Federal Trade Commission for its 2020 Cigarette Report, Americans bought more cigarettes in 2020 than they have in more than a generation.

“The total number of cigarettes reported sold by the major manufacturers, 203.7 billion units in 2020, increased by 0.8 billion units (0.4 percent) from 2019, the first increase in cigarettes sold in twenty years,” cites the report.

Americans could be buying more cigarettes for a multitude of reasons: lockdowns, stress from both the pandemic and the government responses to the pandemic, job losses, closed schools, and more. Or perhaps because they’ve been told repeatedly by trusted public health sources and news outlets that vaping, an alternative that millions of adult consumers are now using to quit smoking, is just as dangerous.

Whatever your conclusion, the trend that lowered the percentage of US smokers down to 14 percent in 2019 (when the last complete nationwide survey was completed) is halting. And that should concern us all.

We see anecdotal echoes of this in a recent style piece in the New York Times, highlighting the “comeback” of cigarettes among the bourgeois hipster crowd in Brooklyn, New York. 

“I switched back to cigarettes because I thought it would be healthier than Juuling,” claimed one woman. It seems the public health lobbies have done their job.

On the more evidentiary side, an extensive May 2021 article published in JAMA Pediatrics found that after San Francisco’s ban on flavored vaping and tobacco products, more teens took up smoking.

“San Francisco’s ban on flavored tobacco product sales was associated with increased smoking among minor high school students relative to other school districts,” concludes the paper.

As tobacco harm reduction advocates have claimed for several years, the persistent public health campaigns, echoed by headline-grabbing media outlets, to demonize and restrict access to vaping has led to a predictable rise in smoking rates, both among adults and teens.

Whatever your view on whether vaping devices, heated tobacco, snus, or nicotine pouches are the most attractive and effective gateway away from smoking, this recent uptick in smoking demonstrates actual harms result when politically-charged health lobbies seek to extinguish market alternatives. And we must ask why they persist.

The opposition of these groups, along with affiliated journalists and researchers, to the rise of nicotine alternatives may have less to do with quantitative questions of science and health and more to do with how these products were created and are delivered: by entrepreneurs providing solutions in the market.

These entrepreneurs are vape shop owners, makers of vape liquids, gas station owners, vaping technology firms, tobacco firms pivoting to alternative products, and an entire creative class of vaping influencers both on and offline who are trying to give smokers a second chance at a long life. These are the true heroes of harm reduction in the 21st century.

The fact that spontaneous markets can deliver helpful and healthier solutions because of consumer demand, rather than by edicts, funding, and programs directly controlled by public health bureaucracies and agencies, runs counter to much of the ideology in the tobacco control space. 

It is the former, therefore, that is the true American innovative spirit that has helped make this country so prosperous and competitive, while the latter has failed us again and again.

If we want to reclaim a true public health victory and help smokers quit to give them long and fruitful lives, it is time to cast aside this aversion to the innovations of the market. The future health of our nation depends on it.

Yaël Ossowski is deputy director at the Consumer Choice Center

Nicotin gây nghiện nhưng không phải nguyên nhân gây ung thư

Các chuyên gia cho rằng đã đến lúc chấm dứt tấn công vào nicotin mà thay vào đó cuộc chiến chống tác hại thuốc lá cần xác định rõ đâu mới là nguyên nhân gây ra các bệnh lý liên quan đến hút thuốc lá điếu.

Nghiện thuốc lá, không chỉ do nicotin

Năm 2011, một nghiên cứu trên chuột của Murphy và Maier đã gây bất ngờ cho giới khoa học, khi chứng minh rằng nicotin không phải là nguyên nhân gây ung thư như trước giờ mọi người vẫn lầm tưởng. Nghiên cứu cho thấy những chỉ số về đặc tính sinh ung thư ví dụ như số lượng u phổi ở những con chuột được sử dụng nicotin so với những con chuột trong nhóm còn lại không đem lại sự khác biệt có ý nghĩa thống kê.

Không ít người vẫn chưa biết nicotin cũng có trong cà chua, khoai tây, ớt đỏ, cà tím với hàm lượng rất nhỏ. Các nghiên cứu khoa học cho thấy nếu ăn 10 kg cà tím, lượng nicotin hấp thụ sẽ tương đương 1 điếu thuốc lá. Tuy nhiên do nicotin gắn liền với thuốc lá, nên phần lớn người ta vẫn “kết tội” nicotin là nguyên nhân gây ra các bệnh liên quan đến thuốc lá. Theo nghiên cứu của Viện Y tế và Chăm sóc Sức khoẻ Quốc gia Anh Quốc, các độc tố và chất gây ung thư trong khói thuốc lá mới là nguyên nhân chính gây ra bệnh tật và tử vong, không phải là do nicotin.

Read the full article here

Reckoning with insurance for better patient choice in healthcare

A new Senate bill seeks to take the hassle of dealing with healthcare companies away from patients and into the hands of insurance companies. Although it falls short of the mark, this bill is a step in the right direction toward sensible healthcare reform in Pennsylvania.

Regardless of your job, your income, or where you live, we’ve all had at least one nightmare scenario when it comes to health insurance.

There are forms, claims, reimbursement requests, schedules, and negotiations. Doctors, dentists, and health practitioners understand the burden, and often have to face their own bureaucratic tests of will before focusing on their patients. The growth of healthcare administration costs emphasizes this. And that’s for people with private plans.

The price inflation that comes with the amping up of health insurance plans in our entire system — not to mention the role of government subsidies — is a well-known phenomenon. Insurance becomes involved in every rudimentary doctor visit or procedure, leading to bad incentives for health providers, employers, and insurance companies. This process involves a middleman in what should essentially be a simple medical contract between patient and practitioner. 

The answer, however, is not in abandoning free exchange in healthcare, as Medicare For All proponents would have us believe, but rather it is in reckoning with insurance to make our system more competitive and fair.

In Pennsylvania, one particular bill is addressing the process of making insurance more accountable and lowering patient costs and headaches.

This session, State Sen. Judy Ward has introduced SB850 that would enact assignment of benefits reform, compelling insurance companies to follow a patient’s wish to directly pay healthcare providers rather than leaving them with the paperwork and negotiation. This would simplify life for patients by requiring insurers to pay providers directly.

One would think this is standard practice, but especially for dental insurance, there are additional steps and vetting that often leave patients responsible for paying their dentists only after the insurance company has paid out the claim.

Though only a small reform, and leagues from where we need to be to have a truly free market in healthcare decoupled from our employers, this bill would make the entire process simpler and better empower patients and consumers.

Since the Affordable Care Act and large Medicare reforms at the federal level, assignment of benefits is recognized in most medical insurance markets, but not yet for dental patients.

These reforms are complicated by the often cumbersome terms of dental insurance contracts: only portions of care or procedures can be covered by insurance, there are caps on the amounts one can reimburse in a single year, and dentists must navigate these steps to accurately bill their patients without producing a shocking bill. This balanced billing approach is necessary for any medical professional who wants to stay in business.

The answer, however, is not in abandoning free exchange in healthcare … but rather it is in reckoning with insurance to make our system more competitive and fair. 

But the status quo often makes it more complicated than it otherwise would be.

That is why price transparency remains an important principle for these debates, and why legislators should continue ensuring patients have choice and access to the information they need.

There are dozens of easy reforms state legislatures could follow that would help improve care: fostering innovation, reducing bureaucracy, giving incentives to patients to use direct-to-consumer options, and more.

By continuing to promote competition and transparency, patients and consumers can benefit from better care and lower costs. It is only a small degree of change we need, but it beats the alternative.

Originally published here

Cannabis Industry Stakeholders, Policymakers Share Perspectives on States Reform Act

U.S. Rep. Nancy Mace unveiled the legislation Nov. 15 to allow state governments to regulate cannabis products through the health-and-safety oversights of their choosing.


During a Nov. 15 press conference, U.S. Rep. Nancy Mace, a Republican from South Carolina who took office at the beginning of the year, unveiled the States Reform Act (SRA), legislation that would allow state governments to regulate cannabis products through the health-and-safety oversights of their choosing.

The 131-page draft bill proposes a 3% federal cannabis excise tax, with a 10-year moratorium on excise tax increases to maintain a competitive marketplace.

The Alcohol and Tobacco Tax and Trade Bureau (TTB), which operates under the U.S. Department of the Treasury, would federally regulate the interstate commerce of cannabis products, while the Food and Drug Administration (FDA) would oversee medical cannabis.

The legislation also includes expungement provisions, but cartel members, agents of cartel gangs or those convicted of driving under the influence would be excluded from seeking expungement.

The Consumer Choice Center applauds Rep. Mace’s effort to provide Americans with a smart, safe and consumer-friendly path to legal cannabis. A focus on establishing legal and safe markets will benefit all of society by finally eliminating the black market, restoring justice and giving the incentive for creative entrepreneurs to enter the marketplace. It is past time America had smart cannabis policies.” – Yaël Ossowski, Deputy Director, Consumer Choice Center

Read the full text here

Cannabis Freedom Alliance Endorses Rep. Mace’s States Reform Act

Today, the Cannabis Freedom Alliance (CFA) announced that it has endorsed the States Reform Act. The Act strongly aligns with CFA’s vision of ending prohibition in a manner consistent with helping all Americans achieve their full potential and limiting the number of barriers that inhibit innovation and entrepreneurship in a free and open market. The States Reform Act is the truly principled vehicle for conservatives, libertarian, and all who value limited government to support cannabis reform. 

CFA was proud to work with Rep. Nancy Mace’s (R-SC)’s team in crafting this legislation and to lend it our future support. The Act creates a bill that keeps Americans and their children safe while ending the federal preemption of and interference with state cannabis laws. The States Reform Act:

  • Federally decriminalizes cannabis and fully defers to state powers over prohibition and commercial regulation
  • Regulates cannabis products like alcohol products
  • Institutes a 3% federal excise tax on those products to fund law enforcement and small business programs.
  • Ensures the continued existence of state medical cannabis programs and patient access while allowing for new medical research and products to be developed
  • Protects our veterans by ensuring they will not be discriminated against in federal hiring for cannabis use or lose their VA healthcare for following their doctor’s advice to use medical cannabis
  • Protects children and young adults under 21 from cannabis products and advertising nationwide

Read the full text here

Consumer Choice Center Praises Rep. Nancy Mace’s Smart Cannabis Legalization Bill

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Consumer Choice Center Praises Rep. Nancy Mace’s Smart Cannabis Legalization Bill

Washington, D.C. – On Monday, U.S. Rep. Nancy Mace (R-SC) unveiled the first comprehensive federal cannabis decriminalization and legalization bill by a Republican member of Congress.

The Consumer Choice Center, a global consumer advocacy group that advocates for smart cannabis policies, praises Rep. Mace’s bill as a significant first step in ending the war on cannabis and providing a consumer-friendly model for sales and distribution to spur entrepreneurship. They join the coalition of the Cannabis Freedom Alliance in endorsing the bill.

“The Consumer Choice Center applauds Rep. Mace’s effort to provide Americans with a smart, safe, and consumer-friendly path to legal cannabis,” said Yaël Ossowski, deputy director at the Consumer Choice Center. “A focus on establishing legal and safe markets will benefit all of society by finally eliminating the black market, restoring justice, and giving the incentive for creative entrepreneurs to enter the marketplace. It is past time America had smart cannabis policies.”

The bill text will be introduced by the end of the day on Monday.

“For too long, lives and resources have been wasted in the failed War on Drugs. By calling on federal lawmakers to legalize recreational cannabis, Rep. Mace is taking the next practical step to save lives and improve our communities,” said David Clement, North American Affairs Manager at the Consumer Choice Center.

“The benefits of legalization have already paid out massive dividends to the people in Colorado, California, Michigan, Oregon, and more, via tax revenues and also by reversing the harsh criminalization that has had a disproportionate impact on low-income and minority communities. Now is the opportunity to make it national,” said Clement.

“We must ensure that the federal government embraces smart cannabis policy, one that encourages competition, entrepreneurship, avoids red tape and eradicates the black market to spur a new revolution in entrepreneurship and opportunity.

“The Consumer Choice Center applauds Rep. Mace’s efforts, and hopes legislators line up behind this proposal,” said Clement.

Read more about the Consumer Choice Center’s Smart Cannabis Policy Recommendations

CONTACT:

Yaël Ossowski

Deputy Director

Consumer Choice Center

yael@consumerchoicecenter.org

—

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, Lima, Brasilia, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more atconsumerchoicecenter.org.

Crypto Hunters: Why Elites are Anxious About Cryptocurrencies

Over the last decade, while we have lived through the ebbs and flows of global crises, triumphs, and changes, a ‘paradigm shift’ has been happening across a network of interconnected computers. This shift began in 2008 when the pseudonymous ‘Satoshi Nakamoto’ unveiled his new project: a trustless peer-to-peer network of monetary transactions that would be recorded on a decentralized public ledger. This new version of ‘electronic cash’ was called Bitcoin.

A Bitcoin is created by computers attempting to solve a cryptographic algorithm—a process known as “mining”—which are then ‘rewarded’ with units of monetary representation for having solved the block of code. Once miners have these monetary units, they can send them across the network to other addresses, quickly and with minimal fees.

What made this process wholly unique was its decentralized nature: multiple nodes connected to a network to verify transactions and blocks, and to ensure that every line of code was accurate to the ledger—also known as a ‘blockchain.’

The Bitcoin source code became the envy of computer programmers, hackers, and an entire generation of “cypherpunks”: technology activists who advocated the use of cryptography to achieve true privacy. This was the dawn of the cryptocurrency age.

As users of the network grew, so did copycat projects. The numbers of vendors accepting cryptocurrencies also grew and eventually an entire economy of digital assets emerged, far from the heavily regulated (and policed) financial sector.

Today, that global cryptocurrency and digital asset economy is worth more than $2 trillion, surpassing the GDP of some G7 nations, including Canada and Italy.

Cryptos in the crosshairs

Today—owing to their size, reach, and utility—cryptocurrencies are no longer mere projects of tinkering computer programmers. Prices of Bitcoin and other digital currencies are commonplace on stock tickers. They are found in the portfolios of large financial institutions. And, at least in the case of Bitcoin, they are now considered legal tender in a country like El Salvador.

But the growth and mainstream adoption of cryptocurrencies has necessarily put them in the crosshairs of various regulatory authorities who want to restrict their use. Often authorities have said that this is because of the volatile, speculative nature of cryptocurrencies, which can sometimes have a percentage rise (or fall) in the double digits in just a matter of hours. Authorities have also pointed to various scams that have swindled users of their ‘coins.’ 

At other times, however, there is a worrying sense that ‘crypto’ is evolving faster than regulators can even grasp, offering unique lending, payment, and exchange options that exist—without a central authority.   

In a recent Bloomberg podcast, Christine Lagarde, former IMF director and now president of the European Central Bank, said: “Cryptos are not currencies, full stop. Cryptos are highly speculative assets that claim their fame as currency, possibly, but they’re not. They are not.” Lagarde thus joins the chorus of central bank chiefs, finance ministers, and treasury secretaries that have warned of the unique threat posed by cryptos to the global system of traditional financial markets.

JPMorgan Chase CEO Jamie Dimon has been one of the more vocal Bitcoin foes, saying recently that he “always believed it’ll be made illegal someplace, like China made it illegal, so I think it’s a little bit of fool’s gold,” and calling on lawmakers to “regulate the hell out of it.”

As decentralized digital assets proliferate, the limited ability of established agencies to oversee and limit transactions means that value is being exchanged outside a guarded or protected system—far from the prying eyes of tax authorities, banking chiefs, and issuers of national currencies.

This, however, is one of the main advantages of using digital assets clocked according to cryptographic algorithms and a real, free market of floating prices: without a central authority, the ability to inflate or deflate the currencies via a printing press or by minting coins is rendered null.

A hedge against the state

When the main unit of exchange is a national currency, the value of that currency is subject to exchange prices. But it also may be inflated or deflated on a whim, based on the needs of the state—for instance, to pay back debts, wage wars, or boost or reduce exports.

Whether it was Roman Emperor Diocletian—who debased the Roman currency and instituted price controls in his 301 AD Edict on Maximum Prices—or the hyperinflation of the German Weimar Republic in the 1920s, or even the abandoning of the Gold Standard by Richard Nixon in 1971, the debasing of currencies serves a purpose that befits a nation and its institutions, and not necessarily its people.

Furthermore, today we see this: U.S. $100 in 1960 are the equivalent of US$886 in 2021. This makes life generally more expensive for those who use U.S. dollars, who must purchase goods and services that may or may not follow the trendline of inflation.

By fixing supply indefinitely—21 million, in the case of Bitcoin—holders of the coin are assured that its value will never be artificially inflated or deflated based on the whims of central monetary authorities, offering peace of mind to investors, savers, and holders (or HODLers).

What’s more, because of the cryptographic process of mining coins and the distributed public ledger of the blockchain, no one can cheat the system. Double-spending, mining new coins without proof of work, or conducting fake transactions cannot happen. And because each account or ‘wallet’ is protected by a “seed phrase”—essentially a private key—there is no way to physically seize accounts or stop payments.

These basic features of cryptocurrencies, as well as their ability to be traded without intermediaries demanding strict compliance (using things like social security numbers, identification cards, tax numbers, etc.) entirely removes governments from transactions. If the financial system were based on these principles and methods, it would make it difficult for the European Central Bank or the Federal Reserve to create new currency, adjust prices, or bail out firms or entities that have made mistakes in times of crisis.

Adapt or die

Given how widespread the trading and use of crypto has become, many in positions of authority have realized that they must reckon with its power. As voiced by Gary Gensler, head of the U.S. Securities and Exchange Commission, the innovative nature of Bitcoin has been a ‘wake-up call’ to the financial sector. “Nakamoto’s innovation, not only Bitcoin as the first sort of one but this whole distributed ledger technology, has been a catalyst for change that, around the globe, central banks and the private sector are looking in on how we can enhance our payment systems,” Gentler told The Washington Post.

Gensler’s comments demonstrate that officials and ruling elites are taking crypto innovations more seriously. They also suggest that they recognize that the revolution that has begun cannot be stopped.

A group at the U.S. Department of Treasury, led by Gensler and Treasury Secretary Janet Yellen, will soon debut official recommendations on regulating the crypto sector by focusing on “stablecoins,” which are digital assets pegged to the value of national currencies for easier convertibility. And in the European Union, the European Commission has tabled a proposal on “Markets in Crypto-Assets Regulation,” focusing on the investment trends of cryptocurrencies and how consumers and users could be impacted by wild price swings.

Core to each of these regulatory efforts are mechanisms designed to tame the so-called “wild West” of crypto. These include plans to regulate fiat-to-crypto exchanges, deeming various cryptocurrencies as securities, and increasing financial surveillance of the crypto market in order to ensure tax compliance.

There is little doubt that many of these regulations will come to pass. Whether firms or crypto users continue to stay in these jurisdictions, however, remains to be seen. While our current monetary system rests on national currencies and regulated banks, every new user of a cryptocurrency unlocks the potential of a system that cannot be overruled, made redundant, or inflated away.

While regulators can claim significant authority on regulated exchanges or payment providers, the decentralized, distributed nature of crypto means that the currencies themselves cannot be controlled or influenced arbitrarily—and perhaps that is the fact that scares authorities the most.

Originally published here

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