This Is How the Feds Assassinate Bitcoin
By Chris Lowe November 21, 2018
A three-pronged assault on cryptos… The “evil spawn” of the financial crisis… Financial elites want to knife bitcoin in the back… In the mailbag – “Oh Cannabis, our home and native land!”…
The bitcoin bears are out in full force…
As we told you yesterday, bitcoin just crashed to a 13-month low.
This follows a bout of heavy selling pressure that started last Wednesday and has wiped $33 billion off bitcoin’s market value.
This isn’t just a concern for bitcoin investors. (For more on what to do if you hold bitcoin, catch up here.)
It’s also causing thousands of bitcoin “miners” – the folks who use high-powered computers to verify the transactions on the network in exchange for newly minted bitcoin – to shut down their operations.
With prices crashing, it’s no longer profitable for many of these folks to expend so much costly computing power (which involves sky-high energy bills) to keep on mining.
And as you’ll learn today, something more sinister may be weighing on bitcoin than the explanations that have been offered up in the mainstream press.
But first, a reminder about that invitation we shared with you yesterday…
Next Thursday, at 8 p.m. ET, we’re broadcasting a special, never-to-be-repeated event that you’re invited to watch… for free.
It’s called “An Evening with Bill Bonner, Doug Casey, and Mark Ford.”
For the first time ever, you’ll have the chance to join these self-made millionaires and legendary newsletter writers for a candid conversation about investing, the economy, and what they’re doing with their own money right now.
We’ll also be giving you a rare chance to “partner” with Bill, Doug, and Mark in a new venture they’re sharing only with current subscribers like you.
So please make sure you RSVP here.
Now, back to the possible catalysts for bitcoin’s plunge…
Most mainstream reporters don’t have the first clue about cryptocurrencies or how they work.
But something the press has picked up on is the “hard fork” in the fourth-largest crypto by market value, Bitcoin Cash.
As we told you last week right after the crypto tumble began, a hard fork is when the programmers can’t agree on which direction the project should go.
So it splits into two projects.
And in the case of Bitcoin Cash, Craig Wright – one of the biggest holders of the bitcoin – has been threatening to dump all his bitcoin to support the Bitcoin Cash hard fork.
Harsher regulations are also causing jitters…
In particular, increased scrutiny of crypto fund-raising projects – or initial coin offerings (ICOs) – by U.S. regulators.
So far, the U.S. Securities and Exchange Commission (SEC) has allowed ICOs to go ahead more or less unregulated, unless there’s been cause to believe some form of fraud was afoot.
That’s because it didn’t deem digital tokens to be “securities,” which have traditionally fallen into two categories – stocks and bonds.
But last week, the SEC said it had settled charges against two companies that issued digital tokens during an ICO because they didn’t first “register them pursuant to the federal securities law.”
And there are fears that this could be just the start of a wider clampdown by regulators.
Another possible cause of the crypto meltdown is far more disturbing…
It’s what Bill Bonner Letter coauthor Dan Denning calls the “assassination of bitcoin” by global financial elites.
Here’s Dan with more…
Cryptos have proven there is an appetite for a cashless digital payment system AND purely digital money. What central bankers and the world’s financial elite have figured out is that bitcoin stands in the way of this new world financial order.
It’s an order where centrally controlled digital money promises complete political power over the lives and choices of billions of people. They’re making their move to establish that order now.
Last week, there was a three-pronged assault on cryptos from financial elites…
The first attack came last Tuesday, in the form of a post on Bank of England’s blog.
John Lewis, a researcher at the central bank, claimed bitcoin was plagued by seven fatal flaws.
These include sluggish transaction times and a hoarding mentality among bitcoin holders that crimp its use as a payments option.
A day later, Christine Lagarde, the head of the International Monetary Fund (IMF), gave a speech in Singapore.
It was titled “Winds of Change: The Case for New Digital Currency.” And it was a bombshell…
Citing “new and evolving requirements for money,” Lagarde asked if central banks should “issue a new digital form of money.”
In other words, a fiat currency in crypto form.
This is already happening. More than one in three central banks around the world are already seriously considering issuing a crypto replacement for their fiat currencies – including the central banks of Canada, China, Sweden, and Uruguay.
These fiat-crypto hybrids won’t be decentralized like bitcoin. Central banks will still be able to issue new fiat cryptocurrencies at will. But they will do away with the need to issue physical banknotes.
As Lagarde told the audience in Singapore, she’s on board with this radical new idea…
I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.
The sharpest attack came from the European Central Bank…
Speaking at a conference in Switzerland, Benoȋt Cœuré – a French economist who sits on the board of the European Central Bank – called bitcoin the “evil spawn” of the 2008 global financial crisis.
Cœuré delivered his broadside against bitcoin a day after Lagarde floated the idea of a state-run alternative to bitcoin in Singapore. And he didn’t mince his words…
[B]itcoin was an extremely clever idea. Sadly, not every clever idea is a good idea. The opportunities of the blockchain are many, but the problems of Bitcoin are also plentiful. I believe that Agustín Carstens summed its manifold problems up well when he said that Bitcoin is “a combination of a bubble, a Ponzi scheme and an environmental disaster.”
He also echoed Lagarde’s call for a central bank-issued crypto-fiat hybrid.
It’s what he described in typical, central banker jargon as a “widely available, consumer-facing payment instrument targeted at retail transactions,” or “general purpose central bank digital currency.”
Why do financial elites want to take on bitcoin?
As Dan says, it’s part of a war that’s raging for control of digital money.
Cœuré is right: Bitcoin was a response to the 2008 meltdown.
It’s no coincidence that the bitcoin white paper was published in October 2008 – one month after the collapse Lehman Brothers nearly brought down the banking system.
As Cœuré pointed out, bitcoin’s pseudonymous creator, Satoshi Nakamoto, etched an important clue to cryptocurrency’s origins in the bitcoin code.
Embedded in the first group of transaction records on the bitcoin blockchain – the so-called “genesis block” – was a Times of London headline from January 2009 about Britain’s bailout of its banks.
It reads: “Chancellor on brink of second bailout for banks” (a reference to the Chancellor of the Exchequer, Britain’s equivalent of the Secretary of the Treasury in the U.S.).
After all, why would anyone want to hold fiat money when the banks that facilitate its payments acted so recklessly… and when central bankers are systematically destroying its buying power by printing it at will?
Bitcoin solves the problem of having to rely on corrupt institutions… and Cœuré knows it.
That leaves one possibility…
Central bankers and their backers at the IMF want to keep control of the money system. And bitcoin and other private, decentralized currencies threaten to take that control away from them. Dan again…
Central banks aim to capitalize on the budding popularity of cryptos and then harness it for their own ends. Cryptos and bitcoin threaten that control. So they have to go.
Bitcoin gets knifed in the back by the SEC, central banks, and the IMF. And we get a digital money system where cash disappears… and the authorities have full transparency over our monetary affairs. Our worst nightmare, in other words.
Of course, just because central banks want to supplant cryptos with their own fiat-crypto hybrids… doesn’t mean that bitcoin and other private cryptos are going away.
As we’ll show you next week… the more control governments and their central banks try to seize over the financial system, the more popular private, decentralized cryptocurrencies such as bitcoin will become.