The digital gold and digital currency companies arebailing on the U.S. market because of the increasedregulation around MSBs (Money Service Business-es). With Know-Your-Customer rules, anti-moneylaundering rules and Suspicious Activity Reports,
the nancial institutions and MSBs are becoming
the complicit agents for State enforcement and ul-
timately for reductions in overall nancial privacy.
This is making it increasingly unattractive to enter orto remain in that type of business. Digital currency
commerce will tend to ow towards jurisdictions thatembrace nancial privacy rather than dismantle it.
Q. Why is fnancial privacy so important as the
wold mov owad a ‘cal ociy’?
Financial privacy is a fundamental global humanright. Money was never intended to be a method of identity tracking or transaction tracking. We have al-lowed our money to be co-opted for this purpose. If we used toothpaste for money, would stores track ourtoothpaste usage and locations where we used tooth-paste? You can see how this notion seems ridiculouswhen you look at it in that context.Now, as the world moves toward a cashless society,
the concept of nancial privacy becomes even more
important. It becomes extremely important! In using
the term nancial privacy, I am referring mainly touser-dened anonymity and user-dened traceability.
Not all transactions will require anonymity and un-
traceability. However, those are the benecial features
of physical paper cash that we stand to lose in a cash-less society utopia. When money goes 100% digitaland there is no more outlet for the anonymity and un-traceability of paper analogue cash, we had better beprepared for what that means. I think it means a veryugly totalitarian, surveillance State unless we work diligently now to incorporate those essential featuresinto electronic money. The decentralized p2p cryp-tocurrency bitcoin is a step in that direction which iswhy I am so supportive of the bitcoin project.
Q. Jam tuk a foca a oal collap of U.s. Dolla and ’ no alon. I would nv -v in my lifim b again M. tuk’ ad-vic (eVer) bu i m a big bank likGoldman sac un wold and a i junv going o cang. how do you fl abouM. tuk’ pdicion and wa do you fl willvnually appn wi U.s. dolla?
A. I agree with James Turk and I follow his work closely. No paper currency scheme has ever lastedmore than 100 years and with the 100-year anniver-sary of the Federal Reserve Note occurring next year,I would say that the wheels are starting to come off the cart. Over 97% of the U.S. Dollar purchasingpower has been lost in that timeframe and it is merelytrickery and gross manipulations that even keep it onlife support now. The USD and the Euro are like twodrunks leaning on each other in order to stay stand-ing.The U.S. Dollar as we know it will probably not ex-ist by the year 2015. After the forthcoming monetarycrisis, they will declare a bank holiday (or several)and then take two or three zeroes off of the curren-cy. I managed the VISA foreign exchange desk andcountries were routinely dropping zeroes from theircurrencies. However, I don’t expect that to happen inthe U.S. until gold exceeds $20,000 or $30,000 perounce. The currency will then be called the New Dol-lar and it will be just as successful as New Coke.
Q. I ofn a popl ay i abou Bicoin,“wll Bicoin i no backd by anying”. ta oming lik 140+ popula govnmn cu-nci in u oday, wa a y backd by?
A. Well, I wouldn’t say that they’re all popular. Allgovernment currencies today are backed by the ap-parent strength of their respective economies andtheir ability to leverage their natural resources and/ or ultimately their standing armies and weapons. I donot know of any political currency today that has di-rect commodity backing.What people don’t realize when they say that bitcoinis not backed by anything is that over 90% of gold’sso-called intrinsic value is actually due to its role as amonetary metal which in turn is really just based onan aggregate mass belief. Gold’s value as an indus-
trial and jewelry metal is not the only factor reected
in its price otherwise its price would be much lower.All commodities of any type, digital or physical, thatare selected by the market as the exchange mediumgain their perceived value from the market partici-
DGC Magazine February 2012 Issue 52 § 15