The Times headline “Chancellor on the verge of second bailout for banks” has even been incorporated into the first block of the blockchain: the genesis block.
Here was a monetary system that no one, government or hacker, could print or demean. The rules were set out in the code. The inflation rate was clearly indicated. And the system, rather than relying on trust, be it banks, central banks, payment service providers or governments, was based on mathematical proof and the power of computers.
So here is apolitical hard money, resistant to censorship and without trust.
And this week we saw a great use case.
How the money was “armed”
Journalist Toby Young, who is an associate editor of The Spectator, for as long as I’ve known him, has created organizations to try and improve people’s lives.
Disappointed by the lowering of standards in schools, he was one of the founders of the first Free School in West London. In 2020, he established the Free Speech Union to help defend people threatened with cancellation. And his news and commentary site, the Daily Skeptic, was born in reaction to all the disinformation and censorship, especially by big techs, that emerged after Covid.
Young’s views are actually quite moderate. He is an old school center-right conservative. But his ideological enemies don’t like him at all and work tirelessly to bring him down. He lost something like five jobs to what he calls “crime archaeologists” digging up things he said decades ago, quoting them out of context and then took offense.
Last week, PayPal out of the blue closed his personal account for “violating its acceptable use policy”. Then, just minutes later, he closed the account for his news and commentary website, the Daily Skeptic. Then a few minutes later she closed the Free Speech Union accounts.
This is no small disruption and undoes the many hours, days, months and years of hard work his team has spent building their subscriber bases. About a quarter of the Daily Skeptic’s donor revenue comes through PayPal, and a third of the Free Speech Union’s 9,500 members pay dues through PayPal, Young says.
Young says, “I did a little Google research and found that numerous organizations and individuals with dissident political views have recently seen their accounts closed by PayPal, particularly on the three issues you can’t be skeptical about: the policy of Covid blockade and other restrictions, mRNA vaccines and the “climate emergency”.
The Daily Skeptic often publishes articles on these topics, and the Free Speech Union may have fallen into another taboo: defending people who have had problems with HR departments for expressing their critical gender views.
The business will do what it needs to survive
How is PayPal able to do this without notice? Because it can.
It did the same thing to Wikileaks in 2010. (Unfortunately, this backfired when donors started using bitcoin and the value of the bitcoins received by Wikileaks skyrocketed to make Wikileaks a potentially very wealthy organization (assuming it is managed to keep some).
PayPal founder Peter Thiel is an outspoken libertarian and probably on the same philosophical side of Young’s argument, but he’s also a businessman.
Paypal will do whatever it is asked to to survive. You can be sure that, in order to survive as a business and effectively become a challenger bank, especially at the beginning of its evolution, it will have to prove that it cannot be used as a vehicle for any type of illicit activity, in particular money-laundering, and it is for this can be so rigorous.
But Thiel is no longer Paypal’s CEO, and like much of big tech, what started in a way now disagrees with its founders’ ideals of free speech, as evidenced by all the censorship. that goes on.
Money, especially electronic money, is a government tool
I have long advocated the separation of money and state, but this is not the world we live in. Today, money is an instrument of government. Whether it’s suppressing interest rates to revive the housing market, printing money to bail out the banks or the entire economy during Covid, or freezing the accounts of political enemies (truck drivers in Canada, or the entire country that is the Russia), finance is armed.
Governments use money as a weapon because it is an easy tool for quickly achieving desired results. It is much easier to sanction Russia and freeze it out of the banking system than to go to war with Russia. It is easier to cut off truckers’ funds than to face them. It is much easier – and faster – to print the money needed to save the banking system than to collect it from taxes – which is what rulers of another era should have done. It is much easier to suppress interest rates and collect the inflation tax than it is to impose direct taxes or curb spending.
The irony of such actions is that, as with Wikileaks, they will accelerate the adoption of uncensored non-state alternatives, of which bitcoin is the most obvious example. The United States, by confiscating Russian dollars and freezing them from the banking system, will accelerate the creation of an international non-US currency system, which will be used by nations, especially Russia and China, who do not want to be tied to the dollar.
In the long term it can backfire, but in the short term it works: it shuts off the funding taps and creates considerable inconvenience and inconvenience.
The case of bitcoin
What to do? I always use Paypal, both as a buyer and as a seller. It’s convenient. But would I really have to switch to another payment processor. Others may not be censors like PayPal, but they will be if put under pressure, you can be sure.
This is a real case of “bitcoin solves this”. You may be able to make it illegal, but you can’t close it.
As we move towards central bank digital currencies, this money weapon will become much more intense.
Your every transaction can be monitored, putting us in the world of Orwellian surveillance states. Some transactions may simply be banned. For example, you may not be able to buy or sell to bodies that aren’t government approved. Taxes and fines can be deducted without your approval.
Central bank digital currencies offer ample space for behavioral economists and thrust ministries. You can be pushed to make all sorts of decisions that you wouldn’t otherwise have made. Social credit systems can be imposed. Are you a good citizen? So you get the favorable interest rate, good loans and other incentives. Are you expressing wrong thoughts on the internet? So you may receive less favorable rates. If you are a really bad guy, your account may be blocked altogether.
In such a world, and this seems to be where we are heading, there is a very strong use case for bitcoin. I urge you to own some.
Dominic will perform his lesson with fun pieces, How heavy is it?on the history of weights and measures, at the Museum of Comedy in London on 28 and 29 September. buy tickets here.