In a recent interview with CNBC, Jamie Dimon, Chairman and CEO of JP Morgan Chase, sarcastically remarked to the laughter of the audience:
“There is a use case for Bitcoin: if you live in Venezuela, North Korea, if you’re a criminal, what a great product.”
Bitcoin has been falsely associated with criminal activity since its inception in 2009. In the early days of Bitcoin, it was indeed used to facilitate the purchase of illicit substances such as drugs, and it soon became the preferred digital currency of online black markets like the infamous Silk Road. This led to the common misconception by the media of portraying Bitcoin as the currency of drug runners, arms dealers and prostitutes. As a side note, it should be pointed out that banks such as HSBC and Jamie Dimon led JP Morgan Chase have openly admitted and been fined for laundering billions of dollars of Mexican drug money.
In any event, the dark and sinister characterisation of Bitcoin paints an incorrect picture of the role it plays in online commerce. The fact that Bitcoin can be traded for real world goods and services illustrates its usefulness and acceptance in voluntary transactions. It’s important to understand that what some jurisdictions deem to be illicit goods and services are completely above board in other territories.
Until recently, online gambling was illegal throughout the US, whereas in Australia it’s advertised during football games. Marijuana is illegal in Australia but not throughout parts of Europe. Prostitution is outlawed in some jurisdictions while completely legal in others. The point is that governments can and often do overreach into the personal affairs of its citizens. Bitcoin acts to promote the freedom of individuals to transact voluntarily in these oppressive environments, as discussed in my Bitcoin use cases article. Perhaps the word oppressive is heavy handed, but criminalising a friendly game of online poker, or two consenting individuals agreeing to sex in exchange for payment, are oppressive acts in a free society.
More than just drugs
The use of Bitcoin to transact in online black markets like Silk Road has painted Bitcoin as ‘drug dealer money’. However it’s important to note that a surprising number of purchases on Silk Road, perhaps as high as 20 percent, were purchases of books. Curiously, banned text such as Bibles constituted a significant minority of Silk Road’s transactions, as Bibles are banned in North Korea, Somalia and several other countries. Sadly, Australia too bans text which the government arbitrarily deems to be not fit for consumption. For example, the state of Queensland banned the book American Psycho, from which the popular movie was based.
We now live in a world where overregulation and unnecessary laws are commonplace. No reasonable person would classify the possession of a Bible or a popular novel as criminal acts. This is rather, the silencing of free speech. Bitcoin liberates the user from the financial blockades of government. So if you’re of the belief that an individual should be allowed to transact freely with their own money, Bitcoin gives this power back to the individual.