The Race To Dominate Bitcoin
By Lawrence
One thing many Bitcoin enthusiasts do not realize is that even though the current Bitcoin mining is limited by the algorithm and hardware technology available to the miners, such problem does not exist for the most powerful entities on Earth. Namely, the various governments with their hands on the supercomputers to big corporations with almost infinite resources to throw behind the mining problem. This creates an interesting yet conflicting issue with the growth of Bitcoin.
For normal miners, it takes a lot of relatively expensive computer hardware and a continuing hefty electricity bill to mine Bitcoins and it is not always fruitful. That’s why there are mining co-ops popping up everywhere to share the loot by distributing the work among all contributing miners. Miners need to justify their mining by carefully planning what to mine and how to mine so that they can net some profit quickly.
For the government entities and some big corporations, there is no such issue. The most important thing is to gain a significant portion of the total float. Cost is not really a problem as it is relatively cheap in comparison. Once there are enough governments secretly mined enough coins on hand, these governments will no longer reject the idea of using Bitcoin for commerce. It is like a replay of the gold standard environment where the governments with the biggest stockpile on hand win.
This time, however, there is a catch. It is impossible to figure out who has what because anyone can have multiple e-wallets thus the gold confiscation scheme cannot be reused. In another words, governments must act now to mine their own Bitcoin and other virtual currencies quickly or they miss the chance to control them. With liquidity dominance, the governments can tax with Bitcoin directly. In turn Bitcoin’s ability to store value independent of government control will be greatly diminished.
Bitcoin enthusiasts should be aware that the existing governments are not going to stand still and do nothing. If anything, the war to control virtual currencies has not even started yet. One day, when the governments find a way to track and tax all the virtual currencies, can the people who heavily wired their wealth to the virtual currencies really give up what they have and start all over again?
If you really think the governments are lacking behind in technology front and that you are smarter than them, think again. Here is a good example. Germany already passed a law which branded all virtual currency transactions taxable. Surprised?
