Rep. Brad Sherman (D - Sherman Oaks) recently spoke at a House Financial Services Committee hearing on the future of money that specifically focused on digital currencies and cryptocurrencies.
Cryptocurrencies like Bitcoin, to put it extremely simply, are digital money. Bitcoin was created intentionally to be a traceable, transparent, global and frictionless method of currency that can be used similarly to cash in that you keep your own wallet and can transact without intermediaries (banks). One byproduct of Bitcoin was a distributed transaction database that cannot be edited or manipulated called the blockchain. Think about it like a QuickBooks ledger of every single transaction you’ve ever made, that cannot be changed in retrospect or manipulated by creative accounting. The use-cases and implications are massive.
At the hearing, Sherman had some strong words about cryptocurrencies. He even called for them to be banned completely for U.S. citizens. I wholeheartedly disagree with Sherman’s sentiment, and almost all of his statements.
Sherman’s first sentence stated, “Blockchain is a good technology, but it can be used to track and transfer sovereign currency.” Which led him to explicitly say “that there is nothing that can be done with cryptocurrency that cannot be done with sovereign currency that is meritorious and helpful to society.” He then stated, “Cryptocurrency accomplishes nothing except facilitating terrorism, narcotics and tax evasions.” Something that he said, “supporters delight in!”
First off, the U.S. government can and does track cryptocurrency transactions. Law enforcement uses that public transaction data to go after criminals. Not in theory, but in reality. This already happens. That is something that can be done with cryptocurrency that cannot be done with cash.
According to the Financial Crimes Enforcement Network, the U.S. dollar in cash is the preferred currency of transaction for drug traffickers and terrorists globally. More than $100 billion a year in drug trafficking cash moves through the U.S. financial system alone. As a supporter of the dollar, I am sure that Sherman does not delight in that fact.
Sherman then goes on to mention Iran negotiations, cryptocurrency’s environmental impact, how cryptocurrencies take funding away from startups and how investor protections should “at a minimum” be instated. All of these statements were worded to instill fear and all were punctuated with an ending that stated cryptocurrencies were only good for “creating a market for narco-terrorists and tax evaders.”
In the early days of the internet, you heard similar statements by politicians.