Ossian Smyth, a Green Party candidate from Dún Laoghaire, made a splash this week when he announced he is taking bitcoin donations for his campaign in upcoming local elections. Bitcoin has the potential to transform many aspects of our lives. Ossian is particularly interested in the transparency it can bring to the flow of money through government. His bitcoin donations are of course visible to all on the bitcoin blockchain: https://blockchain.info/address/1DCa4L6g9E2FYu9U8ZuHxk3Esr6RtjkWUK
We caught up with Ossian at our weekly Wednesday social night in The Baggot Inn and asked him to give us some background on his decision.
Bitcoin is decentralised and technocratic so does that make politics irrelevant to Bitcoin?
If Bitcoin proves disruptive to existing vested interests, then political pressure will emerge to curtail crypto-currencies. If you are worried that your precious metal stocks will fall in value when people divest into Bitcoin or that your payment processing business will suffer, then you may lobby to outlaw or restrict Bitcoin.
Let’s look at how a range of political actions could be effective at damaging the development of Bitcoin.
Governments could seek to introduce punitive taxes on Bitcoin. Bitcoin is already taxable in Ireland. If you are paid in Bitcoin then you are still due to declare and pay income tax. We don’t know yet if the Irish Revenue regard Bitcoin as a currency or a commodity or whether gains on bitcoin would be subject to capital gains tax.
Restrictions on exchanges
Imagine that Bitcoin exchanges are made illegal and their holdings are frozen. Customers lose access to their Bitcoins and lose confidence.
Restrictions on banking
Let’s imagine that the banks are told that crypto currency transactions are now to be placed in the same bracket as money laundering or other illegal activity. The cash accounts of coin exchanges and of anyone found to be trading in bitcoins are frozen.
If Bitcoin use is simply made illegal, then transaction activity will be restricted to those willing to break the law and the perceived association with criminality will grow stronger.
Restrictions on Core developers and foundation board.
The US outlawed foreign Internet Casinos from accepting US customers., Most complied with this law. Executives from companies that did not comply were arrested when they visited US territory. Being a core developer or member of he Bitcoin foundation board would be unattractive should it lead to becoming an exile or outlaw.
We know from experience that idiotic technology legislation is often passed virtually unopposed. I’m thinking of the US DMCA, EU Data Retention Directive and continual extensions to copyright duration. These laws are passed because the voice of reason is weaker than the voice of lobbyists. Even when they want to act in the public interest, politicians lack the basic technical expertise to exercise good judgement in the regulation of technology.
How could politics help Bitcoin development?
- Announce policy not to interfere in the development of crypto-currencies.
- Announce policy not to levy discriminatory taxes on crypto-currencies.
- Accept Bitcoins in payment for government services.
- Mandate the National Consumer Agency to advise the public on how to transact Bitcoins safely.
- Include regulation of Irish domiciled coin exchanges under the Central Bank of Ireland.
So when you go to choose the politicians to represent you at the next election, bear in mind that your choice will affect the way technology is regulated.
by Ossian Smyth (@smytho)
Candidate in Dun Laoghaire local election