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Interviewer: Let's discuss this now with economist, Mark Thornton, senior fellow at the Ludwig
von Mises Institute. Mark, the bitcoin markets have really taken a hit
recently anyway, haven't they?
What will this arrest do for the bit coin itself, its value, and its future?
Thornton: Well, this is terrible for the bit coin market,
at least temporarily, but this was a political event, not a legal or
judicial event, this arrest.
It was a political event meant to intimidate people
in the bit coin space and it was a perfectly foreseeable event, as well.
Interviewer: But obviously we can go into the exact
nature of charges, but does it not surprise you that he has been arrested
for dealing
with the Silk Road website? Which, of course, was was closed down, in effect
laundering money through that. Does not come as a surprise to you?
Thornton: No, not at all. He was showing his bit coins for cash, basically,
in facilitating trade, but not actually,
at least as far as these charges are concerned, involved in the trade. And,
basically he gave a speech
last night about the merits of bit coin, and in new york city today they're
starting a two-day hearing
on the future of bit coin, right there in New York City where he was arrested. So,
it fits in
right after the speech and right before this public hearing
to be held in New York today.
Interviewer: Bit coin has got a notorious reputation now, hasn't it,
by being used by the underworld, by criminals, so they can't be traced in
dealing with all sorts of suspect goods.
Thornton: Oh yeah, the bit coin's a small player even in the
illegal transactions, the US dollar is actually the major facilitator
of illegal transactions, drugs,
human trafficking, are all sorts of nasty businesses.
Most to that trade is done with the US dollar, not bit coin. Bit coin is a small
player.
It has a small percentage of its transactions that
are illegal, that's true, but the majority are for legal goods.
Whereas the US dollar's the primary player
in international trade in illicit items.
Interviewer: Could bit coin become a major threat to the dollar?
Thornton: Well, it is a threat but it's
something that's not going to happen in the next day or the next
year. It's going to take some time to develop,
and basically the central bank, the Federal Reserve, central banks around
the world can fight off
bit coin by providing a more stable
dollar, more stable euro. They're
in the business right now of making the world uncertain as to the future of
money
and so that's the only reason why bit coin was-
has become so prominent today.
Interviewer: It has become prominent now, Mark, but is it becoming a fad that is going to vanish eventually?
Thornton: Well, that's, you know, that's for the history books. We don't know,
but I think the chances are as the bit coin has some advantages over
traditional money
that make it look like it's going to have a future or
if not bit coin, then some form of electronic transmittable
monetary systems outside of the purview
of central banks. I think that's for certain. service a quick question we talk about
Interviewer: Just a quick question, we talk about silk road and I understand that the
US government owns billions worth of- millions I should say worth of bit coins
after the shutdown of that website, but what would it be doing with that money do you
think?
Thornton: Well, they're not the true owner, they're just-
they have possession of those bitcoins. I think that they're-
you know, governments tend to be technologically inept and I'm
pretty sure they're probably won't know what to do with them for quite some time.
Interviewer: You say, well this is political and that this is the US government targeting bit coin,
but will we see other governments also joining the US at targeting the
bit coin, seeing it as a threat?
Thornton: Well, I think that other countries
have started to make their intentions known.
I think that if they see bit coin as becoming a problem for them
that they may be step in. I think China is worried about people moving capital
outside of China and so they're putting regulations and issuing threats.
And so, I think that that is something that we're going to see is
that when bit coin becomes
a problem for governments that governments are going to step in and try
to regulate them and try to restrict
people's access and limit the amount of transactions that take place
with bit coin relative to their own domestic currency.
Interviewer: Mark, great to talk to you, thank you very much indeed. Thanks for your thoughts on
this, it will be interesting to see what the future for the bit coin holds thank you very much.
Mark Thorton with the Ludwig von Mises Institute, thanks.