PHUKET: Bitcoin is only one among hundreds of its kind, collectively known as cryptographic protocol currencies or cryptocurrencies, which are only a small part of all digital currencies. More than 90% of almost every single currency in the world today is digital. Still, cryptocurrencies are unique while having only existed for four years, the total value of Bitcoins alone surpasses the GDP of many countries.
All cryptocurrencies transactions are handled by encrypted servers known as miners. The miners are also given the opportunity to earn freshly created blocks of coins for their work by the design of the system. This in itself is a very profitable endeavor; a person who sets up a miner could see a return on investment in as little as two months or less.
Bitcoins make it possible for people who donít know each other to do business together. You can access your Bitcoins at any time and from any place in the world and use them to pay for anything... and no one else will be able to know what youíre doing. This effectively makes taxation impossible, and unless you actively give up your Bitcoin information, there is almost no way for anyone to know how much money you have.
Today there are bars in New York where you can pay for drinks in cryptocurrencies, grocery stores in California that accept them, fashion houses in Italy, tour groups in Japan and South Korea, hotels in France, and even NGOs in Thailand that have been accepting donations to help those in need. This is but a small part of the literally hundreds of thousands of services which are offered right now. Every day tens of thousands of transactions occur worth millions. Bitcoin is the largest growing market in the world right now and there is a very good chance this will become the preferred method of payment in the coming years.
Yet, in one single act, all Thai citizens, and anyone who ever comes to Thailand is now being told that if you come here, you will be put in prison simply because of the method of payment you use. No other country on the planet has done what Thailand just did and, if the announcement becomes law, it will be impossible for anyone in Thailand to buy or sell Bitcoins, buy or sell any goods or services in exchange for Bitcoin and to send or receive Bitcoins to and from anyone located outside of Thailand. As a result, Thailand will lose millions if not billions of baht in potential revenue in this year alone.
What of the miners handling transactions? They are receiving Bitcoins, but not from real people Ė they come from a computer equation. What of those who have Bitcoins? Does this mean that any Thai citizen who currently has Bitcoins is now unable to get rid of the currency, and if they do they face the possibility of jail time? If so this is guilt by association.
But most of all, what of the hundreds of other cryptocurrencies? Are all of them going to be banned as well? Is it going to be a game of cat and mouse banning every single currency as it becomes big enough to be noticed? Or is there going to be a vague and blanketing law banning all digital currency? No matter how you go about this, the prohibition does not work except to inflate prices and to make criminals out of people who were not so before.
If the law does not respect the choices of the individual to decide what form of currency to use, why would individuals, or companies, do business in Thailand? As cryptocurrencies become more widespread, why would anyone choose to do business in Thailand, when anywhere else in the world you can go about business as usual?
Ultimately, this gesture is utterly meaningless and unenforceable. A scofflaw only needs to switch to a different cryptocurrency, and their activities are legal again. Due to the way the cryptocurrencies are created, you can still use them and unless you willingly give up the information, there is no way for the authorities to know or enforce this ruling.
In this act, Thailand has signaled its wishes to shut itself off from not only a growing market and another source of revenue and growth, but also from a very possible future economic system. As a result, Thai people may never be at the forefront of innovations in this sector.
New technology can be scary, the power it gives, the way it redefines our world. It gives new opportunity to those who use it. Innovators and independent thinkers should not be turned into criminals by the stroke of a well-meaning but uninformed pen.
This ban should be lifted so that honest citizens are not treated as criminals, and as a gesture to the millions in the cryptocurrency community to return to Thailand with their business. I suggest BOT put together a work-group to study the economic benefit of cryptocurrencies to Thailand.
Finally, a request to the Board of the Bank of Thailand: please do not shut yourself out of what may well become the largest economic growth in the history of this planet.
Editorís Note: Until Bitcoin transactions are traceable and thus taxable, the ban will likely remain in place. In fact, for this reason, other governments may also consider a ban.
This article first appeared in the current issue (August 17-23) of the hard-copy Phuket Gazette newspaper. Digital subscribers may download the full newspaper, this week and every week, by clicking here.