Regulators use financial The Slow Criminalization of Peer-to-Peer Transfersinstitutions such as banks to control the flow of wealth. The digital exchange companies that serve as “trusted third parties” are the main control points for bitcoin. That’s the point at which privacy is stripped from users, and the transfer of wealth can be closely monitored. For regulations to work, therefore, users must be herded toward trusted third parties who function as an arm of the government.
This is the part about writing a letter to the central banker for each transaction.
Because peer-to-peer exchanges sidestep digital exchanges, the former are slowly being criminalized.
The governments fear of losing control of wealth taxes is unfounded. Think of the pure cash layer where everything can be assumed peer to peer. Under the current assumptions of auto traded, maximum entropy betting, there is no real government hedge for taxing in pure cash.
But, it is all in the smart layer, government can tax there, quite efficiently. That is the rub, however, there must be a corresponding efficiency increase in the legislature. The legislature is subject to massive coordination failure, and central bankers should focus on that, leave to money to the techies.
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