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How The NSA Scandal Is Good For The Bitcoin Economy

[heading]How The NSA Scandal Is Good For The Bitcoin Economy[/heading]

The NSA is bullish for Bitcoin.

With each passing revelation, a new and far-reaching picture of NSA surveillance is drawn with even more involvement by telephone and internet companies than originally thought, and the pressing economic problems that come with the pervasive surveillance are growing clearer.

Bitcoin Value Soars And DropsForeign nationals abroad have no privacy rights under US law and foreigners using the services of global companies are fair game, as well. Why, then, would a foreigner use any US services if they can go elsewhere without the guarantee of surveillance?   Even close allies of the US, like the European governments such as Germany and the Netherlands are strong US allies on internet freedom, but may also be targets of US surveillance. Why would they jump into the bed of trade with the US/NSA? That is, other than they probably would like access to information on their citizens, of course…

On July 1, a report by Der Spiegel on the NSA spying on European officials also worked to sour relationships with governments only one week before negotiations began on a large US-European Union trade agreement worth nearly $272 billion for the economies and 2 million new jobs. French President Francois Hollande said that NSA spying threatens trade talks between the EU and US.

Indeed, the French government moved for a two-week postponement of the trade talks without luck. The next day, it had to address allegations in Le Monde that it indeed had its own domestic mass surveillance program.patriotact_infographic_butt_0

For internet companies named in reports on NSA surveillance, their bottom line is at risk because European markets are crucial for them. It is too early to know the impact, but it is large, considering Facebook nearly has 261 million active monthly European users, in comparison to 195 million in the US and Canada, and 22% of Apple’s net income came from Europe in the first quarter, 2013.

In a major EU survey conducted in June 2011, “three out of four Europeans accept that revealing personal data is part of everyday life, but they are also worried about how companies – including search engines and social networks – use their information.” Merely 22% trusted email, social networking and search companies with their personal data.

In October 2012, the European Parliament issued a report urging protections between the EU and the US. The Financial Times reported that senior Obama administration officials and tech industry reps successfully lobbied against it.

The NSA scandal has brought increased tensions between the US and the rest of the world.  German prosecutors are looking into prosecuting the NSA, and on July 3 Germany’s interior minister said that people should stop using companies like Goodle and Facebook if they  fear the US is intercepting data. The EU Parliament condemned spying on Europeans and ordered on investigation into mass surveillance. The same day, Neelie Kroes, the EU’s chief telecom and internet official wanred of “multi billion euro consequences for American companies” because of US spying in the cloud.

the-nsa-has-no-idea-how-much-secret-data-edward-snowden-took-and-that-has-them-very-worriedThe companies have attempted to distance themselves from the NSA. Google, Microsoft, Yahoo and Facebook are in particularly tough spots as members of the Global Network Initiative meant to verify whether companies respect freedom of expression and the privacy online.

On July 11 this year, The Guardian reported that Microsoft helped the NSA and FBI bypass its own encryption to access its users’ data, based on Edward Snowden documents.

Even Google’s chief legal officer admits that “Our business depends on the trust of our users,” during a Web Chat about the NSA scandal in June.

So, with that trust gone, not only for US internet companies, but for the US in general, what can we expect to be the repercussions for the US economy?  A decrease in velocity as people find alternatives seems likely. There are places they can go where surveillance won’t be a constant worry pulling on their shoulders. They will choose these options.

One of these options is Bitcoin. Although, in reality, Bitcoin might not give one much more privacy  than much else these days, it certainly gives one the feeling of increased privacy. Even if you explain to a new user that there IP address is tied to transactions, they will still feel as though, with Bitcoin, they enjoy more security.

 

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