The Securities and Exchange Commission (SEC) recently denied a request to list an exchange-traded fund (ETF) that would have tracked Bitcoin.

For comparison, this would be similar to an ETF that tracks gold such as GLD.  In the case of an ETF holding bitcoins, there would be no physical inventory to hold since bitcoins are electronic.

I am not as optimistic as some libertarians regarding Bitcoin.  I don’t think it is likely to serve as a common form of money.  Still, I am in favor of competition to the Federal Reserve and its monopoly over the U.S. dollar.  If competition includes cryptocurrencies, then it is all for the better.

The problem is that the government does not want the competition. That is why there are legal tender laws.  The best thing that could happen to our monetary system is for competition to be legalized.  People should be free to use anything they want for money.  Legal tender laws should be abolished, and taxes on gold (among other things) should be abolished.

This latest move by the SEC shows just how rigged the marketplace really is.  This isn’t just a monetary issue, but also an issue of financial regulation in general.  Why do we need an SEC that has to approve a listing on the stock exchange?

This is just another issue that people take for granted.  They don’t consider that we don’t need the government to approve what gets listed for public trading.  They don’t consider whether we need an SEC at all.

After this announcement, the price of bitcoins went down, although has largely recovered since then.  Of course, when we speak of price, it is the number of dollars that bitcoins will redeem.  The fact that we  put everything in terms of dollars should tell us something.  Whether we like it or not, the U.S. dollar – at least to Americans – is the main form of money.

You can’t walk into most stores and pay with Bitcoin.  You can’t even use it that much through online shopping.  There are very few places that accept Bitcoin for payment.

Maybe this Bitcoin ETF will still go through at some point.  If it does, I would consider investing a small amount in it.  Actually, the term investing may not be as accurate as the term speculating.  It really is a crap shoot.

I much prefer gold to Bitcoin.  Gold has a history of thousands of years as compared to less than a decade for Bitcoin.  Still, I like the competition, and I like the attention that it receives.  If it leads to more people educating themselves about certain aspects of the monetary system, then we will be better off for it.

We should get rid of the SEC.  Unfortunately, people think it is there to protect them.  How did that work out for the Bernie Madoff investors?

We should also get rid of the Fed.  But we really just need to legalize competition for money.  That will phase out the Fed over time.  That will accomplish what we need, while also providing some stability to the monetary system.