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Forbes on Viagra, Bitcoin and Intellectual Property

Excellent Forbes post by Jon Matonis, “Generic Viagra Industry Is Pro-Choice In Payments,” in which he points out that “payment intervention” is being used to stamp out online pharmaceuticals, giving rise to increasing interest in alternative systems like bitcoin to evade control by the state-corporatist duopoly:

Payment intervention is defined as the use of the payment mechanism to detect or prevent certain transactions that are deemed to be politically incorrect or against a particular jurisdiction’s law. The latest target is online pharmaceuticals and their affiliates providing medications such as generic or unlicensed Viagra, Nexium, or Lipitor, all of which are illegal for Americans to have mailed into the United States.

In the recent paper “Priceless: The Role of Payments in Abuse-advertised Goods” presented at the 19th annual ACM Computer and Communications Security Conference in Raleigh, North Carolina, five academic researchers outline the methodology behind the aggressive practice known as payment intervention and arrogantly conclude that it is in society’s interest.

This is the ugly face of monetary repression. It is shameful! Using the payments system as a repressive tool for or against certain behavior is like using Catholic Church attendance as a way to target illegal immigrants. In a free society, private payments should be covered by merchant-customer privilege just as attorney-client privilege covers confidential legal communication. Like the telephone network used to execute a transaction, the payments network is a neutral actor. Pro-choice means placing the decision of payment type in the hands of the money owner. Grandma wants her affordable generic Lipitor.

As Matonis notes:

Herein lies the problem with the current payments network. It is far too dominated by Visa and Mastercard whose contracts with acquiring banks stipulate that merchants are prohibited from selling goods that are illegal in the purchaser’s destination country. Therefore, simply participating in those payment networks inextricably links the law to a voluntary transaction between two consenting parties providing an enforcement mechanism that wouldn’t necessarily exist under other payment types.

As Matonis argues, “Access to safe and affordable pharmaceuticals should be a natural right for all Americans and denying it would be unacceptable, unethical, and a threat to the public health.” Of course. Because of the state-special interest collaboration making conventional money and payment systems risky for activities that ought to be perfectly legal, mechanisms like bitcoin or alternative payment methods may rise to the occasion:

Unfortunately, the practice of targeting the payments mechanism is on the rise by governments and sufficiently “chilled” payment network lackeys, but it will backfire in spectacular fashion. Consumers will be driven to more liberated alternatives such as the privacy-oriented and cash-like bitcoin. They certainly don’t want VISA, Mastercard, PayPal and the rest of the gang telling them what is and is not an acceptable purchase. Interestingly, the study cited bitcoin among creative alternatives when Visa processing becomes abruptly disabled ….

What I found especially interesting in this piece, in a fairly mainstream business publication, was the off hand reference to the immorality not only of efforts to regulate pharmaceuticals, but to that of intellectual property, with a link to one of my recent articles calling for abolition of patent and copyright:

Leaving aside for the moment the twisted economics of privileged drug manufacturers collaborating with generic manufacturers, the immorality of the patent system, and the case against intellectual property, supranational authority was bestowed upon the IACC (International AntiCounterfeiting Coalition) in 2010 through a series of agreements made between brand holders, payment providers, and the White House’s Intellectual Property Enforcement Coordinator. The agreements streamlined targeted actions against ‘rogue’ websites and merchant accounts used to monetize counterfeit goods and services.

Here, Matonis recognizes that it is not only pharmaceutical and medical industry regulations that are giving rise to “payment intervention” as a quasi-enforcement mechanism for enforcing these quasi-prohibition rules, but patent and other IP rights as well. There may be some hope, as more and more people begin to recognize how incompatible IP is with the free market.

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  • Peter Šurda October 29, 2012, 12:04 pm

    Jon Matonis is on the board of the recently announced Bitcoin Foundation and I reference his articles extensively in my Bitcoin writings. Check out his other posts on Forbes, he’s really good, for example Bitcoin Prevents Monetary Tyrrany

    Also, Iain Stewart noted that I made a similar argument during my talk at the Bitcoin conference, in that attempts to regulate payment systems affect cryptocurrencies like Bitcoin disproportionately less than a system based on money substitutes (e.g. banks, Visa, Paypal), which gives Bitcoin a comparative advantage.

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