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Bit coin the regulators nightmare

  Am pretty sure by now most of us have heard about bit coins and a whole host of other alto currencies it is even quite likely we have transacted in some of them mainly through speculation which has played a big role in creating a volatile crypto currency market.
If you are not familiar with bit coin then briefly this is what it is, a form of crypto currency where the mining, (akin to printing regular fiat currencies) and utilization is not based on any central authority like it is with the regular money you and me use. It can be transferred from one computer to another and this includes smart phones with no middle men i.e. it completely cuts out the financial institutions that make almost all their money but coming between you and third party. It was created in 2008 by someone using the pseudo name Satoshi Nakamoto probably with the help of other brilliant brains. Now imagine that you were the Government and were interested in regulating bit coin you have a tough proposition in your hands, a majority of lawmakers and people in the financial world are just waking up to this alternative financial system that is still in its infancy. The founders of Bit coin certainly did do a lot of home work and must have studied models like bit torrents that were used in music file sharing they must have had a plan to decentralize the system to spread it out to millions of computers such that tracking a central authority for purposes of shutting down the system is almost impossible. The United States Government certainly does not like the idea that files get shared here and there because it a affects intellectual property rights which is a major source o f revenue while the Government recognizes this problems they have pretty much kept silent about the whole issue preferring to deal with individuals whenever they can take the case of mega upload founder kimdotcom

Bit coin was designed to be virus like covering a large area that would be impossible to take down; there is no centralized authority to go after it is a protocol much like http in the early nineties it was not possible to foresee all the potential benefits or hazards of the world wide web, Bit coin is not a stock or physical currency and yet it is a payment protocol that no one really completely understands, so the big question is how do you go after something that is a mixture of almost everything. The need for regulation stems from the fact that bit coins are being accepted by more and more countries for example you can now withdraw bit coins from an ATM in Vancouver Canada, Hongkong, Mexico these are just a few places that are bringing this payment protocol closer to us in the form of ATMS. There are a number of merchants online that are using bit coin mainly because of a host of advantages it is providing like the almost zero transaction fees, others are using it for fundraising purposes and to send money to people around the world cutting transmission costs by almost 95 percent is some cases, sooner or later this will need to be regulated to gain increased acceptance as a payment protocol.

No one wants to incur costs of making their merchant sites bit friendly when why are not certain about the future stability of the currency, merchants are hoping there will be some kind of assurance from Government that they can trust this currency. Regulation will need to come up with checklists to be followed, the United States Government is pretty good at coming up with different kinds of guidelines for controlling its citizens and they can easily enforce this if a number of checklists are violated, it is easy to determine who has bent the rules and go after them, yet this is not the case with the new crypto currencies have come onto the world stage, legislation still needs to be enacted to cover this new area and even then how do you go after users who are often anonymous and spread out into millions of computers. One of the most fascinating facts about bit coin is the ability to avoid the inflationary tendencies that currently affect other currencies financial analysts predict that this could turn into a financial black hole sucking in all other currencies like the dollar and cause major financial disruptions

One other big issue why regulation needs to be speeded up is the possibility of tax evasion, it is something that definitely worries a lot of Governments, and the ability to move financial value around and spread it worldwide almost anonymously is cause for concern there are few of us who would turn down the opportunity to conceal a few more income sources and avoid the taxman. There issues with bit coin being used to pay for drugs from pharmacies online and thus bypass Government restrictions, how do you know who is purchasing what drug online it could lead to a lot of problems with drugs and other banned substances reaching the population, and the reason I believe this will be a regulators night mare is the difficulty involved in shutting down these websites it is often an expensive process with no guarantee that a dozen similar sites will not be popping up selling the same stuff. Regulation has to be introduced carefully as any heavy handedness could discourage innovation with people deciding they are fed up and opting to transfer their businesses and innovation overseas to countries that will be willing to accept the fundamentals of this new alternative financial system. It is certainly not easy to strike that balance especially for something as complex and constantly evolving as bit coin. The Government needs to keep its best brains and innovations in place to spur economic growth and prosperity. We have already seen some Bit coin exchange services opting to set up shop in foreign countries where the laws are more accommodative, some of the existing laws such as the Bank Secrecy act and the Money Laundering Control Act have proven restrictive to Bit coin transactions are forced companies overseas.

There are issues with terrorism and the potential misuse of crypto currencies to fund operations undetected these are just some of the issues that regulators are having sleepless nights trying to understand and keep updated. Regulation for crypto currencies will certainly keep evolving as the very nature of crypto currencies does so and this will not be going away anytime soon.

E-currency | Cryptocurrency | Bitcoin


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