Mr. Bitcoin Goes to Washington
13 November 2013 | By Jamila Trindle | foreignpolicy.com
Can the skyrocketing crypto-currency survive when all of D.C. is looking to tame it?
Bitcoin is going to have to grow up fast. The digital currencys skyrocketing value and habit of winding up in criminals hands are attracting the attention of Congress and D.C. regulators. And thats forcing supporters of the four-year-old Bitcoin to suddenly start acting like an old-school financial firm in Washington. Theyre ramping up lobbying efforts to shape regulations that are likely to come, prepping for Senate testimony, and even forming their own trade association. Perhaps its just a coincidence that the Federal Election Commission has quickly decided to allow campaign donations to be made by Bitcoin.
The distributed, cryptographically-signed currency has already had a long journey since it was created almost five years ago to allow people to buy and sell things online without the cost and hassle of a bank. The virtual currency has attracted investors from all over the world, which has pushed the value of an individual Bitcoin to around $380, over five times what it was in April after the last bubble burst.
Its impossible to know whether widespread investment or political contributions were part of creator œSatoshi Nakamotos original vision when he created the first Bitcoins in 2009; his real identity is still unknown. Many enthusiasts see it as a potentially utopian currency because it is independent from the predations of the banking system, which could theoretically mean much lower transactions costs. Other fans with a more libertarian bent like the fact that its not backed by a government, so its not subject to the whims of politicians or a meddling central bank.
Now, the Bitcoin economy is at a crossroads. Either it learns to work with the U.S. government, disavowing much of what makes it unique, or it sticks to less-regulated parts of the world, like some Internet gambling sites. That would likely mean trading Bitcoin would continue to be unreliable, relegating it to more of a curiosity than a usable currency.