A lot of the recent big news surrounding Bitcoin and other cryptocurrencies is related to regulation. Recently the state of New York proposed a new set of regulations which have been met with an overall negative reaction by the Bitcoin community. Ecuador has also effectively banned Bitcoin and the rules and regulations required by the Chinese government have caused massive swings in the market.
Your personal point of view on regulation might well be dictated by your view of what Bitcoin is, and where it could go in the future. Is Bitcoin’s attractiveness the very fact that, at its core, it can’t be regulated? Is it that it is simply a PayPal alternative with lower fees? Or maybe it’s the fact that swings in the market allow you to make profit?
The reason I was personally attracted to cryptocurrency is because of the way that power is given to the people, and taken away from big banks and corporate interests. Many would therefore assume that I see government rules imposing on how these ‘decentralised’ currencies are used as a bad thing. How can entities as large as governments decide on what is allowed, while the ‘power to the people’ dream lives alongside it?
The global recession that began in 2008 was caused by ineffective regulation which allowed bankers to irresponsibly lend money to make a quick buck, knowing that there would be consequences down the line. The response from the public toward the greed and self-serving nature of these people as well as that of giant corporations could well be the defining characteristic of this decade.
Taking a closer look, what I originally saw as a decentralised currency,controlled by the people, is actually something that nobody can control. Those large banks and corporations could ultimately have the most control out of anyone, though, if you take into account the amount of money they could pour into the markets.
Bitcoin itself cannot be changed, and rightly so. It is virtually impossible to ‘hack’, and any of the underlying principles cannot be changed without the consensus of the people using and supporting the network (miners). Coins cannot be created without everybody agreeing and no one can create fake coins. This is the technology that puts it above and beyond what we see as traditional money. However, the infrastructure built around the network is able to- and has been — adapting to the requirements of the market at lightning speed.
The balance between decentralisation and consumer protection is fine one and if a consensus can be reached between the people and their governments then they sky is the limit. People who oppose any form of regulation, in my opinion are seeing things from an idealist’s point of view. An ‘anything goes’ free-market is exactly what caused thousands of people to lose their homes and witness a drop in income while the “1%” are probably still there counting their stacks of money.
We don’t want to lead with “anonymous (currency)”… (or) “currency outside the reach of any government.” I am definitely not making any such taunt or assertion.
– Satoshi Nakamoto, Bitcoin creator.
What is needed for Bitcoin is for the community and users to communicate with the creators of financial regulations to reach a consensus and for those involved with creating the infrastructure around Bitcoin to quickly find the solutions as to how things could be implemented. In democratic countries, if people do not agree with the proposed regulations then perhaps they could show their distaste at the polling booth. For those without democracy, perhaps the need for the people and governments to agree on methods of regulation could spark change.
Widely agreed upon and balanced financial regulations would bring stability and allow businesses to prosper, without the current lingering paranoia that a badly thought out snap-decision by regulators could instantly ruin their business. A balance needs to be struck, and the countries that find this balance the fastest are the ones who will benefit the most from cryptocurrencies.
Tip the author Bitcoin: