Regulating the Unregulated: The Future of Bitcoin?
Bitcoin, though not completely anonymous, has been prized in our society as a stepping-stone for a privacy-minded and anonymous currency. Irregardless of the depreciating value of the Bitcoin, its creation will still be remembered for generations to come. However, there has recently been oncoming pressure from various organizations to regulate cryptocurrency such as Bitcoin, Litecoin, and Dogecoin. Why this pressure? Well, businesses are attracted by the concept of a virtual currency and the Blockchain and its potential for monetary gain, but are still leery of the anonymity portion of most existing cryptocurrencies. They want something which is ensured to protect their businesses and revenue.
Not to ruin the party, but this idea is not a bad idea. Again, we are all entitled to our own opinions, but objectively speaking, some amount of control is necessary to keep things running smoothly. The major problem that I have with regulating cryptocoins is that this completely defies the creation of cryptocurrencies in the first place. They were created to value autonomy, not to be fettered to a central institution. Furthermore, the passing of a bill that makes major cryptocurrencies regulated by the government paves the way for more extreme measures bent on outlawing all unregulated cryptocurrencies. Before I receive a wave of criticism, look at the punishments in most countries for being found with the possession of counterfeit bills. For all you Americans, how does 20 years of prison and a $250k fine sound?
Still, many of you may be thinking that the government would never try to regulate cryptocurrencies, as they have been in circulation unmoderated for many years now. Well, think again. The Uniform Law Commission (ULC) has drafted a bill called the “Regulation of Virtual Currencies Act.” It aims to keep Bitcoins under the jurisdiction of national governments and states that this will ensure security and greater productivity for cryptocurrencies and businesses. In addition, the board in charge of the bill has introduced plans to make altcoin driven businesses obtain official licenses in order to continue financial operations in altcoins. In the same light, Bank of America is vying for a patent that will give it ownership of wire transfer technology and methods pertaining to cryptocurrencies. Bank of America (BofA) backs-up its claim by asserting that Bitcoin transfers would become quicker and more efficient because they would not need to go through a third-party organization. BofA has set its eye on burgeoning currencies such as Bitcoin, Litecoin, Dogecoin, and Ripple. Though it has only specifically named these couple currencies, they will no doubt go after other altcoins too. In addition, BofA has explicitly stated its plans to partner with major cryptocoins-trading websites such as OKCoin, Bitstamp, and Cryptsy in an attempt to control the market.
These claims above may seem good to the uninitiated, but as a cryptocoin fan, I am taken aback by the possible repercussions if the ULC can pass the bill and if BofA can achieve its patent. Of course the central problem is that these regulations and patents will detract from the original message of cryptocurrencies. What good is an altcoin if it’s subjected to the whims of a central government or business? But more importantly, the ULC’s bill closes the door on a free-market. A market regulated by any central power is bound to be stifled of new inventions. I am not saying that this new market will be a flop, but people with unique and/or strange ideas will be discouraged from entering the Bitcoin market due to the fact that they know that they are being watched in their every move and must compete with already successful ideas. Secondly, Bank of America’s patent is covertly a plea for a monopoly. If they are able to partner with major Cryptocoin-trading sites, they can have a major influence over the altcoin industry. They will control the basic premise for the transfer of Bitcoin (wire-transfers) and may push smaller startups into the dust. Coupled with the ULC’s bill, Bank of America, or any other large bank supported by the government, will virtually have complete control over the cryptocoin market. Then, this brings into light an almost Marxist sounding question: Is Bank of America doing this to help “make cryptocoin more efficient,” or is this solely for monetary gain? I would argue that BofA is trying to take advantage of this new concept of regulation to create a monopoly for itself and increase its own revenue. From the American Revolution to the French Revolution, economic gain is the fundamental motivator. In my opinion, BofA, along with the ULC, is trying to stifle our individual freedom by instituting measures that secure its position as the main benefactor of the altcoin market. Businesses partnering with governments to take financial control of the market…what else is new. But then again, each to his own.