Outdated Laws Destroy Innovation

by Scimson on April 9, 2014 - 11:12pm

Bitcoin is a decentralized digital currency, which could eliminate the need for bank transaction fees. However, since it is decentralized, it is also subject to rogues who could exploit the system. Its main problem right now doesn’t rely on users, but on the governments. In her April 2nd, 2014 article “Bitcoin Could Strengthen the World Economy If Washington Doesn’t Destroy It”, Perianne Boring explains the problems with government interventions in the Bitcoin economy.

In the US, the regulation is unclear and some outdated laws might be applied to it which would destroy it. The IRS(Internal Revenue Service) has declared the Bitcoins a property which means that if a gain in capital is made, it must be reported and taxed. It is not treated as a foreign currency like it acts, which makes a value drop much more dangerous than a drop for standard currencies would be.

On the other hand FinCEN(Treasury Financial Crimes Enforcement Network), another branch of the US government, considers it as a money transmitter and have declared that it need to comply to the 1970 Bank Secrecy Acts. This act requires banks to help the government in investigating money laundering cases. The whole point of Bitcoin is that it is decentralized and that there is no party between the buyer and the seller. It is also very confusing that it is sometimes treated as currency and other times not by the same government.

Bitcoin currently has a bad reputation among government because illegal transactions are anonymous and cannot be tracked. It reduces the control of the government over the currency. However, it could also provide a world wide access to the financial industry, which is currently only available to half the human population.

I think it is clear the government must learn how to have their branches communicate together and modernize their laws. It is barely conceivable that a law that is more than 40 years old be applied to a concept as modern as Bitcoins. The Bitcoin was created with the objective of being independent from government and it should remain so. If governments start introducing laws, it will destroy the idea of cryptocurrencies. I believe we should leave the internet open and free and the Bitcoin should not be regulated by government as it is part of it.

Comments

If there is one thing that shouldn’t surprise the people of the United States it’s that their
government likes to have control or at least put on the perception as if they do have control. This is simply another example of that. Now, I am not a political science major, nor do I know much about this Bitcoin idea, however, in this capitalist society it is no wonder that the government is ordering that if it is used it has to be regulated by them and taxed by them. The government needs to find whatever way possible to try and bring revenue into this already depleted economy here in the U.S. Entrepreneurs don’t have a chance at coming up with better ways to solve issues in this country without the government turning it around into a government controlled revenue builder. I have a cousin who is an entrepreneur and complains at every family event that the government isn’t working for the country, but the country is working for the government, in that, the hard working people of this country are keeping the government spine together while the lazy, greedy politicians are destroying the planet one knew bill/law at a time. This is quite the statement, however it’s no surprise that the people of this country are upset at the government. There is no chance that anything in this society will be able to get away with not having any government supervision, which is arguably unconstitutional, however just like in this case, the government will find some way around that as well

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