Outdated Laws Destroy Innovation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In the US, the regulation is unclear and some outdated laws might be applied to it which would destroy it.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.