Tuesday, October 15, 2013

Bitcoin Phobia

MIT Technology Review (h/t Instapundit) has an article discussing a likely backlash by governments and banks against Bitcoin--an electronic currency. The fear, to sum up the article, is that Bitcoins allow transactions and transfers of "cash" without government scrutiny or regulation, or the chance for banks to tack on a fee. From the article:
... Mathematical and computer networking principles are used to underpin a system through which financial transactions can be made digitally, without the need for any central authority or financial institution. 
The code that supports and regulates the Bitcoin network is built into the software needed to use the currency. It works in a distributed network across the Internet to confirm transactions and prevent counterfeiting. Adding to the mystique, the technical expert or experts who developed the Bitcoin protocol are still unknown. 
... However, Johnson says that Bitcoin’s success will draw increased attention from governments and regulators, who are used to having tight control over currencies. He believes they will be egged on by established financial institutions, which will likely seek to quash the currency. Bitcoin enables very rapid, cheap transfers and payments that could compete with existing fee-based ways of moving money around. “Any bankers watching this should be very afraid,” said Johnson. 
... He also said that some governments outside the U.S. may feel threatened by Bitcoin because it allows citizens and companies to sidestep restrictions on the movement of funds across their borders.

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