28 Feb 2014 / Livemint – Call me a dreamer. Call me a contrarian. I still believe in Bitcoins.
The collapse of Mt. Gox—and the evident disappearance of perhaps 6% of the world’s supply of the virtual currency—hasn’t put me off at all. And even if I’m wrong, and Bitcoin fails, I’ll probably support the next digital currency. The reason is simple: For those willing to take the risk, eyes wide open and fully informed, money without government carries a certain appeal.
But not to everybody.
Senator Joe Manchin, a West Virginia Democrat, in a letter sent to pretty much every financial regulator in the federal government, has demanded action. The letter calls on regulators to “prohibit this dangerous currency from harming hard-working Americans.”
The trouble is the senator hasn’t come up with a particularly compelling list of harms. He’s angry, but not persuasive.
Let’s begin at the top. “This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy,” he writes.
Bitcoins might be described as lightly regulated, but “unregulated” is too strong. (A point the Treasury Department has emphasized.) And lots of other instruments allow users to participate in illicit activities. Like, say, dollars.
“Due to Bitcoin’s anonymity,” Manchin continues, “the virtual market has been extremely susceptible to hackers and scam artists stealing millions from Bitcoins users.”
Is this true? Yes, hackers and scam artists have plagued the Bitcoin market, as they plague lots of markets. That isn’t a regulatory failure; it’s a law-enforcement failure, or a security breakdown at the Bitcoin sites. Although it is theoretically possible for groups of Bitcoin miners to game the block-chain technology that protects against, say, Bitcoin forgeries, no serious evidence has yet been offered that the block-chain itself has been broken….. Read more
