At the beginning of this week, regulatory officials and members of law enforcement in the US met with a Bitcoin advocacy group amidst a growing concern and interest in digital currency. Authorities in America are concerned about a potential for money laundering, and Washington has taken an interest in the subject.
So what is Bitcoin, and what are it’s implications for the ordinary people who use it?
Basically, Bitcoins are digital coins you can send through the internet, crypto-currency which can be transferred directly from one person’s virtual wallet to another without a financial intermediary. While some critics focus on the unstable exchange rate, inflexible supply and risk of loss, more and more vendors are beginning to accept Bitcoin, such as WordPress and Reddit. And this month, Germany has recognised the currency as a legitimate one.
There are quite a few advantages to a currency which has been described as a financial Rosetta Stone – you can set your balance to display as the equivalent in a currency of your own choosing. With Bitcoin comes lower fees, no limits and worldwide use. And because you’re not going through a financial institution such as a bank, the fear of having your account or funds frozen is removed.
Because there is a limit set on how many Bitcoins can and will be eventually produced, the value is consistently rising. There’s no government or company backer, so worth is established by international buyers and sellers, similar to gold and silver. Current exchange rates place the value of one Bitcoin (BTC) around Ђ88, $118 and Ј76.
And despite fears over the safety of Bitcoins, and the potential for money laundering, such fears may not be completely founded. The possibility of having them stolen is indeed real. But all transactions are available in a publicly accessible file, making it difficult for criminals to filter money through the service.
It’ll be interesting to see how the world’s governments react to a viable alternative to people worried about the decreasing spending power of the money in their wallet. One thing is for sure – Bitcoin isn’t going anywhere.