Tuesday, April 2, 2013

Bitcoin Holds More Value Than the Entire Currency Stock of 20 Nations

Bitcoin Holds More Value Than the Entire Currency Stock of 20 Nations:
As was noted earlier on
Reason 24/7
, Bitcoin now holds more value than the entire
currency stock of 20 nations.
Granted, the 20 nations in question (which include Bhutan,
Guinea-Bissau, Samoa, and the Central African Republic) do not
include influential economic powers, but the fact that Bitcoin is
now worth
over $1 billion
is worth noting.
Bitcoin has exploded in value over the past few weeks, with some
citing the crisis in Cyprus as the wakeup call that has some in
Europe putting their money away from the hands of governments that
are wreaking havoc with Europe’s economies.
However, as BitPay.com CEO Tony Gallippi has pointed out,
American regulations, which made the legal status of online
currencies clearer, have contributed to demand for Bitcoins. From
Fox News:
Bitcoin demand has also increased, Gallippi says, because last
week U.S. regulators issued the first official guidelines for
private digital currencies. Prior to the regulations, the legal
status of the currencies was in doubt.
“Now people can see that it's not illegal, that it's not
banned,” Gallippi said.
While some might be reassured by the new guidelines over at
Cullen Roche of Pragmatic Capitalism foresees a
potentially gloomy future for those who use Bitcoins:
I think Bitcoin can continue to exist as a subordinate form of
money with a very low level of moneyness, but if Bitcoin were to
grow to a point where it becomes a highly competitive form of
money, but circumvents the laws, regulations and taxation of a
system like the US banking system, my guess is that the US
government will make it illegal for merchants to receive Bitcoins
for payment.  And then 100 FBI agents get a few thousand
Bitcoins each, buy something from US based Bitcoin merchants and
parade them out on national TV for the entire nation to see why
Bitcoin acceptance results in a $250,000 fine and 5 years in
prison.  In other words, Bitcoin could very well become a
victim of its own success as the US government would never allow
another form of money to detract from public purpose due to high
levels of monetary competition.  Of course, I am referring to
the US government, but this view would likely be embraced by many
governments around the world.
So Bitcoin is an interesting and extremely innovative form of
money, but probably not a viable form on any grand scale since its
inevitable competition with the US banking system will likely
render it at odds with the goals of the US government.
More from Reason.com on Bitcoin