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Don't think of it just as currency or a new set of payment rails. To get a full sense of Bitcoin and its implications for banking, you have to think bigger than that.
February 25 -
Something resembling deposit insurance for virtual currencies may still be in the distant future. But a growing array of startups is attempting to offer Bitcoin users a similar layer of security to that enjoyed by bank depositors.
January 22 -
In back-to-back hearings this week, lawmakers acknowledged the promise of virtual currencies like Bitcoin and the risks of overregulation along with the danger of abuse. Laws on the books may suffice to address the latter, for now.
November 20
WASHINGTON Sure, the bitcoins on your computer carry risks. But have you thought about the dangers from the cash in your wallet?
A Democratic House member and apparent digital currency fan has launched a hilarious stunt to urge federal regulators to ban U.S. dollars, following a more serious plea by Sen. Joe Manchin, D-W.Va., to prohibit Bitcoin.
In a Feb. 26 letter to Treasury Secretary Jack Lew and the heads of four regulatory agencies, Manchin said the use of bitcoins for illegal activity and the crypto-currency's volatile price fluctuations justify the U.S. following other nations and prohibiting "this dangerous currency from harming hard-working Americans."
But in response, Rep. Jared Polis, D-Colo., turned to satire to rebut Manchin's points. Writing to the same officials, Polis said dollars should be banned for every one of the same reasons that Manchin raised in his letter about Bitcoin. He highlighted images of dollars seized in drug busts, and "suitcases full of dollars used for illegal transactions... in popular movies such as American Hustle and Dallas Buyers Club, as well as the gangster classic, Scarface, among others."
He noted that dollars also contain materials such as cotton and linen that "go through extensive treatment and processing" while digital currencies "are carbon neutral." Polis cited a Justice Department study saying that just 3% of the $1 billion in cash stolen in 2012 was ever recovered. Dollars were found in Saddam Hussein's compound, when Manuel Noriega was arrested and in the Watergate case, he said.
"The very features of dollar bills, such as anonymous transactions, have created ubiquitous uses from drug purchases, to hit men, to prostitutes, as dollar bills are attractive to criminals who are able to disguise their actions from law enforcement," Polis wrote in his March 5 letter. (The letter was addressed to Lew, as well as the heads of the Federal Reserve Board, Office of the Comptroller of the Currency, Commodity Futures Trading Commission, Federal Deposit Insurance Corp. and Securities and Exchange Commission.)
"Due to the dollar bills' anonymity, the dollar bill market has been extremely susceptible to forgers, tax fraud, criminal cartels, and armed robbers stealing millions of dollars from their legitimate owners," Polis added. "Anonymity, combined with a dollar [bill's] ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions."
Polis even raised arguments equivalent to Manchin's mention of countries already banning Bitcoin including Thailand and China by pointing to other nations that have experienced dramatic price fluctuations and even deflation as a result of their national currencies. "Many of our foreign counterparts already understand the wide range of problems that physical currencies can have," Polis said.
