Since 2009 when Satoshi Nakamoto (sources claim that the “person” is actually a German) with his associates started implementing Bitcoin as a cryptocurrency, no one and probably not even the creators expected it to achieve such value.
At one point, it spiked to $1200 and all of those people who saved up their Bitcoins had a reason to celebrate. Of course the guy who paid 10.000 Bitcoins for two large pizzas was certainly not one of them, but pioneers in every field are always the ones who get the bad end of the stick.
Bitcoin vs Normal Currency
Today BTC is an acclaimed currency with its usability growing constantly. In many countries you can buy nearly anything with it online, but what’s the difference between Bitcoins as a currency compared to real world currencies like dollars or euros for example? The difference is that its not centralized in any way, National Banks control the value of their currencies, but Bitcoin value is determined by the free market.
That also has its down sides. A couple of years ago when some hackers robbed one of the Bitcoin banks (online wallet providers) the value of Bitcoin dropped from $30 to only $2 , panic spread across the internet amongst miners and bad publicity had taken its toll.
You are sorry now that you didn’t buy those Bitcoins for a measly $2, aren’t you? Well you are not the only one, I can tell you that straight away. People who sold them for $2 probably feel even worse, if it makes you feel any better. At the time of writing of this article the value of a single Bitcoin was $637, which is almost a 50% drop compared to its $1200 value during the beginning of December 2013. Therefor Bitcoins are still an unstable currency as their value is being governed solely on the market demand, which can fluctuate similarly to what happens with the stock market.
How Goverments Are Reacting to BTC
Canada is actually adding ATM machines for BTC. The German ministry of Finance has publicly announced that Bitcoin is and will be the “Unit of account”. Bitcoins are getting acclamation from all over the world but what has the US government to say about it?
US Federal Reserve Chairman Ben Bernanke awhile ago gave his approval to the new currency but has expressed his concerns as well, he pointed out that “The Federal Reserve has no authority to get involved in this issue”. This statement was more than enough for Bitcoins to receive even more recognition worldwide, but not everyone was so restrained when expressing his fears toward Bitcoin.
Former US Congressmen Ron Paul is not happy about Bitcoins at all : “When the dollar is in trouble, that will be one of the alternatives, and the more Bitcoins are used, the worse it will be for the dollar.” And if you look back to what happened a few years ago, when American dollar was half past dead that scenario is not something to disregard.
Similar points were heard during the hearings in Congress where many members expressed their concerns. Democratic Senator Tom Carper said: “Virtual currencies can be an effective tool for those looking to launder money, traffic illegal drugs, and even further the exploitation of children around the world.”
FBI and US Government Have The Biggest Bitcoin Wallet
This statement does have some connection to reality , if you remember during September 2013, the FBI had shut down the Silk Road online drug marketplace and seized Bitcoins that belonged to Ross Ulbricht AKA “Dread Pirate Roberts”, who was the Silk Road operator. During that raid, the FBI had managed to seize 144.000 Bitcoins (worth around $91 million) which ironically makes the FBI and the US government the holders of the world’s greatest Bitcoin wallet! Add that to another 30.000 Bitcoins that have previously been seized by the FBI from the Silk Road and you get a considerable amount of currency that apparently one of which Washington is particularly fond of. However, just because someone uses Bitcoin for illegal purposes does not mean that Bitcoins should be prohibited, if something like that is even possible.
What gives the biggest headache to politicians when it comes to Bitcoin is their inability to control them. Maybe not now but in the near future Bitcoins might start to be a big thorn for the US government and it will be very interesting to see which course of action authorities choose when dealing with this new age underground currency comes to the table.