US policymakers not sufficiently aware about digital currency, Bitcoin: Legal experts
20 May 2013
The possibility that US policymakers may not know enough about nascent digital currency Bitcoin came about as the general consensus during a panel discussion among legal experts on Saturday at a Silicon Valley conference devoted to the nascent digital currency.
"Congress is the wild card here," said
Jerry Brito, director of technology policy at the Mercatus Center at George Mason University, who liaisons with Washington on technology issues said Congress was the wild card in the matter, but he was very optimistic about the regulatory climate for Bitcoin ... because regulators and folks on the Hill simply did not understand it.
Use of digital currency Bitcoin, managed and traded over a peer-to-peer computer network, is growing. Designed as a decentralised form of payment it is not regulated by any financial institution or government body. There are some concerns over whether the government might be getting involved, and if so, how.
Brito added, they were trying to fit it into existing buckets, and Bitcoin was very confusing to them. However the potential was there to understand it, to allow it to flourish," he added.
Agreeing with the Brito, Rainey Reitman, of the Electronic Frontier Foundation said, "I've gone to D.C. and lobbied and had real mixed feelings about how effective it is." "Most legislators don't understand it. They don't have the technology teams available to them," he added.
Bitcoin's increasing acceptance was a major theme at the conference, with more than 50 sessions held over the course of the three-day event, future facing titles such as "Bitcoin in the Future", "History and Prospects for Alternative Currencies," and even "The Future of Panhandling."
The panelists' remarks came only days following Tokyo-based Mt Gox, the largest Bitcoin exchange online, getting slapped with a seizure order by the Department of Homeland Security, for alleged non-compliance with US financial regulations.
So what is Bitcoin? According to the Bitcoin website, " Bitcoin is a digital currency, a protocol, and a software that enables
- Instant peer-to-peer transactions
- Worldwide payments
- Low or zero processing fees
- And much more!"
Is the Bitcoin market one that you should be interested in? The answer may be yes, but the entry point will depend on what type of investor you are. This special blog, provided by Alan Edwards of Bithedger.com will provide some insight for investors and traders who are considering whether to enter the market of the crypto currency Bitcoin.
Writing in DailyForex, Edwards said liquidity concentration risk remained a major problem for variety of reasons, and the currency needed to penetrate deeper into the world economy to increase diversification and the infrastructure of exchanges needed to be more robust.
According to Edwards unless risk concentration diversified and exchanges increased in size, robustness and quality, Bitcoins would remain a high risk asset that could only be traded in relatively small volumes with high spreads and lag that made leveraged trading unfeasible.
In traditional Forex economic news events were the primary source of valuation volatility, while the concentration of volatility around publication of key economic data acted as the drivers for market trends.
According to Edwards in the absence of underlying financial fundamentals of fiat currencies, Bitcoin valuations were not driven by the same drivers and Bitcoin FX traders would need to develop new valuation methods in a very dynamic environment.