Alison K. Lanier
Bitcoin does not have a smooth history interacting with other, more longstanding forms of currency. This includes, for instance, the official currency of the United States. The California Department of Financial Institutions, which lord over, according to CNET, the state’s financial institutions, did not take too kindly to bitcoin insinuating itself as an alternate currency to the approved official U.S. currency.
Credit: freedigitalphotos.net pakorn
However the federal powers that be seem to have changed their tune toward bitcoin in the face of its widespread use and popularity. From a previous order to cease operations, CNET reported, the electronic currency is now part of a bill that is “intended to fine-tune current law to address Californians’ payment habits in the mobile and digital fields.”
Bitcoin remains a successful alternative to cash, among many other alternative digital payment methods like Starbucks stars, Venmo, and Amazon coins. California’s assembly bill-129, now law, assures that all the various modes of payment—digital coupons, points, and, yes, currencies like bitcoin—are acceptable and legal tender in the state. Governor Jerry Brown signed the bill into effect at the end of June.
Bitcoin, the world’s first decentralized currency was launched by the still-mysterious Japanese thinker, or collective, Satoshi Nakamoto, according to Bitcoin Web Hosting. Hatched as a concept in 2007, the currency saw its first transaction in 2009. The ideal behind the currency, says Bitcoin’s website, includes “instant peer-to-peer transactions,” “worldwide payments,” and “zero or low processing fees.” Essentially, it is a currency generated by computer on an open-source platform. Unlike Paypal or Venmo, which stores United States dollars in an online account in person-to-person transactions, Bitcoin is technically not a transaction in dollars, but rather, at an exchange rate. This means that it flew in the face of various restrictions against trading in tender that is not the national legal currency, in the United States and abroad.
A Rocky History
Bitcoin encountered setbacks and boosts, like the one in California, in recent years. ZDnet reported on the Chinese government’s crackdown on bitcoin trading in March, the People’s Bank of China deeming that “all the accounts opened by the operators of websites that trade in the virtual currency.” Meanwhile, the day after China’s strict regulations went into effect, Sydney, Australia, saw its first Bitcoin ATM, where users could create accounts via license and fingerprint scans and trade bitcoins for cash.
Bitcoin finds itself in legal limbo, too, in various other countries where regulations are underway to moderate the trade in digital currency or find those regulations on hold for the present. In Japan plans to regulate bitcoin were dropped, according to ZDnet, after the theft of approximately 850,000 bitcoins—or $ 450,000—through “years of systematic cyber-attacks.” The theft led to a high-profile collapse of one Bitcoin exchange, Mt. Gox, which then filed for bankruptcy and sparked continued debate among official bodies about how to regulate, if at all, the popular international currency.
California seems to have made up its mind, however. While the previous law technically rendered Bitcoin trading illegal in the state, as the RT network wrote, as currency that is “anything but the lawful money of the United States,” in other words, the officially minted and issued dollar.
According to the RT network, the passage of the bill “makes clarifying changes to current law to ensure that various forms of alternative currency, such as digital currency, points, coupons, or other objects of monetary value do not violate the law when those methods are used for the purchase of goods and services or the transmission of payments.” Lawmakers’ priority seemed to be to prevent the thriving legal gray-area trade in Bitcoin and various other point systems accepted by retailers, like Starbucks stars and rewards, from remaining outside state or even legal control.
There are also more idealistic drives behind the bill, as lawmakers’ explanation behind the legislation reads, according to the RT network. The bill additionally legalizes what it calls “community currencies,” which are local digital or otherwise alternative currencies that are used in specific areas as tender to specifically support small businesses or to protest large financial institutions.
Bitcoin’s future is a hot topic amongst investors and lawmakers alike. Entrepreneur.com reported on Barry Silbert’s outlook on Bitcoin’s future. Silbert, SecondMarket Holdings founder and CEO, has various investments in Bitcoin businesses. Silbert speculated—confidently—to Entrepreneur that Bitcoin will follow the same bubble trend that it has seen in the past, with skyrocketing values like the bubble it saw in 2013. “The history of Bitcoin trading is a bubble, a correction, consolidation and another increase,” Silbert described to Entrepreneur. “It’s happened four times and it will happen again.”
That being said, Silbert also said that in 10 years Bitcoin will be steamrolling traditional wire money transfer services like Western Union and will be accepted alongside credit cards and Paypal at any online transaction site. Bitcoin’s star is on the rise toward the mainstream, said Entrepreneur. “It’ll be a no-brainer.”
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