Although Bitcoin isn’t breaking records and making everyone rich anymore, well over 1,000 different types of blockchain-based cryptocurrencies are still being used – altogether making over $250 billion in market capitalization. This week, a Republican lawmaker asked, “Will cryptocurrency be the future of money, are they a bubble that will burst, or even just a passing fad?” Congressman Andy Barr’s (KY-6) question is a part of the mounting concern from Washington over the increasing – yet absolutely unregulated – world of cryptocurrency, all shrouded in mystery.
Highly volatile (as many have learned) digital currencies have been around for almost ten years, existing freely in the central bank-less and government-less ether. They began thriving within the shadows of the Dark Web, assisting miscreants purchasing drugs and other illegal paraphernalia without oversight from authorities. The completely unregulated world of crytocurrency was devoid of tax issues, adding to the seemingly anarchic view of digital dollars existing as a umbrous parallel to the world’s mainstream banking complex.
Dirty Silk Road paths aside, Bitcoin and other colorfully-named cryptocurrencies began being popularized by people from nearly all backgrounds. People were tired of governments and their capital-throttling excrescences like the Internal Revenue Service (IRS) taking “rightfully-earned” money away, because taxation is theft, right? Apart from Libertarian champions and other characteristic followers of digital currency, being on the “in” with Bitcoin was thing to do to separate one from those fiat currency-using squares.
One will be hard-tasked to find a person that wasn’t aware of the volcanic rise of Bitcoin – the world’s leading crytocurrency – last year, soaring by more than 1,500 percent, going from just above $1,000 per coin to touching the bottom $20,000, all before its hypersonic fall back to the ground in December. Most traditional economists watching the Wall Street tickers claimed the surge was a speculation bubble, with people trying to cash in on a relatively new mainstream idea. Even though only a few were made into truly wealthy cryptocurrency cowboys, wheeling and dealing on Coinbase and other trading sites, the unregulated nature of the digital-based industry is something lawmakers want to rectify.
The House Financial Services subcommittee met Wednesday to discuss monetary and trade policy and several prominent issues connected to the complex phenomena of Washington’s still-unresolved approach to a regulatory framework. Economists say that government must institute regulations to prevent price manipulation among cryptocurrencies, but that is where is paradox lies. The absence of rules is what makes digital currency so popular.
The rise in cryptocurrency is in part caused by what people see as the central bank’s monopoly on issuing money, compounded by the popularity of the growing movement of using less bank notes. Though, this isn’t the only reason behind the wishes of elected officials to regulate digital currency.
Economist Rodney Garratt of the University of California, Santa Barbara told the subcommittee during the meeting, “Central banks are currently evaluating numerous options for digital currencies, not just in response to the shift away from cash.” Garratt added, “But also for meeting core objectives and the enhancement of financial market infrastructures,” to best serve people and the world market at-large.
Norbert Michel, director of the Heritage Foundation’s Center for Data Analysis, noted that “Western policymakers” are accustomed to a central bank, adding that, “It is certainly difficult to imagine a cryptocurrency replacing the U.S. dollar as long as the Federal Reserve acts as a moderately good steward of the national currency.” Nevertheless, insofar as substitutes to traditional currencies exist, “Congress should eliminate barriers that impede people from using their preferred medium of exchange,” Michel said in a report from the Washington Times.
The world has seen innovation in going from engine carburetors to fuel injection, biplanes to supersonic jets, rotary telephones to smartphones, but the banking system is still based on an archaic Medieval Age process, according to budding Bitcoin investors. People flocked to cryptocurrency for its decentralized nature, its quickness and ease of use, transparency, anonymity, and hedge against financial risk from currency devaluation.
As Congress attempts to get a stranglehold on digital currency, people may ask that since money – especially in elections – is noted as a freedom of speech or expression, should cryptocurrency remain unregulated?