Bitcoin Legitimacy Grows

Recent developments In the U. S., Europe, and China have greatly increased the viability of bitcoins as legitimate currency.
U.S. lawmakers have taken new interest in bitcoins and other virtual currencies since the FBI shut down Silk Road, a popular website where large numbers of anonymous bitcoin transactions were made for illegal goods and services. The site was shut down and its alleged operator, Ross Ulbricht, was charged with drug trafficking, computer hacking and even murder-for-hire.
On November 18, the director of the U.S. Treasury Department’s Financial Crimes Enforcement Network, Jennifer Shasky Calvery, told the Senate Homeland Security and Government Affairs Committee that virtual currencies such as bitcoin have legitimate uses and should not be banned. She told the panel that it is important to recognize that innovation is an important part of the economy and should be encouraged.
Acknowledging that bitcoin ownership is generally anonymous, and that they are attractive to criminals because of it, Calvery said that law enforcement agencies should be able to address their misuse within the framework of existing laws and regulations.
According to testimony by Edward Lowery, special agent in charge of the Secret Service’s Criminal Investigative Division, Congress should provide more funding to hire technologically savvy investigators if it wants to combat criminal use of digital currencies.
Delaware senator Tom Carper, head of the committee, said that federal agencies should keep an eye on virtual currencies, but shouldn’t be afraid of new technologies any more than when email and the Internet were evolving. “I think it’s clear that some folks just want a chance to try and play by the rules,” he told the committee.
Mythili Raman, the head of the Justice Department’s Criminal Division, told the committee, “I think it is our duty as law enforcement to stay vigilant about the criminal misuse of those virtual currency systems, while recognizing that there are of course many legitimate users of those services.”
While the value of the bitcoin has fluctuated widely since its introduction four years ago, its value has risen dramatically in 2013 due to several factors, including lack of faith in government-backed currencies and the ease and relatively low cost of transactions. Bitcoins have outperformed every other major investment category by a 260:1 margin thus far in 2013. While that level is not likely to be sustained, there’s little reason to believe the cyber-currency’s value won’t continue to outpace more traditional investments.
Throughout the past several months, bitcoins have kept growing in acceptance. In August, Germany began accepting them as a “unit of account,” and Baidu, China’s equivalent of Google, is now accepting bitcoins, opening the huge Chinese market to the currency. After a program about bitcoins aired on Chinese television, downloads of bitcoin wallets surged and the Chinese yuan is now the second most-traded currency in bitcoins after the U.S. dollar.
Coinfloor, a bitcoin exchange, opened for business in London in early November. It has made a commitment to meet all government regulations and enforce scrupulous anti-money-laundering compliance, electronic verification and an industry standard flagging system. While Coinfloor currently excludes U.S. trading due to regulatory differences, CEO Mark Lamb told a Wired UK interviewer, “We believe users and traders deserve a trustworthy exchange on which to conduct their business, and we look forward to helping to establish bitcoin as a mass market asset.”
A number of U.S. businesses are enthusiastic about the future of bitcoins.
“We feel that the concept of bitcoins and the technology behind it make it a viable currency that offers more long-term security than government-backed currencies like the dollar or the Euro,” says Amagi Metals owner Stephen Macaskill. His online precious metals company is one of the pioneers in trading bitcoins for gold and silver with transactions exceeding $1 million per month.
With just under 12 million bitcoins already in circulation, they represent nearly $7.2 billion U.S. in value as of mid-November 2013. Even with admitted market volatility, that’s a number that is bound to attract the attention of a growing number of businesses throughout the world as the virtual currency grows in acceptance.

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