Where is the real opportunity for bitcoin regulators?
Thursday 01 May 2014
In the rush to get to bitcoin to its next stage of growth we have organisations readily engaging regulators and legacy institutions. It’s not my intention to discuss the merit of such an approach. Instead, I intend on questioning the specifics of the approaches taken so far.
There is a determination to neatly package bitcoin. The technology is presented to regulators as something that will benefit them by streamlining their existing operations.
This is too shortsighted; for any entity with even a modicum of vision, this does not represent the greatest value proposition. The opportunity of bitcoin for the nation state is real but is not being presented properly.
There are vast amounts of real economic growth already being created in the bitcoin economy.
The real opportunity lies in attracting that wealth into any given borders.
The first jurisdiction to recognise this and choose the correct regulatory path
will attract the entrepreneurs, the doers and the builders.
This state will generate unimaginable wealth. They will be the envy of the world. That is the real potential.
Regulators may have heard of bitcoin as a currency or commodity and it may have come to their attention as a payment system or a digital form of cash. They should be made to understand that, fundamentally, bitcoin is a solution to a long-standing problem in computer science so, to regulate bitcoin as only a monetary phenomenon will lead them down the garden path.
Regulators will then see that the computer scientists already building tools will need a base of operations. The opportunity will become strikingly obvious.
There is a nagging fear that bitcoin is somehow dangerous and must be handcuffed. Regulators must be directed to choose hope over fear. Bitcoin is only a tool; a computer network. It is not inherently good or evil. It can’t be.
Bitcoin is a square peg. It will not fit readily into any existing regulatory round holes. As such, the challenges faced by regulators are real and numerous. If one values the regulation sought, then one must be sympathetic to these challenges. It is essential, above all else, that authorities realise that Bitcoin needs and deserves its own unique approach.
With so much ambiguity internationally, the first nation to embrace appropriate regulation will immediately benefit. Over time this will widen the tax base and greatly increase the future income opportunity. With some vision and foresight a regulatory authority can nurture this technology and usher in a new era of prosperity within their borders.
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