Donate to Tomas Forgac, Tomas Forgac\'s site Enter the bitcoin amount you would like to donate: Donate with Bitcoin WIRED Is Wrong: We Don’t Need to Regulate Bitcoin WIRED contributor and faculty associate at the Berkman Center for Internet & Society at Harvard argues: as Bitcoin grows in popularity, it has to be regulated – but only once it is fully understood.This need for regulation, he says, springs from the risks Bitcoin introduces and opportunities its decentralized nature presents for tax-evasion and money-laundering.And if that was not enough, anonymous drug markets like Silk Road should make it obvious that some kind of regulation is required.When read carefully, the text does not really provide any cogent argument for regulation.Rather it milks the same buzzwords and repeats the same unsubstantiated claims, which we are supposed to take for granted because they come from academia and the press.It is correct that we do not fully understand the potential of this technology yet.

But when will we?How will we define the point when it is appropriate to draft rules which might have a potential impact on millions of businesses, billions of people and trillions of transactions?When do we consider the technology “settled” enough to define a legal framework for it?Anyone answering these questions will have to admit that the supposedly-appropriate point chosen will be arbitrary and, as the technology continues to grow, any regulation will be outdated before the ink on its signatures is dry.Regulators have a terrible track record in addressing risks related to anything.Which of the existing financial regulations lowered the risk of fraud or negligence we have seen over the past decade?SEC did nothing to stop Bernie Madoff.Some top global banks got away with as little as a wrist-slap for laundering hundreds of billions of dollars.The recent ‘Panama papers’ leaks will uncover only the tip of the iceberg of global fraud, corruption and tax-evasion.On the other hand, a compliance burden imposed on millions of small businesses by regulations supposedly designed to prevent all of this is immeasurable.

If anything, regulations always increase risks by lowering the motivation of individuals to do their own due diligence (how many of you know how much of your deposits are held in your bank’s reserves and how much has been lent out?)One had to be extremely naïve even before the Panama papers to think tax evasion is something new to the Bitcoin world.litecoin visaMore to the point, the potential for tax evasion should in fact be considered to belong to the bright side of Bitcoin’s nature.bitcoin amazon minerIf Bitcoin allows middle class to avoid draconian taxes the way wealthy can dodge them in the legacy financial system, it is merely an equalizing tool in a struggle against unjust confiscation of the fruits of our productivity.bitcoin casino api

As for money laundering, it should be scrutinized within its full context.How much of it is happening due to genuine violent and property crimes and how much is only a result of bureaucrats arbitrarily moving victimless activities to the black market?bitcoin math miningSilk Road and all of its successors are, after all, great examples of Bitcoin and other technologies bringing safety to an industry chronically ill from street violence and overdose risk by introducing transparency and feedback mechanisms.litecoin brasilIt is easy to regulate anything.bitcoin old man rapperIt is not only difficult, however, but outright impossible to regulate anything without introducing a whole raft of unintended consequences (which in fact might be fully intended by those usually invited to the regulatory design process).litecoin credit card buy

More regulation means more bureaucracy and less prosperity, more budget expenditures and less tax revenues.Instead of trying to stop tax evasion and money laundering with regulations which won’t work, we should be arguing against the root causes of these phenomena – onerous taxes and criminalization of voluntary transactions between consenting adults.bitcoin hahahaImage Source: Tiger Plxel @Flickr Author is a founder of Coin Of Sale Follow him on Twitter: @TomasForgac Bitcoin Tomas Forgac's site Austrian school of economics | Liberty | Bitcoin Join The Discussionbitcoin ny teknikBitcoin first achieved mainstream awareness during 2013, complete with un-predictable price surges and painful drops, which made many intrigued as well as skeptical about the virtual cryptocurrency.Since then, Bitcoin has reached dizzying heights, valued at over $1100 early in 2014, be-fore crashing and surging several times since then.

Right now, investors are cautious, but putting money back into Bitcoin, with it currently trading around $380.Analysts expect it to rise to over $600.Enthusiasts are claiming this is a sign that the crypto-currency has crossed the chasm, whereas others are still more cautious.Bitcoin is the most widely known cryptocurrency – although there are others, all ending in “coin.” This suggests these are currencies implying central regulation and safeguards, usually in the form of a governing body.Except none of that exists when cryptocurren-cies are concerned.“Satoshi Nakamoto” is allegedly the name of the creator of Bitcoin, although it’s un-known whether he is an individual or a group.Crypto-currency works as follows: digital coins are “mined” on hard drives across the world, with algorithms designed to keep a maximum of 21 million coins in circulation at any one time, to avoid inflation.Engadget explains the mining process this way: “Imagine that you’re an actual miner with a pickaxe in your hand, and there’s a big boulder in front of you with golden coins hidden in its very center.

To get to the gold coins, you’ll have to chip away at the boulder: The better your equipment is, the faster you can go.As time goes by, though, you’ll notice that boulders become harder to break and the gold coins in the center become fewer in number.The boulder in this case represents a block or a big bunch of transactions miners have to verify and solve.Each piece of rock a miner chips away represents a verified transaction, and the gold coins represent the bitcoins a miner can earn and introduce into the circu-lation.” No one can control the flow of Bitcoins or other currencies.They are simply bought and sold, through exchanges, whereby they convert your actual cash you can spend in the physical world for a digital coin, or a percentage of a coin, depending on the exchange rates.Despite the fact that Bitcoin is closer to being a security (although the U.S.Securities and Exchange Committee is yet to formally acknowledge this) or a form of barter (ac-cording to Canadian regulators), you can still store cryptocurrency in a wallet.

A digital wallet at least, or if you’ve invested heavily and want extra security, you can put them in virtual cold storage.These wallets function similar to PayPal, except they can generate individual codes or keys when you want to buy something, or when someone is sending you money.More businesses, even those outside of the tech sector and startup community are ac-cepting cryptocurrency as a form of payment for goods and services.There are several advantages for businesses, if you wanted to add Bitcoin or similar currencies as a pay-ment option: Will it ever break out through the tech crowd and be something your grandmother gives you as a Christmas present?You can already deposit cash in Bitcoin ATMs, of which there are several hundred worldwide.You can also hold part of an investment portfolio in Bitcoin.More places are accepting it as a way of paying for goods and ser-vices, including Dell, Microsoft and Expedia.Even Ben Bernanke, the US economist who served two terms as the Federal Reserve Chairman feels that Bitcoin, “may hold long-term promise, particularly if the innova-tions promote a faster, more secure and more efficient payment system.” As for who’s backing Bitcoin: startups involved in the cryptocurrency space have over $1 billion behind them, with Wall Street investment banks, the New York Stock Exchange, the NASDAQ, along with Visa, MasterCard and Capital One taking a bet on this unregu-lated currency.

Perhaps as a result of more investment and greater scrutiny, the number of black mar-ket players using Bitcoin to buy and sell drugs or pay hit men has thankfully reduced.So have the thefts, which took place across some high-profile currency exchanges in 2013 and 2014.Payment services, such as PayPal, Stripe and Square have integrated Bitcoin as a curren-cy option and some payroll startups have given their customers the option to pay staff in Bitcoins.At the same time, regulatory bodies haven’t caught up, which is where the greatest risk remains.Central or Federal banks were created once it became apparent that financial security for a currency depended on safeguards being in place.For cryptocurrency to achieve that same level of security, there would have to be some form of centralised control, which is contrary to its evolution as a decentralised, peer-to-peer currency.History has seen many alternative currencies come and go.Back in the Dutch Golden Age, in the 1630’s, you could buy a house in a beautiful part of Amsterdam for the price of one tulip bulb.