Bitcoin Holds More Value Than the Entire Currency Stock of 20 Nations
As was noted earlier on Reason 24/7, Bitcoin now holds more value than the entire currency stock of 20 nations.
Granted, the 20 nations in question (which include Bhutan, Guinea-Bissau, Samoa, and the Central African Republic) do not include influential economic powers, but the fact that Bitcoin is now worth over $1 billion is worth noting.
Bitcoin has exploded in value over the past few weeks, with some citing the crisis in Cyprus as the wakeup call that has some in Europe putting their money away from the hands of governments that are wreaking havoc with Europe's economies.
However, as BitPay.com CEO Tony Gallippi has pointed out, American regulations, which made the legal status of online currencies clearer, have contributed to demand for Bitcoins. From Fox News:
Bitcoin demand has also increased, Gallippi says, because last week U.S. regulators issued the first official guidelines for private digital currencies. Prior to the regulations, the legal status of the currencies was in doubt.
"Now people can see that it's not illegal, that it's not banned," Gallippi said.
While some might be reassured by the new guidelines over at Business Insider Cullen Roche of Pragmatic Capitalism foresees a potentially gloomy future for those who use Bitcoins:
I think Bitcoin can continue to exist as a subordinate form of money with a very low level of moneyness, but if Bitcoin were to grow to a point where it becomes a highly competitive form of money, but circumvents the laws, regulations and taxation of a system like the US banking system, my guess is that the US government will make it illegal for merchants to receive Bitcoins for payment. And then 100 FBI agents get a few thousand Bitcoins each, buy something from US based Bitcoin merchants and parade them out on national TV for the entire nation to see why Bitcoin acceptance results in a $250,000 fine and 5 years in prison. In other words, Bitcoin could very well become a victim of its own success as the US government would never allow another form of money to detract from public purpose due to high levels of monetary competition. Of course, I am referring to the US government, but this view would likely be embraced by many governments around the world.
So Bitcoin is an interesting and extremely innovative form of money, but probably not a viable form on any grand scale since its inevitable competition with the US banking system will likely render it at odds with the goals of the US government.
More from Reason.com on Bitcoin here.