Senate for Cryptocurrency

Is our government getting on board with the idea of Bitcoin? Cryptocurrency is a major issue around the world recently as Bitcoin's value skyrocketed last year. This brought to the attention to governments the many illegal uses of cryptocurrency, such as tax evasion and money laundering.

However, there was a Senate hearing by the Senate Banking Committee on Tuesday February 6, 2018 that was very positive when it came to cryptocurrency. The chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, discussed the dangers associated with investing in Bitcoin, but also praised the blockchain technology. Then later he discussed how Bitcoin and blockchain are difficult to separate. They are essentially one and the same. Without Bitcoin there would be no distributed ledger technology—known as blockchain.

Source: Tech Crunch
This positive tone in the Senate hearing likely was the cause of the increase in Bitcoin's value after it plummeted below $9,000 last Thursday and below $6,000 this week. Now part of the reason why Bitcoin dropped below $9,000 last Thursday was also as a result of the Commodity Futures Trading Commission. They issued a subpoena on a cryptocurrency exchange called Bitfinex. They were especially curious about its relationship with an altcoin, a smaller less well known cryptocurrency, called tether. Tether's big seller was that it was backed the US dollar. One Tether was supposedly worth $1, however, it was soon discovered that this did not seem to be true, but a complete scam.

Most alt coins are actually scams. They are extremely easy to create thanks to the Ethereum platform and are essentially Ponzi schemes because there is no product that backs the coins. The value essentially comes from people accepting them. 

Of course, the slide in Bitcoins value was not only affected by the actions of the CFTC, but it was one cause. The other causes include the governments all over the world cracking down on cryptocurrency. The big question everyone is asking is whether cryptocurrency is a cause for concern. Does it pose a threat to our economy? If so, how do you regulate something that's purpose is to be unregulated?

Comments

  1. UnknownFebruary 13, 2018 at 7:07 AM

    It is interesting to see how the government is responding to the use of Bitcoin. I honestly don't know if it poses a threat to the economy because what exactly backs Bitcoin? Can you buy things with it or does it act more like stocks? Usually with something like this I would agree that the government does not have a place in regulating it, rather it's up to the people, but in this case, I don't think government regulation is possible.

    ReplyDelete
  2. bevFebruary 13, 2018 at 7:13 AM

    good thing I sold some bitcoin at the beginning of the year. I think we should be seeing a lot more government regulations in the coming years to respond to this new market. As you have described, most of the value for many of these cryptocurrencies comes from people's acceptance of it. And unlike actual currencies that are backed by the fiscal strengths of national governments, the cryptocurrency market is pretty much a black market right now.

    ReplyDelete
  3. UnknownFebruary 13, 2018 at 7:14 AM

    All types of money fluctuates in our economy but the government seems to have an easier regulating other types that aren't cryptocurrency, most likely being because they aren't in electronic form. So I wonder the same, do the pros outweigh the cons? Can it help us or will it hurt more?

    ReplyDelete
  4. Natalie ReedFebruary 13, 2018 at 7:18 AM

    First of all I really appreciate this blog because without it I would never learn about Bitcoin simply because I don't take the time to in my daily life. Also I think it is really interesting to see how the government's response to Bitcoin drastically affects its value. I think it's interesting that the government is beginning to take increasing interest in Bitcoin and I am interested to see what they will do from here.

    ReplyDelete

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