At first the thought of regulators toiling with the bitcoin sent shivers up and down my spine. In part the popularity of the bitcoin is based on its independence from such entities. Perceived by many as unscrupulous and representing the super rich or at least not the common majority, these regulators so its thought would create laws that fashion the bitcoin into just another government controlled currency. I have a different perspective.
I think that some regulation is good. If the bitcoin is allowed to go unchecked in an completely democratic or anarchical way then some entity is going to take control of it and fashion it to their benefit. Hate to say it, but society, nature, however you want to look at it is made that way. There are endless examples of this. One close to home was the unregulated (more or less) mortgage business of 2002-2007 – which in part, was responsible for the rise of the bitcoin. Business people, using a technological advantage, took control of mortgage financing and created great inefficiencies in the financial system that put real hurt on our society. Today, the world is progressing at an incredible rate and old ideas about capitalism and government are likely to do more harm than good. However, the paradox is that due to that growth we need some regulation to build a veneer of trust and give the mass some level of perceived security. Not to the point of controlling the bitcoin making it just another name for the dollar, euro or yuan; rather to levy some credibility. I will admit this can be a fine line.
If some credible regulation can be enacted that does not tamper with the underlining functionality and number of bitcoins created then the bitcoin holds some real value. As governments and countries try to maneuver through these tough financial times and their currencies devalue or debase as a result the bitcoin is a real opportunity for a store of stable value. Gold, for example serves that purpose for many now, however, gold cannot be easily traded for currency. I think one future of the bitcoin will be to allow holders to obtain a stable store of value, whereas their countries currency currently does not.
Some regulation of the bitcoin is needed, too much will be trouble. I don’t necessarily disagree with Jesse Powell, but I do hope that regulation creates a balance of flexibility and structure for the bitcoin that gives it the credibility it needs to become more mainstream and keeps it on its own a decentralized global currency.