cryptocurrency

Opposing Bitcoin Regulations Could Impede Currency Expansion

bitcoin-regulation

According to Payment Source, the state of New York Department of Payment Services recently proposed the framework for ‘BitLicense’, a money transfer license pertaining to businesses that use Bitcoin and other cryptocurrencies. Although this proposal still has yet to be approved, the potential effects could alter the course of Bitcoin’s use nationally.

The proposed Bitcoin license would require state businesses to not only provide full customer disclosure, but also transaction receipts, a complaint resolution center, and user account verification. A cyber security program is also a requirement of the proposal, with heavy emphasis on record keeping ot be spearheaded by a chief information security officer.

When this proposal is placed in comparison to more liberal Bitcoin states like Texas, there is an extreme conflict in both interest and practice; Texas’ current Bitcoin laws make the currency an unofficial form of payment that is unregulated by the market. Bitcoin is not treated as real money, but can be used for goods, services, and currency exchange would still follow state law. With varying forms of enforcement for this controversial cryptocurrency, it leaves many wondering which the best course is for the future.

The new proposal is not yet active, and must be voted on by state businesses interested in transmitting Bitcoin. The voting period began July 23, 2014, and will continue for 45 days.

Although these new regulations only apply to New York for the time being, it is still a largely relevant issue because a majority of New York’s financial policy acts as a model for the national industry. Also, any customer not based in New York would still likely feel the effects of the legislation because any and all Bitcoin transactions/advertisements that go through New York’s financial industry will still have to be regulated.

New York’s new license proposal would likely deter many businesses, simply to avoid the hassle of registering for a license. Although Bitcoin miners themselves would remain unaffected, businesses would not only have to report all Bitcoin activity on a daily basis, but also be subject to independent investigation by the Department of Financial Services.

The proposed changes to the Bitcoin market vary extensively from many of the current practices on a national level, although it may not be all bad; these changes can significantly reduce the risk of money laundering, Bitcoin thievery, and overall illicit financial activities that could otherwise be disguised through Bitcoin. The tradeoff is that many companies are more than likely not looking to go through the steps to obtain a license, especially when it is subject to so many regulations. Will this have an overall negative effect on the national Bitcoin market? Will other states follow suit? We will all soon have answers once voting is concluded.

New Bitcoin Debit Cards may make cryptocurrency a universal coinage

Admin

Business, New Product, Tech

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The Bitcoin craze that began a few years ago is yet another one of the unforeseen curveballs that the internet has thrown at us. Although this form of electronic payment may seem futuristic and innovative—and to some parties, illegitimate—there’s no denying that it has altered the landscape of peer to peer payment forever. With financial service institution “Xapo” set to launch a Bitcoin debit card this month, it brings to question what exactly the future of this cryptocurrency and other open source payments may be.

For those who are a little less tech savvy, Bitcoin is a form of digital payment used to purchase goods, services, or merely trade among consumers. Bitcoins are earned through a process called “mining”, where users connect their computer to a server to process countless other Bitcoin transactions. These transactions go to an independent Bitcoin ledger called the “block chain”.

As users gain more Bitcoins, the processing of mining becomes increasingly difficult, and block chain rewards decrease per every block mined. There are only a finite amount of Bitcoins, and this method of accumulation is only expected to last until about 21 million Bitcoins are created. By that point, the only way to make a profit off of Bitcoins will be through payment transaction fees. This could possibly explain why finding alternative ways to use and transfer Bitcoins has become a topic of interest.

According to www.coindesk.com, the Bitcoin debit card will act the same as a regular debit card, and will be usable at any location a Mastercard can be used. Zapo analyzes the user account registered to the card, and then sells the appropriate amount of Bitcoins through the Bitcoin exchange service “Bitstamp”. The merchant will receive whatever localized currency is accepted in the area, so businesses will still receive real money, not Bitcoins.

With Bitcoin value currently fluctuating near $600 USD per coin on www.bitcoinexchangerate.org, this is a huge step forward for the use of this peculiar digital currency. Now, owners and investors will have legitimate ways to spend their Bitcoins on goods and services outside of the internet. But what affect will this new service have on the market value and liquidity of Bitcoins? Will this make Bitcoin a more legitimate form of payment? Bitcoins were highly popular, largely because their fees were so much lower than those of regular credit card processors; how will this affect the price relationship, and what affect will this debit system have on other merchant payment systems? What do you think? Let us know!