[LINK] Bitcoin bullish

[stephen at melbpc.org.au]

So, is bitcoin a currency, a commodity, a security, or perhaps, as the 
American Bankers Association claims, a service businesses like Western 
Union. Whatever, definitions will determine its regulatory environment.

But bitcoin continues to increase in value exponentially, having gained
50 percent in value since Nov 16 and over 400 percent since mid-October.
Maybe because of increased Asian interest, or, as Marketwatch put it, a 
"Chinese feeding frenzy," with the largest market cap exchange in China.

IDK but a global digital currency may probably help unify us earthlings.


Rick writes,

>> Bitcoin Pursues the Mainstream
>>
>> <http://www.nytimes.com/2013/10/31/technology/bitcoin-pursues-the-
>> mainstream.html>
>
> I got up to speed quite quickly after reading this multi-part plain
> English article written by a bitcoin aficionado:
>
> http://codinginmysleep.com/bitcoin-mining-in-plain-english/
>
> (snip, lots of interesting stuff)
>
> The bottom line is the Fed in the USA will not tolerate a non-fiat
> currency for long. It will likely be made illegal.


Yesterday, Bernanke gave Bitcoin his 'cautious blessing'

http://www.businessinsider.com.au/ben-bernanke-on-bitcoin-2013-11


And the NYTimes reports 

"Regulators See Value in Bitcoin, and Investors Hasten to Agree"

BY NATHANIEL POPPER  nytimes.com  19th Nov 2013


The virtual currency bitcoin took a big step toward the mainstream on 
Monday as (U.S.) federal authorities signaled their willingness to accept 
it as a legitimate payment alternative.

A number of federal officials told a Senate hearing that such financial 
networks offered real benefits for the financial system,yu even as they 
acknowledged that new forms of digital money had provided avenues for money 
laundering and illegal activity.

“There are plenty of opportunities for digital currencies to operate within 
existing laws and regulations,” said Edward Lowery, a special agent with 
the Secret Service, which is tasked with protecting the integrity of the 
dollar.

Signs that the government would not stand in the way of bitcoin’s 
development, even as it has been cracking down on criminal networks that 
use the digital money, stoked a strong rally in the price of the crypto-
currency.

By Monday evening, the value of a bitcoin unit soared past $700 on some 
exchanges. The total outstanding pool of bitcoin — which is created by a 
network of users who solve complex mathematical problems — is now worth 
more than $7 billion.

The Senate hearing Monday afternoon was the clearest indication yet of the 
government’s desire to grapple with the consequences of this growth, and 
the recognition that bitcoin and other similar networks could become more 
lasting and significant parts of the financial landscape.

“The decision to bring virtual currency within the scope of our regulatory 
framework should be viewed by those who respect and obey the basic rule of 
law as a positive development for this sector,” said Jennifer Shasky 
Calvery, the director of the Treasury Department’s Financial Crimes 
Enforcement Network. “It recognizes the innovation virtual currencies 
provide, and the benefits they might offer.”

Ms. Shasky Calvery and the other officials at the hearing did say that 
basic questions still had to be answered about virtual currencies, 
including whether they can actually be considered currencies or whether 
they are more properly categorized as commodities or securities. The 
distinction will determine which agencies regulate the networks and how 
they are treated under tax law.

Ms. Shasky Calvery said that the Internal Revenue Service was “actively 
working” on its own rules for bitcoin.

The hearing followed other less visible steps taken by regulators and 
lawmakers to bring digital money into the mainstream.

New York State’s top financial regulator, Benjamin M. Lawsky, said last 
week that he would hold a hearing to consider the creation of a BitLicense 
to provide more oversight for transactions. Earlier, the Federal Election 
Commission put out an advisory indicating that bitcoin could be legally 
accepted as political donations.

The general counsel of the Bitcoin Foundation, a nonprofit advocating the 
currency, said in his testimony on Monday that he was receiving a much more 
friendly response from both government and the financial industry.

“We have recently perceived a marked improvement in the tone and tenor 
taken by both state officials and bank executives,” the general counsel, 
Patrick Murck, said.

Bitcoin has experienced a remarkable ascent since it was created in 2009 by 
an anonymous programmer or collective known as Satoshi Nakamoto. The money, 
which is not tied to any national currency, has been popular with 
technophiles who are skeptical of the world’s central banks. Only a finite 
amount of bitcoin will ever be created — 21 million units. Users have bid 
up the price on Internet exchanges, betting that the currency will be more 
widely used in the future.

There are significant questions about the wisdom of the digital money as an 
investment, given that bitcoin has no intrinsic value and has proved to be 
vulnerable to hackers. Many money managers have recommended that 
unsophisticated investors stay away.

Recently, though, bitcoin has been catching fire around the world, with 
exchanges in China particularly active. A growing number of prominent 
American investors have also bought stakes, including Michael Novogratz, a 
principal at the private equity and hedge fund giant Fortress Investment 
Group, as well as the Winklevoss twins, Cameron and Tyler.

The increasingly widespread ownership of bitcoin has shifted attention away 
from the criminal enterprises that have used digital money, but it was a 
focus at the Senate hearing.

Last month, the online marketplace Silk Road, where bitcoin was the primary 
form of payment, was shut down and its founder arrested after authorities 
accused it of being used to buy and sell drugs, weapons and pornography. 
The chairman of the Senate committee, Thomas R. Carper, Democrat of 
Delaware, said that a few days after the arrest, a similar site sprang up.

It can be harder to track criminals who use bitcoin, law enforcement 
officials said at the hearing, because they operate across international 
borders and often do not use established financial institutions that report 
transactions.

But Mythili Raman, an assistant attorney general at the Justice Department, 
also said that because every bitcoin transaction was recorded on a public 
ledger, it was possible for investigators to trace the movement of money 
between accounts.

“It is not in fact anonymous. It is not immune from investigation,” Ms. 
Raman said.

All the officials at the hearing said that crime had been an issue during 
the early days of credit cards and online payment systems like PayPal, and 
should not be a reason to limit innovation.

“It is our duty as law enforcement to stay vigilant while recognizing that 
there are many legitimate users of those services,” Ms. Raman said.

The bitcoin supporters who testified at the hearing said bitcoin could 
bring major changes to the financial system by cutting out the middle men 
needed to move money around the world.

“I am here to testify because I believe that global digital currency 
represents one of the most important technical and economic innovations of 
our time,” said Jeremy Allaire, the chief executive of Circle Internet 
Financial, which is seeking to promote more widespread use of the currency.

Given bitcoin’s appeal to skeptics of government, many aficionados have 
been wary of involvement by Washington. But advocates at the hearing said 
that the increasing cooperation with regulators could lay the groundwork 
for further growth.

“As this technology moves from early adopters into mainstream acceptance, 
it is critical in my view that federal and state governments establish 
policies surrounding digital currency,” Mr. Allaire said.

A version of this article appears in print on 11/19/2013, on page B1 of the 
NewYork edition with the headline: Regulators See Value in Bitcoin, And 
Investors Hasten to Agree .

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