28 May What is going to happen to Bitcoin?
Over the past year, Bitcoin has grown from a small community of hackers to the latest and greatest thing to be happening in the venture capitalist industry. The excitement around the anonymous decentralized currency appeared to be unstoppable until last Tuesday.
Last Tuesday, one of five commissioners at the Commodity Future Trading Commission told Reuters, “we could regulate [Bitcoin] if we wanted. That is very clear”. This lead to the Department of Homeland Security taking action to seize and control US funds at Mt. Gox, the largest Bitcoin exchange (see the warrant here). Until the government intervention, Mt. Gox handled 66% of all Bitcoin currency conversion. Not only did this mean a huge struggle for the Bitcoin industry, it created great unease for the venture capitalist community assuming that the risk of an entire industry and investment was being taken out by the government in one blow.
So what does the requisition of Mt. Gox mean for Bitcoin investments going forward?
One argument is that this is just the first strike in a series of intervention as an attempt to prevent money laundering, illegal trade and consumer risk. Another argument is that Mt. Gox did not go through the proper process when registering their business and working within the rules for money transfer and banking.
After a week of government intervention the answer is still unknown and left to our own speculation. I personally think that Bitcoin will continue to thrive as a decentralized currency regardless of inevitable government intervention.
What do you think about the US Government taking action? Will the Bitcoin movement continue to thrive? Will Bitcoin survive without anonymity?