Tame the Bitcoin Beast!

Tyler and Cameron Winklevoss, the twins best known for their bitter wrangling over Facebook, have poured a substantial portion of their wealth into Bitcoins and led the first major attempt to drag it into the mainstream. Earlier this year, they filed papers for a $20m initial public offering of their stash, which would make the currency easily available to ordinary investors, with no need for technical savvy. US authorities are dragging their feet over the IPO, but the twins are undeterred. On Sunday, Cameron Winklevoss told the website Reddit that his conservative estimate was that Bitcoin would surge past $40,000 in value. “I believe it could be much larger,” he said. “It will probably happen much faster than anyone imagines.” They are not the only people attempting to make Bitcoin more accessible. Alderney, one of the Channel Islands, is talking to the Royal Mint about plans to mint physical Bitcoins, dragging the so-called “cryptocurrency” firmly into physical reality. Elsewhere, JP Morgan, the world’s largest investment bank, has taken a step towards creating a Bitcoin-style currency of its own. Last week, it filed a lengthy patent for an electronic currency that experts hailed as a potential “Bitcoin killer”. The document does not make any explicit references to Bitcoin, the similarities are apparent. JP Morgan’s currency proposal would be “a new paradigm for effectuating electronic payments”, the bank said. Although JP Morgan’s plan would be a threat to Bitcoin, the fact that the bank is engaging in this battle at all is a hat tip to Bitcoin’s increasing momentum. Meanwhile, Bitcoins have crept further and further into daily life. A growing number of retailers now accept them as payment, especially for online transactions, for anything from pizza to flights. In America, newlyweds Austin and Beccy Craig ran an experiment to see if they could last more than 100 days using Bitcoin as their only currency, including in many bricks and mortar stores. They managed it. It is still easy to see why critics are concerned about Bitcoin’s legitimacy, however. Its beginnings are admittedly a little murky. The currency was launched in 2009 by Satoshi Nakamoto, a reclusive mathematician who left the project the following year, and has done his best to remain anonymous since. One of the cornerstones of the system he developed was that there is a limited number of Bitcoins. However, there is no single authority to police that agreements. Instead, the currency is effectively controlled by all of its users around the world, who are all incentivised to play by a single set of rules in order to protect their own investments. Regulators fear that it is vulnerable to rebels, who could break the rules and throw the financial system into turmoil. Their fears may be well placed. But it feels naïve to slap a ban on electronic currency, per se, just because it might be risky. The horse has already bolted. It is too late to lock the stable door, so governments need to try to tame the beast instead. 1wLx4152MUYokrNcw5po3i1LKsbczWuPn