The cryptocurrency Bitcoin has just hit $250 per Bitcoin (it soared past $200 yesterday). But with all this interest mounting, will politicians start to take interest in what could be a very subsersive tool? Bitcoin is well known as the alternative currency that enables black market dealing in narcotics to take place online, without trace. Tim Lee thinks the alternative currency might not be a dollar competitor though:
Bitcoins have some unique properties that no other financial instrument has. They combine the irreversibility of cash transactions with the convenience of electronic transactions. And, the lack of middlemen and regulations greatly reduces the barrier to entry. You don’t need to get permission from big banks or financial regulators to create a Bitcoin-based financial service. All of this means it makes sense to think of Bitcoin less as an alternative currency than as a new platform for financial innovation.
The real threat to Bitcoins is that whatever they eventually turn into, governments may decide to clamp down on them. Very few outlets in the physical world will allow you to pay with the currency, but if states ban even those then users may be forced underground. This would entrench Bitcoin as a tool associated with enabling illegal activities, rather than as a more benign interesting technological development.