A few hours ago, the Wall Street journal reported that New York is preparing to unveil fresh Bitcoin licensing rules. This is exactly “NOT” what the doctor ordered.
The governments of the world aren’t going to let a mysteriously created cryptocoin threaten sovereignty and their own national currencies. At the same time, elected officials don’t want to alienate their constituents. So rather than ban the digital currency outright, they present their regulation daggers as consumer protections. They’ve concocted the perfect plan to forever banish bitcoin to the fringes.
Let’s say you want to start a Bitcoin company in the U.S., chances are you’re going to need a Money Transmitter License, or rather 51 of them, because 47 states three territories and the District of Columbia each have their own permitting process for any business that handles money on behalf of its customers.
Instead of working to sort out this regulatory mess, government officials are piling on even more red tape. Benjamin Lawsky, New York State’s top financial regulator, has spent the last year hammering out the details of the so-called BitLicense, a new regulatory regime that will apply to virtual currency companies that serve customers in New York.
Rather than fighting a battle that can’t be won (aka competing with fiat), many alternative currencies have decided to focus on the commodity side of the equation. Cryptocurrencies can also be used as value stores and to provide better anonymity.
Goldcoin (GLD) for example is modeling its currency after physical gold and working to make it secure by continually improving its patented 51% attack defense. While Dash (DASH) has created the next generation anonymous peer-to-peer cryptocurrency. Both of these could actually thrive in the tightening regulatory environment.
The problem with Bitcoin is its like a runaway locomotive with a belly full of steam. The passengers are relaxing in the dining car but there’s no one at the controls of the train. Development is at a standstill, yet survival means change. So while the altcoins are busy innovating and adapting, the bitcoin train is headed towards its last stop – final destination – Fringe Station.
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