Bitcoin Finds Its Place in the World in 2016, Sort Of
Posted on: December 27, 2016, 10:00h.
Last updated on: December 20, 2016, 09:07h.
This was the year that Bitcoins grew up, or at least hit adolescence.
Once considered subversive, the decentralized digital currency continued to gain mainstream acceptance throughout 2016. It even became a payment mechanism for legitimate goods and services, rather than a shady way of paying for shady stuff only a few years back: things like illegal drugs, weapons, and some services that you can’t, um, find on Angie’s List, shall we say.
According to a joint study by the Central Bank of Germany, University College of London, and the University of Wisconsin-Madison, the Bitcoin economy is no longer driven by transactions based around illegal activities. Once the secret currency of people trading god knows what on the Dark Web, it’s now taxed by the IRS, while venture capitalists plow millions into tech startups building Bitcoin platforms in Silicon Valley.
Even Russia, which has railed against crypto-currencies in recent years, has come on board. Perhaps realizing the essential impossibility of attempting to ban a monetary method whose sole purpose is to bypass all centralized banking systems, the Duma announced recently it would create its own digital currency to function alongside the ruble. Bitcoin, meanwhile, will be classified as a “foreign currency.”
Finding Its Place in the Sun
Bitcoin has, to a degree, been integrated into financial and legal systems globally. And while it may be a long way away from mass adoption (and might never get there, due to its relative technical complexity), it has outgrown its persona non grata stage, at least.
Does Bitcoin’s integration into the mainstream system represent its failure as an instrument of liberation from state law and world banking? For those who have always enjoyed its rebellious beginnings, it still has the power to irk governments as a payment method for unlicensed online gambling, unfettered by a centralized banking system.
Several jurisdictions have flirted with regulating Bitcoin over the years, notably the Isle of Man in the UK. The problematic issue is grappling with the idea of regulating something whose sole purpose is to be essentially, unregulated and stealth.
The Trouble with Bitcoin
Like the Isle of Man, the United Kingdom Gambling Commission (UKGC) this year appeared to quietly sanction the use of digital currencies when it updated its License Conditions and Codes of Practices in September. And the Isle of Man’s Gambling Supervision Commission (GSC) and Treasury approved changes to laws that will allow digital currencies to be accepted as cash deposits for online gambling sites.
It will be interesting to see what shape these new more Bitcoin-friendly regimes will take as they emerge in 2017. Both jurisdictions adhere to the highest levels of international anti-money laundering protocols, which would appear to be at odds with the use of Bitcoin for online gambling.
By its very nature, Bitcoin is untraceable. It’s possible to know the current owner, but not where it has come from, or its use in previous transactions, which makes it very difficult to satisfy most anti-money laundering measures. Bitcoin remains an unregulated currency, and attempts to impose regulation on it may prove to be more difficult than anticipated in an increasingly regulated and monitored online gaming universe.
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