Bitcoin needs regulatory framework to change 'risky' image

LONDON Tue May 13, 2014 1:05pm EDT

Bitcoin themed stickers stand attached to glass doors during the Inside Bitcoins: The Future of Virtual Currency Conference in New York April 8, 2014. REUTERS/Lucas Jackson

Bitcoin themed stickers stand attached to glass doors during the Inside Bitcoins: The Future of Virtual Currency Conference in New York April 8, 2014.

Credit: Reuters/Lucas Jackson

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LONDON (Reuters) - Regulators should create a framework of rules to help to make virtual currencies such as bitcoin more attractive to ordinary consumers, a lawyer from the Bitcoin Foundation said on Tuesday.

Bitcoin made headlines earlier this year when Tokyo-based bitcoin exchange Mt. Gox filed for bankruptcy after saying it might have lost some 750,000 bitcoins in hacking attack.

Patrick Murck, general counsel at the Bitcoin Foundation, said cooperation was needed between authorities to create rules that would support those using the digital currency responsibly.

"There's an opportunity to work together to stop people saying it's scary and risky," he said. "The challenge is just to get a framework out there that makes sense for people," said Murck, speaking at an event on the state of digital economy.

Launched in 2009, bitcoin offers a way for people to conduct transactions over the Internet. Supporters say the anonymity that bitcoin offers lowers the risk of fraud, while critics say that same anonymity and lack of central oversight make it easier to commit crimes.

The Bitcoin Foundation aims to standardise the currency, protect it from theft or counterfeiting and provide education.

Some companies involved in bitcoin, including investment firms and those providing services for the currency's users, have also called for regulation to ensure their customers feel more comfortable about virtual money.

A number of regulators, including the U.S. Securities and Exchange Commission, have warned investors about the risks of scams related to virtual currencies.

Murck said there were a handful of well-funded companies working towards making bitcoin more attractive and safer for ordinary consumers by trying to insure bitcoin holdings and to reduce the currency's volatility.

Those companies have learned from the collapse of Mt. Gox and have more knowledge about how the industry works that was not available before, he said.

Bitcoin could be ready for the mass market by the end of the year, Murck added. "I feel much more confident today than I did 12 months ago. The wind is definitely blowing at our backs."

The banking industry also has a role to play in opening the bitcoin market up, Murck said, by providing finance to companies involved in bitcoin or integrating bitcoin services into its own products.

(Reporting by Clare Hutchison. Editing by Jane Merriman)

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Comments (3)
millsdmb wrote:
this whole article is rubbish

May 13, 2014 1:29pm EDT  --  Report as abuse
FreeJack2k2 wrote:
The Bitcoin Foundation doesn’t seek the protect it from counterfeiting, because it cannot be counterfeited, in the first place. That’s the whole point of it.

May 13, 2014 3:34pm EDT  --  Report as abuse
Surn wrote:
While I disagree with the implication of the title of the article, it is clear that the politics of bitcoin is complex. The FEC Recently declared bitcoin approved as “Cash or other assets” for political campaigns and PAC’s to use. Further, it is approved to be held as an asset and purchased on exchanges by political groups.

What we see in your article is not the technical fact about bitcoin, as it is not nearly as risky as other forms of cash because it is encrypted and secure, but the defense of the smear that it is “risky”.

Bitcoin is “risky” compared to banks, which are already failing, scandalized, and hated worldwide, because it is new and on the internet. Every criticism of bitcoin is also true of the internet in general. In the end, bitcoin (crypto currency) is less risky because it is decentralized and secured via encryption. There is no central point of failure, like the internet.

The spreading of FUD (Fear, Uncertainty and Doubt) against bitcoin and other cryptocurrencies is done by established orginizations who are afraid of the technology and the changes it brings. These organizations are spreading cryptophobia.

May 14, 2014 12:28pm EDT  --  Report as abuse
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