Bitcoin Users Are Not Regulated But Exchanges Are
One of the most debated issue related to the bitcoin refers to the anonymity of the transactions. Are them really safe or is just a myth? Considering that this is one of the biggest advantages that the internet reveals about the new digital currency, I consider it worth our attention. The short answer is no, the transactions are not anonymous. A proper word to be used in this situation would be pseudonym. A longer answer is given by Fergal Reid and Martin Harrigan, researchers at the University College Dublin. Using different tools, from network analysis to visualize egocentric networks and applying a few techniques such as community findings and network flow algorithms, they managed to find out important details about the bitcoin network.
The wallets that you use to keep your bitcoins don’t have your name on them, and you can have as many as you want, but if someone wants badly to find you, eventually will find you.
What could stop people from making money? I think the answer is nothing and thus, a group of persons managed to do an electronic payment processing system for the bitcoin currency named Bitpay (classified as a payment processor, not a money transmitter). Basically it enables online merchants to accept bitcoins as a method of payment. The owner of this system reveals that people use bitcons for all sort of payments such as the taxi’s receipt or the visit to the dentist.
In March, it was announced that the site processed a volume of $5.2 million and now has 4.500 merchants. The users of this method of payment increased rapidly, especially because people afraid of credit card frauds chose the bitcoin system instead, apparently trusting it more. Also the illegal acquisitions are encouraged by this currency and by its deceptively anonymous status. There has been episodes that made the bitcoin less attractive, like the theft of 24 000 BTC or 250 000$ from Bitfloor, a large American exchange, which made the site go offline, but people didn’t turn their backs to the virtual currency.
Even considering the number of negative cases related to the bitcoin, lately, the positive media attention kept coming. Thereby, its value reported record volumes and since the beginning of this year an increased trust came from important names as Reddit and Kim Dotcom’s Mega which now both accept bitcoin payments.
The latest news about bitcoin are linked to a forex trading platform, a project which is still debated by investors but it has all the ingredients to be a successful plan taking into consideration that the crypto currency became a million dollar market. Recent news revealed the implication of FinCEN (Financial Crimes Enforcement Network) in the bitcoin matter. The decentralized digital currency as was defined by FinCEN has no central repository, no single administrator and persons my obtain it by their own computing or manufacturing efforts. The released document also reveals that miners who use their bitcoins to buy goods and services are not regulated but miners that sell their bitcoins are. (Those miners have to register as money transmitters; getting such licenses is not likely to happen in the near future).
To put it in another way, users are not regulated but exchanges are. Even if it difficult to use bitcoins in accordance to the regulations that recently were imposed, this is a less important matter for the users. Their attention is focused on the fact that bitcoin is on his way to become totally legal and accepted.
We don’t know for sure how the evolution in time of the bitcoin transactions looks, but we do know that we will see businesses and organizations starting experimenting with bitcoins on a much larger scale.