Bitcoin is finally beginning to make a splash in the mainstream media. It is actually becoming commonplace to see articles about it in Bloomberg, the Wall Street Journal, and even the Economist. The prestigious Economist has written fifteen Bitcoin related articles since March of this year as opposed to the 6 it wrote from June 2011 through March.
For Bitcoin enthusiasts, this attention has been a double-edged sword. More attention brings more people who hear about Bitcoin and decide to give it a try, more businesses that decide to accept Bitcoin in payment, and more people who accept Bitcoin as a store of wealth and a currency. More attention also brings more attention from governmental organizations which may, but probably won’t, view Bitcoin as a good thing.
In general, though, Bitcoin’s prospects seem to be looking up. Bitcoin has been legally declared a currency in the US for the purposes of charging Trendon Shavers (AKA prirateat40) of running a Ponzi scheme defrauding millions of dollars from Bitcoin investors. Germany has declared Bitcoin to be a “unit of account” which also effectively allows the government to tax users. And even Thailand, widely reported to have banned Bitcoin, has not really banned it as much as said “we don’t know what to do with this thing, so we prefer it to just go away.”
One of the more interesting recent developments was a request from the Conservative Action Fund PAC to the FEC to allow Bitcoin donations. According to an article in Bloomberg, it may be difficult for the FEC to deny this request given the ability of PACs to accept commodities like gold and securities. The effect of Bitcoin on politics is likely to be small in 2014 and even 2016, but the ability to donate bitcoins will spark headlines and likely be part of the campaign finance reform debate that we are almost certainly going to need to have in the next few years.
There have been setbacks as well, including the cease and desist order issued to the Bitcoin Foundation and other groups by the California Department of Financial Institutions. New York subsequently issued twenty two subpoenas to many of the biggest and most famous Bitcoin related businesses run in the US. California’s cease and desist orders appear on their face to be little better than Thailand’s “go away” given that they were sent to organizations that are clearly not doing what they were ordered to desist. The significance of New York’s subpoena’s is not yet clear, but when more information is revealed, it is likely to turn out that it also is just the state’s financial board trying to get a handle on Bitcoin.
In fact, just after New York issued their subpoenas, many of the top names in Bitcoin met in Washington with a nearly a dozen high-level agencies including the Justice Department, the Federal Bureau of Investigation, the Department of Homeland Security, the Internal Revenue Service, the Secret Service and the Financial Crimes and Enforcement Division (FinCEN) of the Treasury Department, which hosted the meeting. Reports from this meeting were that although the representatives of these departments were skeptical, and especially worried about possible illicit uses of Bitcoin, they seemed willing to listen and keep an open mind.
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One of the key arguments made in this meeting was the economic damage regulatory uncertainty or over-regulation would have on businesses trying to operate with Bitcoin in the US. Despite initial news reports which all painted Bitcoin as a money-launderer’s dream, it can be shown that Bitcoin is largely being used for legitimate purposes, just like fiat. In a county that is still struggling with high unemployment and significant economic woes, discouraging businesses is desirable. And it does seem that more and more business are trying to offer a Bitcoin payment option. The obvious advantage is that, although small, the Bitcoin community is dedicated and will often seek out businesses accepting that option.
Since starting this website, I have been taking a look at the small-business people of Bitcoin to learn more about them. As I reach out more, I am finding that all is not roses on the front lines. Several of the businesses that I have contacted have told me that they just haven’t gotten any response to their Bitcoin plaques.
This shouldn’t be a huge surprise, really. We are still early on Bitcoin’s adoption curve. The best advice to businesses that are currently accepting Bitcoin, but not getting a huge response, is to wait and keep that Bitcoin Accepted Here tile prominent. It is difficult to know when this juggernaut will take off, but when it does, there are going to be a lot of people rewarding those who accept Bitcoin
In my next post, I will be interviewing Brent Van Arsel, the founder and owner of Language101.com. He has an innovative language learning program and is accepting Bitcoin. We discuss his business and the prospects for Bitcoin.