‘Bitcoin means loss of control for government agencies’ – expert Posted on December 17, 2013 by Asher Berube December 17, 2013 (Source: Voice of Russia) —

The craze around Bitcoin is beating record highs. The protocol raises much debate polarizing the views on the future of the digital currency from complete support to resounding opposition. The Voice of Russia discussed it with Andreas Lehrbaum, Chairman of the non-profit organization “Bitcoin Austria”. What are your predictions for bitcoin when will it catch on in a global sense?

Well, I’m sure, it has quite a big potential. I mean, it’s a totally new technology, and it enables services that were previously impossible to do. So, for the first time in history, you can act globally without any fears, without any limitations in the amounts, and without needing any third party to enable the services. And that means that the future potential of Bitcoin is pretty good. You mentioned 3 pluses: without paying for services without a third party and so forth.

Are those the same qualities that cause certain countries to be very afraid of what Bitcoin could mean. They cannot control it. Yes, it is. Bitcoin, of course, means loss of control for government agencies or other monitoring authorities, because for the first time they cannot really stop anybody paying to different countries or enforcing capital controls, so that’s partly the reason why they are expressing concern about this new phenomenon, and also why they might try to crack on some of big changes and put pressure on their merchants to follow the rules of the traditional monetary system. The European Banking Authority has warned markets about the currency’s possible threat. The Chinese government simply banned trade in Bitcoins.

Is this monetary novelty really that much of a danger? What are bitcoin’s large scale implications for existing currencies? They basically warn about Bitcoin, out of concern for consumers, that’s basically a consumer protection issue. They warned it is necessary to be aware of the risks becoming of dealing with Bitcoin and also by dealing when paying with Bitcoin, because there is no consumer protection built in, there is no authority that can save your deposits or ensure your deposits. Who actually owns Bitcoin right now? Our listeners don’t know all about Bitcoin, I’m just wondering, I mean, I myself also don’t understand who actually owns and is in some way responsible for Bitcoin? Is there any responsibility right now on the creators of Bitcoin? To ask who owns Bitcoin is like asking who owns Email, who owns the Web. It not really a something somebody owns, it’s technology that can be followed or implemented by different parties and anybody who implements or follows rules of Bitcoins.

So, there is no central governing body, and also the creator is not really available any more, he disappeared a few years ago from the scene. Everybody can see that Bitcoin does exactly what it says it does, but the creator himself is not there any more to have some control over the currency. Right now it is developed by independent and voluntary communities of developers, it is an open source of software, and anybody is free to download and use it. Now, who at this point can crack down on Bitcoin and how they can crack down under current international legislative policy?

Will they have to pass new laws all over the world to be able to regulate Bitcoin, protect consumers or protect your own local national currency? Lawmakers will have to catch up. They will have to adopt the laws, because the existing regulations and the frameworks don’t quite fit Bitcoin. It doesn’t meet many of the traditional features of monetary instrument or money. Therefore, the legal system definitely has to do that.

But as we have seen with other technologies like Bitcoin, it is usually very long and slow process, and a long way may probably lead nowhere, so I wouldn’t be surprised if many of the regulatory attempts, if you know, wouldn’t work in the long run. I think, cracking down on Bitcoin is pretty hard. It is, of course, possible to make it harder for users to use, but nobody can really deny anybody to using it. The government could make it much harder and more risky to use Bitcoin, and in the long run, then, people might choose not to use it. But outright forbidding Bitcoin is practically impossible, because it is nothing illegal.

Another reaction of markets worldwide is the BitCoin-Like initiative, launching digital based currencies akin to the BitCoin. What prospects do you see for such a computer-based currency emerging in Russia? There are two different kinds of alternatives to Bitcoin. One part comes from Bitcoin itself, that’s alternative coins, “altcoins” for short. So, as I said, Bitcoins is open for anybody to use, it is also open for everybody to modify. And that has been done many times.

So, it is pretty trivial to change a few things, call it some other name and register again as your own Coin. But unless you introduce some totally new features, people won’t use it, because there are already lots and lots of infrastructure built around Bitcoin, and lots and lots of users. So, that’s something that will probably prevent come new copy of Bitcoin to catch on. And there was a startup, it was very interesting, called Coin Base.

They got $ 25 mln in a venture capital investment. And the aim is to educate the market about Bitcoin. Do we need to learn about Btcoin? Should we be teaching kids in school and universities how to deal with Bitcoin? Is it going to be part of the global economy? We should teach students in universities about Bitcoin, at least. It might even be taught in school, sooner or later. It is a new technology. People will start to use it, will learn how to use it and will teach how to use it.

It is nothing more, nothing less. It is just new technology. It is a tool that can be used for many different purposes, it has, in my opinion, lots of potential. We will see how the whole traditional financial system will react to that in the long run. -