Bitcoin Regulations Inevitable – Economics Professor
Created to become a liberating technology from conventional banking and transactions, Bitcoin’s success will likely lead to necessary regulations in the coming years.
Those are the sentiments of London’s Kingston University economics professor Steve Keen. As the price of Bitcoin continues to break through barrier after barrier, its move into the mainstream financial world will eventually call for regulation.
Speaking to RT, Keen highlighted the emergence of Cryptokitty, as well as the launch of Bitcoin futures on CBOE as moves that will lead to regulatory action.
The Bitcoin markets reacted incredibly strongly to the proposed futures launch and continued a favourable response after the first day of trading.
Keen believes the value of Bitcoin has created an excellent environment for bulls in the market who are holding their Bitcoin tight:
“The intriguing thing about that is that it is good for people on the sell side of Bitcoin. As one of the commentators said recently, one of the reasons the process has been escalating so much …is that there is enormous pressure on the buy side of Bitcoin and there are almost no sellers. Because, of course, selling involves forgoing a probable capital gain, so nobody wants to sell right now, everybody really wants to buy in.”
What is a concern for the University professor is the inevitable prevalence of fraud and hacking that is inherent with new technology.
“You can’t be deregulated in a system where there will be criminal attacks. The code itself is clearly not foolproof, people will find their way in, forks will be forced upon them, whether they want them or not. In that situation, regulation may be the only future.”
As much as Bitcoin strives to be decentralized, it is now intrinsically tied to the greater world economy, especially with the launch of futures. What was once created to be a peer-to-peer transactional system now has to come to terms with all the tricks of Wall Street, says Keen:
“The whole idea that you can be a separate financial eco-system, which I think is the fantasy behind the formation of Bitcoin, is now facing reality – that you’re a part of that inter-linked system – whether you want to be or not. Therefore you can be hit by what happens in other markets; you are not immune to having short squeezes, bears move in and drive the price down. All these sorts of effects are there, they are not avoidable.”
Part of its undeniable attraction is that Bitcoin and its underlying Blockchain backbone allows the average man to transact with his neighbour, anonymously and securely, without a middleman.
It also rules out the underpinning problem of fiat currency – debt. Keen believes banks will eventually adopt Blockchain technology in the future.
“Blockchain technology could be used by trusted party like a central bank to produce digital money which could be then given to everybody in the county. At the moment central banks only interact with the banking system and some nonbank financial institutions. And suddenly, central banks could interact with us directly. That to me would be a means by which we could use digital currencies to cancel the excessive level of credit created money which has been made in private debt bubbles. That’s probably the major innovation; central banks taking on Blockchain technology producing digital currency and giving us all a bank account at the central bank which could be used as a way of bringing about people’s quantitative easing.”