To some, the bitcoin is the virtual currency of the future. It has become a hot trading item in a short period of time.
The collapse of one of the major bitcoin players has U.S. Senator Tom Carper, D-Del., concerned.
The bitcoin works like real currency, but in a virtual world. The currency allows people to make online transactions without third parties such as banks or credit cards. Sen. Carper believes if the currency is going to work fairly, regulations might eventually be needed.
The collapse this week of Japan’s Mt. Gox (Magic:The Gathering Online Exchange) serves as an example of Carper’s concern. Mt. Gox is an exchange, where people can buy and sell bitcoins.
Although bitcoin is used internationally, it’s a virtual currency that’s not backed by the government. Since its creation in 2009, the new technology has been known to have many advantages, according to Sen. Carper. Among the advantages, is people in other countries can use it without going through foreign exchange and it lowers the cost of transactions. However, Sen. Carper says it opens the door for online crimes such child pornography, money laundering and all kinds of drugs transactions to take place.
“As any industry matures it will face growing pains and there will be individuals who believe they can use the fog of uncertainty to cover up their follies. When it comes to policy, it is the responsibility of the federal government to steer the boat, not row the boat. Our Committee (Homeland Security and Government Affairs Committee) will continue to work closely with relevant U.S. government entities to steer the boat away from nefarious actors – and it’s up to legitimate, law abiding industry partners to row the boat into law abiding waters,” said Caper, who serves as committee chairman.
Mt. Gox exchange along with the Intersango are among the most recommended for bitcoin users, but with the disappearance of Tokyo-based company, it’s a concern that many people will now start to lose interest.
“The disturbing news from Japan is a reminder of the damage potentially ill equipped and unregulated financial actors can wreak on unsuspecting consumers. U.S. policymakers and regulators can and should learn from this incident to protect consumers. For months, our Committee has been calling on law enforcement, industry, and relevant regulators to come to the table and engage in meaningful dialogue to provide clear rules of the roads for entrepreneurs, investors, and consumers. Without these rules, businesses can’t be successful and consumers can’t be protected,” said Carper.
Carper added he is working with his staff and federal agencies to determine what lessons can be learned from this failure so that this does not happen here in the United States.