Bitcoin--a technology and a currency
From: Central Bank Journal of Law and Finance(Vol. 3, Issue 1)
Publisher: National Bank of Romania
Document Type: Report
Length: 10,146 words
Bitcoin is an innovative form of digital money based on blockchain technology and a decentralised ledger. Bitcoin is open to everybody and has brought forth rudimentary organisational structures with the potential for creating externalities. This paper assesses Bitcoin and its governance mechanisms. Recently, central and private banks have come to emphasise the technological potential over the currency-related aspects. In what seems to reflect the literature on the tragedy of the (anti) commons, the development of automated, digital clearing systems, which are only accessible to interested parties, ushers in the reprivatisation of ledgers. Apart from New York's BitLicense, government intervention into virtual currencies is still in its infancy. The transnational structure of the internet and regulatory competition preclude national authorities from pursuing a comprehensive regulatory policy. Regulators are currently assessing the benefits of private financial networks against the fall-out from money laundering and tax evasion practices. Keywords virtual currencies, regulation of private financial networks, distributed ledgers and clearing system, the tragedy of the (anti) commons JEL Classification: E51
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