With three bitcoin exchanges shutting down after experiencing thefts worth hundreds of millions of dollars, some in the bitcoin community are urging government regulation and intervention to protect consumers. It was reported Sunday that Mt. Gox, one of the world’s biggest exchange platforms, suffered 150,000 DDoS attacks per second for several days ahead of its shutdown.
After years of the peer-to-peer decentralized system decrying government officials getting involved, should the bitcoin community accept authorities entering into the market? If so, is it justifiable?
Over the past year, since the rise of bitcoin and its growing acceptance among the Internet landscape and merchants, numerous central banks and federal governments have outlined a series of messages: it won’t be held responsible if any digital holdings vanish. The institutions have also urged its citizens to be cautious because the cryptocurrency is volatile, risky and vulnerable to security attacks.
Bitcoiners, who many believe to be “techno-libertarians,” scoffed at the suggestion that authority figures should even intervene. The state of New York is in the midst of issuing bitlicenses for businesses transacting with bitcoins, while some federal lawmakers are calling for heightened regulation or outright bans of the virtual currency. Japan has also mulled over the idea of intervening following the failure of Mt. Gox, but instead wants international cooperation.
Although bitcoin was founded on the premise of being decentralized and anonymous and therefore anti-government, using the tools of government could very well be legitimate and still consistent in the digital currency’s principles. However, its very nature could prove troublesome for some cash-strapped governments because of the intricacies involved.
Indeed, in a libertarian society, free markets prevail but there is still a role for a government: enforcement of contracts, the protection of private property, safety from fraud and defense against force. The same could be applied here: an invasion of property was undertaken and theft transpired so authorities must investigate and detain the alleged perpetrators. It’s as simple as that and perhaps consistent in the libertarian message.
It has become rather prevalent that several leading bitcoin individuals and organizations have called for regulation of the digital currency. We reported that Brian Armstrong, the co-founder and chief executive of Coinbase, called for bitcoin regulation. It was also discovered last month that the Bitcoin Foundation, which has also urged for regulatory actions, worked with the New York prosecutor’s office in its probe of Mt. Gox.
On top of all of this, one whistleblower is threatening to unveil a web of corruption at the Bitcoin Foundation. Identified as Two-Bit Idiot, he published a blog post on Tumblr entitled “Coup or Death for the Bitcoin Foundation?” He plans to post another article listing “damning facts,” including:
“There is evidence that Bitcoin Foundation board members may have had direct access to Mark Karpeles which allowed them to personally deposit and withdraw funds from Mt. Gox, despite persistent delays for other customers.”
After a leadership that has decried government coercion against bitcoin, it now seems the same individuals are running to the government for help. Is this the step that the bitcoin community wants to take next? Since the currency is decentralized and there is actual “leader per se, it could be proven difficult to solicit the opinions of its base. Sure, the leadership may want regulations, but what about the people? The people should say if they want regulation or not.
