It appears big government has once again sought out a corner of the economy it has yet to regulate into submission. This time in the regulators' cross hairs is the cryptocurrency bitcoin, which operates without a central authority or intermediary financial institution and conducts all transactions electronically. Formerly thought of as a sideshow attraction like Flooz that would be doomed to the same fate, bitcoin is gathering steam and now is accepted at several locations and websites.
Sensing an opportunity to install regulations on the currency before it becomes to ingrained in society, the New York State Department of Financial Services has issued 22 subpoenas for digital-currency companies and investors. These subpoenas have defeated the overall purpose of Bitcoin being an independent currency alternative, and these subpoenas will have an overall negative effect on the future of Bitcoin and the future of cryptocurrency.
Bitcoins are experiencing international growth and the value of this international digital currency is set entirely by market forces as the currency operates without a central bank. The bitcoin system is designed to halve the number of Bitcoins released every four years, reaching a maximum of 21 million Bitcoins in 2140. The system operates without the interference of human beings on any level. The invisible hand of the market controls almost everything in the system.
Well, as of now, anyway. With the state of New York and the United States government gathering a lay of the land for expected regulations, it's very likely these subpoenas will affect the way Bitcoin does business. Government continues to be intolerant of any matter that it has no control over. Why should the government get a say in how a competing currency conducts business? If an individual accepts using bitcoins as currency they accept the risk of that currency inflating, deflating, or having no value the same as any other currency. Government interference with bitcoin completely defeats the purpose of the alternative independent currency.
The subpoenas issued by New York State Department of Financial Services will have an overall negative effect on Bitcoin and the future of the cryptocurrency market. If you seek to establish an independent currency, free of manipulation from men like "Helicopter" Ben Bernanke, you will be unable to do so. If you are able to break through and create an accepted currency, which is no easy task, you will be forced to answer questions about it to a body with a long-standing monopoly on currency. Would it come as a surprise to any if future regulations imposed on bitcoin drastically alter the way bitcoin does business and makes the currency go the way of the dodo? Regulations have the same destructive powers as taxes, and breaking Bitcoin's current model is undoubtedly what will stem from the introduction of regulation.
Bitcoin is about to experience the nine scariest words in the English language: "I'm from the government and I'm here to help."