Bitcoin Domination Dies Out


Bitcoin domination may not depend on the world’s governments, but since Russia decided to consider this virtual currency illegal and Mt. Gox, the world’s once-largest digital money exchange suspended withdrawals and created chaos in the communities that trade this kind of currency, its power could be slowly dying out. Warnings against using bitcoin have been issued by Russian authorities, which mentioned that the virtual currency could be used for financial terrorism or money laundering, therefore treating it as authentic currency is illegal.

Bitcoin domination is reportedly dying out after the Russian Prosecutor General’s Office stated on February 6 that the sole official currency is the rouble and the introduction of any other monetary unit is illegal. However, Russia is not the first country to take legal actions against the virtual currency; China and Denmark have already restricted the digital money deposits and the Reserve Bank of India has warned bitcoin users that they will be submitted to legal risks if they carry on with such transactions.

Russia remains the most vehement country against the virtual currency after its central bank issued a statement with regard to this currency’s speculative character and the risk of losing value.

“Citizens and legal entities risk being drawn into illegal activity,” the Russian Prosecutor General’s Office said.

As a result, even if trading bitcoin does not intentionally leads to financial terrorism or money laundering, using this virtual currency will be considered an illegal action, therefore it will be sanctioned by the law. Moreover, the central bank began working with “other law enforcement agencies to tighten regulations.” At the same time, FinCEN’s director Jennifer Shasky Calvery stated that “if this virtual payment system is going to survive and be a real player in the financial system, regulation is going to catch up, because it has to.”

Mt. Gox Could Predict the Future of Virtual Currency

Not only the number of countries which look at bitcoin with skepticism is growing, but also proofs of the currency’s high volatility and unstable security which have caused Mt. Gox to come to a standstill and Coinbase, the most reputable wallet service to become the target of thefts.

“I think I just witnessed Mt. Gox die today,” Reddit user “CoinSearcher” said.

The former largest bitcoin exchange suspended withdrawals because of a currency-wide vulnerability named “transaction malleability” that reportedly allows users to change transaction’s details and make it seem as if the transfer did not succeed, although the money was transfered. However, rumors showed that the company’s founder, Mark Karpeles was alerted by United States federal agents that the company was not registered as a “money service business.”

Bitcoin reportedly received another hit when hackers stole $40,000 from Coinbase, thus showing that the anonymous nature of the virtual currency makes it susceptible to money laundering.

The reportedly domination of the virtual currency could be dying out after Russia became the second country to ban the use of bitcoin and more nations around the world are taking this option into consideration. At the other extreme, the future of the “money substitute,” as Russian officials call the virtual currency seems steady in the United States, where major retailers use it as payment.

By Gabriela Motroc



The Verge

Digital Trends



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