The next phase of the Bitcoin revolution will be the standardization of stock exchanges where coins are exchanged. Bitcoin is currently at the time of the prospectors of Far West. The world has agreed that a bitcoin provides a stored measure of value in the same way that gold and silver have evolved through the ages. Like gold and silver, Bitcoin is only worth what the other person is willing to pay you for it. This has led to cheating since the beginning of the exchanges. Twisted scales and cored ore have all become standard as miners and testers seek to improve their results. This led to government control and the creation of centralized exchanges.
The Bitcoin dream has been to control one's own community and stay beyond the physical oversight of any global government. The utopian dream was broken a month ago when Mount. Gox, by far the largest trading center of Bitcoins, has closed down due to a security and theft of about $ 300 million of Bitcoin. Customers who had Bitcoin on deposit with Mount. Gox still does not know how much they will recover. The problems at Mt. Gox exposes the cybersecurity argument. Surprisingly, bitcoin as a currency has been remarkably resilient. This resilience may very well be just the boost needed to legitimize the currency and the leaning toward government involvement that could really help this nascent store of value to reach its main potential.
The timing of the mount. The Gox incident can prove to be a boon to the currency. The Tera Group, from Summit New Jersey, had already proposed a bilateral agreement to the Commodity Trading Futures Commission (CFTC) to begin exchanging bitcoins via a swap execution facility or a centralized exchange. The vast majority of commercial currency transactions take place through swaps, which is why we follow commercial traders in our own transactions. A swap agreement is essentially an insurance policy that provides a guaranteed value at a particular time to protect against currency fluctuations. This is the basis of commodity exchanges. The exchange markets are the highways of the financial sector. They handle huge volumes while collecting a small toll for each transaction. As a result, the cost of an individual swap is low, but the sheer volume of swaps processed makes them a huge source of revenue for all major banks.
The CFTC has not yet commented on Tera Group's proposal. We commented in November that Bitcoin had transcended novelty status and that the income pool was becoming too important to be ignored by global banks. The resilience of Bitcoin facing Mt. The debacle of Gox testifies to the power of a world popular movement. Bitcoin should have plummeted around the world while Bitcoin owners were trying to trade them for hard currency. The market response has been very orderly. While prices fell at all levels, the market seemed to understand that this was a company-specific problem and was therefore limited to Mt. Gox & # 39; s customers ability to take out their money. As a result, bitcoin prices stabilized at around $ 585. This figure is well below the peak of $ 1,200 reached in December, but remains very close to the average price of the last six months.
The last element coinciding with the structural transformation of Bitcoin as an anarchist and alternative value bank that exists outside the institutionalized financial sector to be integrated into this same financial system is its ability to be taxed by the traditional governments created for it. circumvent. The Internal Revenue Service has finally decided that this is enough and that it wants its reduction. The IRS has declared Bitcoin as property rather than currency and is therefore subject to property laws rather than currency laws. This allows the IRS to get its share while legitimizing the need for a central exchange to determine its value. It also eliminates arguments with the US Treasury and Congress on public procurement issues. It is simply considered a good that can be exchanged for other goods and services, barter.
Bitcoin is a global marketplace trading on an electronic network. This is very similar to the foreign exchange markets. Regulators in the sector and the banking sector will quickly find that the failure of Mt. Gox has done more to encourage individual resolution of global Bitcoin users rather than end the existence of this recent person. Private Bitcoin users will ask the government to protect its people from crooked exchanges, just as farmers have been cheated in the grain trade of ancient Egypt or gold and cattle by testers and stockyards in the Wild West. Tera Group may be in the right place at the right time with the right idea because Bitcoin has proven to be self-sufficient at the retail level. Institutional and legal structures are in place to continue its evolution, with the financial sector determining how to monetize it.