US to lose out if it keeps stiffening Bitcoin regulations

US to lose out if it keeps stiffening Bitcoin regulations
Bitcoin is an indiscriminate and pure technology, with which you can be anywhere and be anybody and still be able to spend - that’s why it’s very popular in the developing world, economist Jeffrey Tucker told RT.

RT:So, "Bitcoiniacs" has set up the first ever bitcoin ATM. Is this pushing legal boundaries? How will the authorities view this?

Jeffrey Tucker: I don’t think so. Probably not in Canada. Canada has more liberal laws than US. In fact, almost everybody in the world has more liberal laws than the US as regards bitcoin.  The US is now restricting what is called ‘money exchange businesses’, so there is so much high cost associated with ATMs. It doesn’t surprise me that it started in Canada rather than the US. The US will lose out if it continues this trend towards regulating crypto currency.

RT:The digital currency still relies on traditional hard currencies to calculate its value. So has it really replaced anything?

JT: Wait a minute. Everything relies on traditional hard currencies to calculate value. That doesn’t make bitcoin different from anything else, everything has a price in real currency. Really it’s formulated to be an alternative currency and there is no reason why it can’t itself become a means of calculation, so you can do your accounting. In fact, people do this all the time. You can enter into bitcoin sphere and live a wonderful life. Look, I know it’s difficult to understand, and if you don’t understand it, you shouldn’t feel alone. Economists of the Federal Reserve, of the Treasury and overall Academia do not understand it either. It’s one of these wonderful market innovations that shocked everybody.

RT:A currency's only useful if you can actually buy things with it. How functional is Bitcoin?

JT: A year ago I would have had to say that, well, it has a limited functionality, but now you can actually use bitcoin at Walmart, at you know every kind of big box store, anybody that sells a gift certificate, you can buy this gift certificate with bitcoin using very simple apps.

RT:What are the prospects for Bitcoin?

JT: I’m not sure about Moscow and Britain but I know that in the United States we have a very vibrant gift card economy, so you can buy gift cards at bitcoin now, meaning that you can bypass the government currency entirely. It’s not just that, you can use it all over the place online and I do it all the time. I’ll tell you, it only takes a few times of using bitcoin to realize this is incredibly easy. It’s much easier than credit cards and there is no danger of fraud or identity theft and other things that come with the old-fashioned credit cards system. It’s just a pure technology.

A customer puts money into the world's first ever permanent bitcoin ATM unveiled at a coffee shop in Vancouver, British Columbia October 29, 2013. (Reuters/Andy Clark)

RT:Bitcoin is just a technology, which can be tricked. Can you end up being robbed without knowing who did that?

JT: No, I don’t think so. There are very limited ways which have the possibility for double-spinning before the confirmation comes in. But the chances of it are so small and it will be cut so quickly. Bitcoin acts like real property. When you spend it, you are really spending stuff. That doesn’t happen with credit cards, you know, the credit card is just a spending trust; you are engaged with third part agencies. That’s excludes a third of humanity from the major exchange. With bitcoin you can be anywhere and be anybody and still be able to spend the cool stuff, that’s why it’s very popular in the developing world, for example.

RT:Bitcoin is very volatile and sensitive to market changes. For example, we saw a 10 percent drop after the FBI shut down an online drug store which used the currency. Why are people using Bitcoin despite the risks?

JT: You know, you have to have some doubts and be crazy not to. I mean that thing is only for 4.5 years old. And a year ago, this time I thought it was insane, I mean I thought it was just another stupid technology that comes along every few days and then flames out. So I’m a fairly recent convert, the more I look into it, the more confident I’m getting that the future of world market systems is cryptography and this kind of cryptomarket-based currency. It’s quite spectacular. 

RT:Do you think it has a chance to survive, knowing how controlling governments can get?

JT: Let me put it in this way, it’s volatile in term of government currency but it may be not volatile in terms of itself, if you can imagine such a thing. There's another way to look at it and that is the government currency itself is the source of volatility, not bitcoin. Maybe that sounds like sophistry and it is to some extent; it’s a very young child in a way, bitcoin currency. Yeah, it still tries to find its value. I think it’s up about 20 percent since the initial drop. These are exciting times for bitcoin. If we just get round the problem of getting in and out of government money, then we will get to a beautiful future.  And that’s why I’m excited about these ATM machines.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.