Last updated on August 15th, 2016 at 06:53 pm
Many Bitcoin traders and miners have been wondering how world governments and other major organizations will react to Bitcoin. So far, most governments have remained largely moot. The German government, however, has now labeled Bitcoin as a currency unit and private money. This marks the first time that a major government has given official status to the online currency. Recognition from one of the world’s most powerful and respected governments, marks another major step forward for the currency.
Bitcoin has been making other headways across the European Union. German web-bank Fidor teamed up with Bitcoin Deutschland GmbH to launch an online trading platform. While this might seem like a minor development, the deal with Fidor marked one of the first times a Bitcoin platform has been launched in cooperation with an official and regulated bank.
In 2012, France become the first country to recognize a Bitcoin bank, Bitcoin Central, and even extended it a license. This also means that deposits in the bank will be protected under national security and insurance programs. This development came about as a result of the efforts of “Paymium”, a money-over-IP provider, which worked closely with French regulatory bodies by educating them on what Bitcoin is and how it works.
Some members of the Bitcoin community have been less than thrilled by these developments, however, as official recognition might mean official regulation. With one of the biggest advantages of Bitcoin being the lack of oversight and regulation, it’s fair to wonder if government cooperation or involvement is actually a good thing.
The German government, for example, has ruled that some business transactions involving Bitcoin should be taxed. This increases the costs of using Bitcoin and may turn some investors away from the currency. At the same time, if the currency were to become a tool for tax evasion, the risk of a major government intervention would greatly increase. A minimal level of oversight might actually increase the viability of the currency in the long-run.
This is especially true given that scammers have increasingly been trying to rip people off through Bitcoin scams. Fake hedge funds, rigged mining pools, computer viruses, and efforts to steal from wallets have all occurred in recent months as unscrupulous hackers have tried to take more than their fair share. Government recognition and some high level involvement may offer people legal recourse to pursue scammers, which could actually help stabilize the Bitcoin market.
Undoubtedly, some members of the Bitcoin community will be unmoved by the potential benefits that come along with official levels of recognition. After all, nobody likes to pay taxes and not having to worry about “big-brother” government looking over your shoulder is usually a good thing. Still, oversight might add much needed stability and safeguards to the emerging currency. Over the long run, this could increase acceptance of Bitcoin and could even push prices higher.