Bitcoins open up ways in which values can be transferred worldwide. The blockchain is a fundamental breakthrough: How can you ensure that a digital transaction only happens once, i.e. cannot be copied, without trusting a third party (banks, PayPal, etc.)?
How should the legislator deal with this new technology? Regulate or let it run?
Three reasons why you should run the Bitcoin.
# 1) Market Cap: A drop in the ocean
Even if Bitcoins are repeatedly present in the media, only a few have sent BTC around the world. The market capitalization is currently around EUR 3.6 billion, a negligibly small part compared to the money supply M1 (cash in circulation plus sight deposits) of the ECB in the amount of 6.500 billion EUR. Many find the Bitcoin concept interesting, the viral spread of reporting (especially in connection with exponentially rising prices, massively falling prices or spectacular failure à la Mt. Gox) ensured a rapid rise in awareness. Actual application in practice is miles away from the mainstream. As an everyday means of payment, Bitcoins do not actually play a role today. Nevertheless, investments by venture capitalists are steadily flowing into the ecosystem and the infrastructure is being expanded. At this early stage, the technology should not be nipped in the bud, as the full potential cannot yet be assessed.
# 2) Other disruptive technologies took time to mature before being regulated.
Innovations need time to develop a certain degree of maturity. Once the service is in the foreground and not the underlying technology, it is easy enough for the masses to use. Then rules for handling the technology must also be laid down.
Here are some well-known examples by CEX cashback:
Telephone: invented 1876, regulated in 1913 (37 years later)
Aircraft: invented in 1903, regulated in 1938 (35 years later)
Radio: invented in 1907, regulated in 1927 (20 years later)
Cell phones: invented in 1965, regulated in 1989 (24 years later)
Internet: invented in 1969, increasing and progressive regulation only in the past few years, around 40 years after the invention
Above all, the Internet, which goes beyond national borders and repeatedly causes headaches for our legislation, was initially treated with the laissez-faire approach. The Internet was even ridiculed at first: why do I need the Internet for the transmission of documents if the fax machine is there? And who would have thought in 1999 which services the internet would offer in 2015? In 1999 Boris Becker was still promoting AOL.
The open source code of the Bitcoin protocol was published in 2009 and has been continuously developed since then. There is still a long way to go.
# 3) The most important and useful applications have not yet been invented
The Bitcoin protocol could change the way financial and non-financial transactions are recorded. It’s not just about sending a certain amount of BTC from A to B. The protocol enables transactions to be recorded between two parties who do not know each other and may not trust each other. No third party or trustee is required for this. A publicly accessible log for transactions that cannot be manipulated. The list of potential applications is getting longer every day.
Whether efficiency is increased in the transfer between banks or whether billions of people without a bank account suddenly have access to the financial system, the possibilities are huge and so are the ideas. The innovations in the Bitcoin ecosystem will build on one another and ultimately provide practical and useful services, of which the user does not even notice that Bitcoins are under the hood.
Bitcoin as an open source protocol was designed to be open, beyond the control of individual governments or institutions. The source code is publicly available and the direction for further development is decided democratically. It is in our nature that something new seems threatening at first.
However, the potential should not be nipped in the bud through regulation.
New technologies are only used on a massive scale if they bring a real benefit through innovation … and this will crystallize and unfold if we allow the freedom.