June 14, 2014
Over the last year or so I have read quite extensively about Bitcoin. The amateur economist in me is fascinated by it’s disruptive capabilities and supply and demand characteristics.
However, something that has been evident over the months is the extent to which very smart people around the world have been able to hack less secure environments and steal other people’s BTC.
There are many reasons why this might be and I don’t understand cryptography enough to try and explain any of them.
What I do know is that Bitcoin is semi-anonymous (each transaction is logged in the blockchain, but who the parties are and what they exchanged are not known) and that the amounts that have been hacked (from Bitcoin and other alt coins) is truly astounding.
If this had happened in a traditional bank, it would have been global news, but because of the inherent complexities, these “heists” have barely registered.
There are three reasons why I think that this might be the perfect crime – presuming a person has the skill to pull it off.
Firstly, barely anyone understands the subject which makes investigation quite tricky.
Secondly, it is anonymous and there is no need for a balaclava and shotgun to pull it off. No shootouts with the police are required here.
Thirdly, for now at least, there is zero consensus as to where Bitcoin should be regulated, or even if it should be.
To me this is fascinating. As global financial rules and regulations become more interlinked (at last!) a technology has sprung up that simply weaves a path through all of the laws.
I’m not saying that it is the job of the EU to try and regulate it, I do not believe that is the case. However, all the news about Bitcoin seems to come from the United States and virtually none from Europe.
Given the currency problems that the EU has had in recent years, I wonder whether there are any policy folk in the EP or EC focused on what might be the most disruptive technology ever.
If you have no idea what I am blathering on about, you could start by reading this.financialguy