Are Bitcoins a real currency?
Article: Alec Salloum – News Writer
[dropcaps round=”no”]T[/dropcaps]he online currency of Bitcoins, has garnered substantial international attention in the wake of a United States Federal judge’s ruling in a fraud case pertaining to the currency. Monday, Nov. 18, saw Judge Amos Maazant, from the Eastern District of the Texas Federal Court, definitively rule that Bitcoin is money. The case involved Trendon Shavers, who was accused by the U.S. Securities and Exchange Commission (SEC) for fraud.
Shavers operated a Ponzi scheme through his company, Bitcoin Savings & Trust. The SEC reported that Shavers had seized 700,000 Bitcoins, at the time this translated to $4.5 million USD, from his investors. Since a government does not back Bitcoin, the legal process surrounding these events was perpetually in a grey area of operations. During the court proceedings, Judge Mazzant issued this statement, “Shavers argues that the BTCST investments are not securities because Bitcoin is not money, and is not part of anything regulated by the United States.”
Ultimately, the Judge dismissed this notion.
“It is clear that Bitcoin can be used as money. It can be used to purchase goods, that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money.”
This statement from the US federal government has been received as a government endorsing this decentralized, digital and largely anonymous currency. In response, the price of Bitcoin jumped drastically this week, with buy prices exceeding $900
USD per BTC. Comparatively, in early 2011, BTC was trading at around $.30.
Evidently, Bitcoin can be tremendously volatile. The trading point of $.30 in 2011, jumped to $32, then crashed $2, all within the course of one year. Within the course of this week, BTC purchasing rates have peaked above $900, and as of writing this article are back down below $800 USD.
Despite this, Bitcoin does appear to be here to stay. The currency has existed since 2009, though initially it experienced some technical glitches and difficulties, which delayed its effective implementation. In its infancy, Bitcoin was exclusively used for internet purchases, most infamously on websites offering illegal services, like the now shut down Silk Road.
The Silk Road offered its customers a web-based drug purchasing service and briefly offered gun and munitions sales. The Silk Road only took Bitcoins in its transactions because the currency is largely anonymous and encrypted. This has been a point of contention for many governments and organizations thinking about endorsing or accepting the currency.
However, as Judge Mazzant stated in his release, the greatest limitation of Bitcoins currently is what goods you can purchase with them. Sites like BitcoinShop.US, Bitcoin Valley and more are specifically geared to utilize Bitcoins. These sites sell electronics, clothing, jewelry, books etc. Additionally, existing sites like WordPress and Etsy have adopted the new currency. As of Thursday, Nov. 21, Cyprus University has publically stated that it will accept Bitcoin as payment for tuition.
The ruling of the US Federal Judge may usher in greater acceptance of this once unknown and skeptically received currency.
[button style=”e.g. solid, border” size=”e.g. small, medium, big” link=”” target=””]Image: Michael Chmielewski[/button]