Bitcoin

Concerned about Bitcoin Regulations? : Who does it and How?

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who-regulates-bitcoin-the-community-of-course
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Bitcoin has seen some success in the realm of financial attainment. This is largely due to the way it is regulated. Bitcoin uses Blockchain technology, which is as transparent as glass, allowing no space for fraud among the users of the Bitcoin community. Now there isn’t a centralized governing or regulating body per say when it comes to Bitcoin. Nonetheless, there are a group of people who keep the whole Bitcoin process up and running. These people had very limited power and laid out tasks, beyond which they cannot possibly act, they are called Bitcoin miners. They issue and monitor the flow of Bitcoin at every moment, for an agreed remuneration but don’t regulate Bitcoin all by themselves.

How Is Bitcoin Regulation possible?

Good question and the answer points to the daring act carried out by the original creators of Bitcoin, under the alias of Satoshi Nakamoto, who permanently revoked the sole right to alter a Bitcoin Blockchain. The Bitcoin Blockchain contains all the information about Bitcoin transactions from the very beginning, and whoever can alter the Blockchain, has the right to regulate Bitcoin.

Picture it as a ship maker, who has the only key to the engine room (an ideal engine room, which needs no further maintenance), locks the room and throws the key into the ocean, but allows anyone to come aboard the ship. There may be pilots, deck officers, engineers, cooks, cleaners and other members of the crew to keep the ship moving, but the actual source of control can never be manipulated by anyone ever again.

The True Regulators of Bitcoin

Following this foundation, it should be rather easy to see that immediately you become a user of Bitcoin, you are automatically a legitimate regulator of the currency. How? Well, you pay mining fees for every Bitcoin transaction, don’t you? This mining fee serves to reward the miners who confirm the transactions so that each time miners wish to obtain a Bitcoin reward; they have to oversee the flow of Bitcoin. The miners also use their reward, to obtain mining equipment, to mine more Bitcoin, creating a pretty self-sustaining Bitcoin ecosystem.

Therefore, because of the Bitcoin Blockchain, the power of regulating the Bitcoin Digital currency, remains distributed, in the hands of all its users, each one playing a role or another.

The significance of Bitcoin & Blockchain development

Anyone who has studied history and finance would agree that there are always a select few, a united handful, a pair of individuals who wish to control or at least have the power to influence everything. Unfortunately, they are most successful and found in the government. There are laws, and financial laws which govern a State and its monetary operations, yet no laws can alter the success of Bitcoin in almost every nation of the world.

This has become very bad news for the governments of Nations, and for quite a while, many countries have had to sue those who encourage local Bitcoin operations, senate meetings have been held, negative press statements have been released and so on, all because the usual controllers of the world economy have an earnest desire to, but have found no success in efforts to regulate Bitcoin.

Moves by Nations to regulate Bitcoin

Since there is no way to internally regulate Bitcoin, countries like Australia, Japan, U.S, and China among others, have created means to regulate Bitcoin externally, that is the operations of their territory. This is made possible because Bitcoin has Exchanges through which it can be converted to fiat money, and because Bitcoin provides an efficient way to perpetuate money laundering, these moves are pretty important.

Following a financial scandal in 2017, involving Australia’s biggest bank, Commonwealth Bank of Australia, reforms have been made, to make digital currency exchanges to be overseen by Austrac, Australia’s financial crime-fighting agency. New legislation will be put in place to further increase the enforcement powers of Austrac; this will help them to mitigate the movement of money to criminals and terrorists.

After the collapse of Mt Gox in 2014, where 850,000 Bitcoins were lost, Japan also carried out financial reforms which stipulate that Bitcoin or any other alternative coin which wishes to operate in Japan, must come under the regulatory supervision of the Japan Financial Services Agency, by October 1, 2017. This allows all cryptocurrency exchanges to be audited annually and are subject to KYC (know your currency) and anti-money laundering regulations.

Related reading, see: Top 10 Bitcoin Exchanges

These and many similar moves (including those of the U.S Securities and Exchange Commission) to externally regulate Bitcoin have enabled this currency to reach high prices, as they limit financial fraud through Bitcoin. Therefore, these attempts are good for the Bitcoin ecosystem.

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