Bitcoin has been at the forefront of a great deal of controversy since the shut down of underground drug network Silk Road. But a US Senate committee is hearing today that it offers a number of benefits, and is a powerful tool for online financial transactions.
The US Department of Justice and the Security and Exchange Commission were among two agencies that addressed the committee today about the potential benefits of Bitcoin as a legal tender. The Senate Committee on Homeland Security and Governmental Affairs has been tasked with determining the benefits versus the risk of such forms of digital currency.
Deputy assistant attorney general Peter Kadzik wrote in a prepared statement:
The FBI’s approach to virtual currencies is guided by a recognition that online payment systems, both centralized and decentralized, offer legitimate financial services/
Like any financial service, virtual currency systems of either type can be exploited by malicious actors, but centralized and decentralized online payment systems can vary significantly in the types and degrees of illicit financial risk they pose.
Bitcoin has been increasing in popularity as people move away from financial services that are more traditional, such as PayPal and Ally. Unlike those institutions, Bitcoin acts as a form of currency in and of itself, rather than just a means of transporting money from one user to another.
Though the number of websites that accept Bitcoin is growing, the monetary method is best known for its place on the internet black market. Through browsers that access the deep web (sites not indexed by search engines, making up the bulk of the internet) like Tor, transactions have been made for everything from the illegal drugs of Silk Road, or child pornography.
But the wide application of Bitcoin is neutral, and like all money, it can be used for good and bad. It was this point that US agencies made today, urging the Senate to assist in the regulation of such currencies so that legal action can be taken when necessary.
Bitcoin can facilitate private and anonymous transactions, which are resistant to oversight and control,” Patrick Murck, counsel for the Bitcoin Foundation explained. “This by no means implies that using Bitcoin can or should provide anyone immunity from the law.
Talks and testimony are planned to be ongoing.