Chapter 10 Regulation
Pull the string, and it will follow wherever you wish. Push it, and it will go nowhere at all.
—Dwight D. Eisenhower
The topic of digital currency regulation is not just controversial; it can be downright inflammatory to digital currency purists. Bitcoin was created to remove third parties from the financial system, whether they are government agencies or money center banks. As a proponent of free-market capitalism, I would prefer the market to self-regulate and many digital currency traditionalists view the self-regulating mathematical code at the heart of these currencies as superior to any government regulation. This argument has merit but also has a flaw in its logic. While the mathematical code does an exceptional job of removing financial intermediaries, it does not address the problem of human greed and deceit.
As the creator of a digital currency, I have watched the industry mature from a terrible toddler with a penchant for the illicit to a rebellious teenager with a bright future. For digital currencies to fulfill the promise of adulthood, they need some rules to live by—a protocol, if you will.
For the first time in human history, digital currencies and the blockchain technology allows individuals to send secure information over an unsecured network without a trusted third party. The most obvious use for this technology is for financial transactions. Conveniently, the centralized financial-services industry is ripe for disintermediation. Since ...
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