Claim 3a: Bitcoin will be dead as soon as the
If the bitcoin community successfully aimed at disrupting the financial sector,
bitcoin might indeed be soon a thing of the past (see the preceding paragraph).
However, it is much more probable that bitcoin remains a niche product.
Regulation is doubtlessly a challenge in this scenario. The cryptocurrency does
not really fit into existing patterns. As discussed above, it is unclear whether
bitcoin most closely resembles a security, a currency, a commodity, a means of
payment or a new asset class. This will make regulation more difficult.
Any regulation efforts will run into the problem that a global, decentralised
currency can simply move from one jurisdiction to another. In fact, such
migration has already taken place in the US. In 2014, well-meant regulation in
the state of New York caused bitcoin exchanges to move to other US federal
states. And strict national regulation will simply make the bitcoin infrastructure
move to other countries. Introducing international rules, for example at the G20
level, might be difficult because the countries are already pursuing different
regulatory approaches. Canada and Japan, for example, appear to be leaning
towards bitcoin-friendly regulation. In addition, uniform regulation at the G20
level might simply result in the bitcoin infrastructure being shifted to smaller
countries. For example, Switzerland and Iceland offer a bitcoin-friendly
environment, too. Several Swiss cantons already accept tax payments in bitcoin.
Moreover, Switzerland has established a “crypto valley” at Zug, where
programmers work on cryptocurrencies and blockchain technologies. Iceland is
the home of major bitcoin miners. Even if the authorities agreed on a global
framework for bitcoin regulation at some point in the future, the implementation
will give rise to problems – just remember the efforts to harmonise international
financial market and tax rules.
This leads us to four conclusions. First, there are indeed regulatory risks which
have an impact on the bitcoin price. Second, bitcoin is likely to survive for the
foreseeable future because it can take advantage of different national regulation
concepts and approaches. Third, it will be difficult to devise and implement strict
and uniform global regulation, as several countries pursue a bitcoin-friendly
approach. Fourth, a bitcoin community which aimed to disrupt the current
market structure would probably achieve the opposite and quickly cause the
regulatory end of bitcoin.