21 January 2017
visit http://www.wolterskluwerfs.com

Ditch legal tender to unleash bitcoin - think tank

18 June 2014  |  5205 views  |  0 bitcoins

The concept of legal tender should be abolished and private money should enjoy a level playing field that enables the likes of bitcoin to compete with state-backed currencies, a new think tank report suggests.

Regulators around the world have been scrambling to respond to the wave of new crypto-currencies, led by bitcoin, that have been gaining traction over the last couple of years.

In a paper for the free market Institute of Economic Affairs, Kevin Dowd, a professor of finance and economics at Durham University, argues that there is strong demand for alternative currencies, fuelled by mounting restrictions of financial freedoms.

People are increasingly frustrated by state-controlled money thanks to a weakened ability to store value, growing restrictions on finance, oppressive taxes and a lack of privacy, says Dowd.

This disillusionment will lead to a tidal wave of new private monies, he predicts, with bitcoin eventually displaced by better options. But for them to prosper, governments must stop stifling competition, instead welcoming rivals that will force their own currencies to improve.

According to the report "governments should consider eliminating any and all regulatory or legal obstacles to the use of private monies".

Several countries - including the US and Germany - have declared that bitcoin is not a currency but property for tax purposes. Dowd says that this is wrong and that any transactions in a private money should not be put at a tax disadvantage relative to official currencies.

The report also calls for the end of the US's prohibition against the private issue of coins and for courts to be required to enforce contracts made in private currencies.

The level playing field implies the abolition of legal tender because parties to contracts would no longer be compelled to accept a currency they do not want to. Also implied is that governments themselves would have to accept private money in tax payments, if they become "well established".

"Above all, we need to move away from the medieval attitude that the issue of any form of money is a state prerogative," concludes Dowd.

Mark Littlewood, director general, Institute of Economic Affairs, adds: "Bitcoin has proved widely successful as an alternative form of exchange and as way of restoring financial freedom. It is just the beginning however. Fierce demand for private money will drive innovation, creating a tidal wave of new and superior forms of exchange."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Bitcoin to have 'profound' impact on trust-based markets - Wedbush analysts

Bitcoin to have 'profound' impact on trust-based markets - Wedbush analysts

30 May 2014  |  7890 views  |  0 comments | 10 tweets | 6 linkedin
Bitcoin not a threat to banking system...yet

Bitcoin not a threat to banking system...yet

20 May 2014  |  8437 views  |  0 comments | 16 tweets | 7 linkedin
Circle bids to take bitcoin mainstream

Circle bids to take bitcoin mainstream

16 May 2014  |  7792 views  |  3 comments | 6 tweets | 3 linkedin
US Attorney General floats tighter regulations for virtual currencies

US Attorney General floats tighter regulations for virtual currencies

09 April 2014  |  3616 views  |  0 comments | 9 tweets | 10 linkedin
US tax man says bitcoin is property, not currency

US tax man says bitcoin is property, not currency

26 March 2014  |  4422 views  |  0 comments | 4 linkedin
Singapore to tackle money laundering risks in bitcoin transactions

Singapore to tackle money laundering risks in bitcoin transactions

13 March 2014  |  5011 views  |  0 comments | 5 tweets | 3 linkedin
New York regulator starts accepting bitcoin exchange applications

New York regulator starts accepting bitcoin exchange applications

12 March 2014  |  8545 views  |  0 comments | 6 tweets | 4 linkedin
UK rejects VAT on bitcoin trades

UK rejects VAT on bitcoin trades

03 March 2014  |  4838 views  |  0 comments | 7 tweets | 6 linkedin
Bitcoin plunges again after dark market Web hack

Bitcoin plunges again after dark market Web hack

14 February 2014  |  6401 views  |  7 comments | 10 tweets | 7 linkedin
China bans banks from bitcoin transactions as Wall Street wades in

China bans banks from bitcoin transactions as Wall Street wades in

05 December 2013  |  6655 views  |  7 comments | 9 tweets | 6 linkedin
Germany declares bitcoin 'private money' and subject to tax

Germany declares bitcoin 'private money' and subject to tax

19 August 2013  |  8749 views  |  0 comments | 13 tweets | 10 linkedin

Related blogs

Create a blog about this story (membership required)
Visit contisgroup.comVisit capgemini.com

Who is commenting?

Top topics

Most viewed Most shared
Banks face big profit loss to digitisation - McKinseyBanks face big profit loss to digitisation...
16079 views comments | 92 tweets | 111 linkedin
Seven banks plan blockchain platform for SMEsSeven banks plan blockchain platform for S...
12751 views comments | 48 tweets | 44 linkedin
Accenture beats Brexit blues with largest-ever London startup programmeAccenture beats Brexit blues with largest-...
11000 views comments | 31 tweets | 20 linkedin
US fintech firms join forces to push data sharing via APIsUS fintech firms join forces to push data...
6663 views comments | 39 tweets | 39 linkedin
HSBC forms tech advisory boardHSBC forms tech advisory board
6359 views comments | 21 tweets | 23 linkedin

Featured job

to Six-Figure Base, Bonus, Benefits
London, UK

Find your next job