The former FDIC Chairman: bitcoin should not be banned
27 am Beijing time, the U.S. Federal Deposit Insurance Company (FederalDepositInsuranceCorporation) nineteenth chairman Sheila – Baer (SheilaBair) on Tuesday wrote that bitcoin should not be banned.
Baer article excerpt follows:
In the past year, bitcoin prices have risen nearly 2000%, it has recently fallen sharply, all this makes the supervision departments issued a special warning.
For the purpose of regulatory agencies, found an asset bubble in jeopardy (any one within a year 2000% increase in the price of assets is a bubble) is painful. They know that the bubble will burst. They know that people will therefore loss. But what should they do?
Some people think that bitcoin in society did not play what role, therefore, should be banned. But as “beauty”, bitcoin has value in the eyes of the holder.
From the beginning of the rise of commercial activities, human beings have intrinsic value of some things is not always obvious given. Especially in the media, which is the trading currency, the reason we give it value only because the transaction with it better. No matter in ancient India shells, or today many of us put in wallet thin green paper (USD), its value exists in people’s cognitive psychology rather than its physical properties.
As for the legal currency, even if the currency is the government and the right of Taxation, and the central bank and the power of the printing press as a guarantee. When the loss of public trust in those institutions like a postwar German government of the Republic of Weimar, or Southeast Asian countries in 1990s the government loses public trust, the legal value of money would evaporate. Indeed, for some of the more reliable technology rather than government investors, because bitcoin lack of support for the central bank, so it is more valuable.
Admit that bitcoin as a medium of exchange of individuals and businesses so many, enough to expose the underlying behavior for trying to be worthless. Bitcoin: the prospect of eventually being widely accepted and direct P2P transactions allowed within the scope of global prospects, have a strong attraction.
In addition, different from the statutory currency, bitcoin supply is limited, and strictly limit the mining speed, which for many people as a store of value, and this is similar to gold.
Indeed, the market value of bitcoin today seem to be far more than the intrinsic value of these purposes. But this is not the first time for a common market value of the assets pricing is too high. In 1630s the Holland tulip bubble burst in Holland did not prohibit the tulip, and in 2000s the technology bubble burst when technology stocks has not been banned.
With respect to the bitcoin own value judgment, the government should do is to develop policies on the market do not add fuel to the flames of madness. Of course, the banks involved in the federal insurance organization should not be allowed to directly or indirectly support bitcoin speculation. The government should also take measures to ensure the bitcoin price — regardless of the market value, reflects the investors after obtaining comprehensive information decision, not by fraud or manipulation, and trading activity is not used to fund illegal activities. Fortunately, regulators have taken positive measures in these areas.