Bitcoin is being forced to grow up fast. The arrest last week on money laundering charges of Charlie Shrem, a leading Bitcoin booster, coincided with a regulatory hearing in New York to mull what on earth it is – a virtual currency, speculative asset or a means of exchange?
The best answer is the last, although most excitement has been generated by its wild swings in value and the libertarian promise of a cryptographic currency replacing fiat currencies such as the dollar or the euro. In the end, the old laws affect everyone, including Mr Shrem, who has resigned as vice-chairman of the Bitcoin Foundation.
Payment sounds like the most mundane use for Bitcoin, or other tokens of value, yet it has the biggest potential. It is a challenge to the banking system and may allow the quick and cheap exchange – and transfer of ownership – not only of currencies but other assets, goods and services. It fixes a fundamental gap in the internet.