Leading economist predicts assault on Bitcoin
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The leading academic Simon Johnson, MIT professor and former chief economist to the IMF has predicted an assault on the Bitcoin currency from governments and financial institutions alike. He envisages pressure and lobbying on politicians from major banks to try and stamp out the renegade means of exchange.
“There is going to be a big political backlash,” Johnson said on stage at MIT Technology Review’s EmTech conference in Cambridge, Massachusetts. “And the question is whether the people behind those currencies are ready for that and have their own political strategy.”
Established institutions and structures thrive on control and Bitcoin defies that control through its fundamentally decentralised nature. Transactions can be made digitally without any institution setting or monitoring the parameters of the currency, and Professor Johnson views that in itself as a threat to existing power centres – a threat he feels they will move to eradicate.
The code that generates and regulates Bitcoin is embedded in the software itself. The developers of Bitcoin remain anonymous to this day, and it’s complex mining system remains a standalone, self functioning algorithm. It was swiftly adopted by those operating outside the traditional financial system and gained particular notoriety as the currency of sites such as the now defunct ‘Silk Road’ – an association that will no doubt provide ammunition to those seeking to attack its legitimacy. But it is of increasing interest to tech investors and cutting edge tech firms with more businesses adopting Bitcoin in one way or another.
Johnson fears that Bitcoin will soon fall victim to its own success and its ability to provide rapid, cheap, peer to peer transfers will soon begin to compete with existing payment methods.. “Any bankers watching this should be very afraid,” he said.
He feels that before Bitcoin is tarred with the Silk Road brush and presented to the public as the currency of digital criminals, it needs to take a proactive lobbying and PR stance to ensure its survival.
“They shouldn’t sit back and wait for other people to define them in terms of Silk Road or anything else,” he said in an interview after the conference. “They should be proactive and explain why this would be a great industry for the U.S. to develop, and why they should have appropriate regulation around that.”