Bitcoin Bubble: Senate Holds A Hearing On Virtual Currency

Some are arguing there’s a Bitcoin bubble, even as the US Senate holds a hearing on virtual currency.

As previously reported by The Inquisitr, a company recently raised 9$ million to boost mainstream bitcoin use.

The Bitcoin market price has been fluctuating all over the map, hitting $400 last week to rise all the way up to $900. This has some people concerned about a potential Bitcoin bubble that could pop at any moment, similar to how the housing bubble collapsed once people realized how much prices were overinflated. But that doesn’t mean Bitcoin will never be a successful alternative currency. The question is where does the speculation end and the real usage begin?

Yesterday, Congress held it’s first conference on the decentralized virtual currency Bitcoin. Experts from a range of fields were present at the meeting, including CEO of The International Centre for Missing & Exploited Children, Patrick Murck from the Bitcoin Foundation, Jeremy Allaire, CEO of digital currency startup Circle, Jerry Brito from the Mercatus Center at George Mason University, Jennifer Shasky Calvery, Director of the Financial Crimes Enforcement Network, Mythili Raman, attorney from the U.S. Department of Justice and Secret Service agent Edward W. Lowery III.

The hearing was a result of a three month investigation into Bitcoin and the discussion centered on the potential for virtual currencies to be given the ok for use on the market. Concerns aired at the hearing discussed the potential for Bitcoin to be used by criminals for money laundering and in pursuit of child pornography. The government assured all present they felt confident in their ability to put a cap on illegal activities.

Despite the concerns, Mythili Raman from the Justice Department argued for Bitcoin:

“We are attuned to the criminal use, but there are many legitimate uses. These virtual currencies are not in and of themselves illegal. There is good reason for us to remain watchful, but we also intend to balance that against the need for legitimate users to use the technology.”

In a letter from Ben Bernanke, the outgoing Federal Reserve Chairman stated he thought the idea held promise:

“Historically, virtual currencies have been viewed as a form of “electronic money” or area of payment system technology that has been evolving over the past 20 years. Over time, these types of innovations have received attention from Congress as well as U.S. regulators. For example, in 1995, the U.S. House of Representatives held hearings on “the future of money” at which early versions of virtual currencies and other innovations were discussed. [Fed] Vice Chairman Alan Blinder’s testimony at that time made the key point that while these types of innovations may pose risks related to law enforcement and supervisory matters, there are also areas in which they may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.”

Do you think the United States should embrace virtual currencies or should we be leery of a potential bursting of the Bitcoin bubble and the potential financial instability associated with that scenario?