Digital Currency

September 26, 2014 • Volume 24, Issue 34
Are bitcoin and other new money systems safe?
By Daniel McGlynn

Introduction

A website displays bitcoin currency exchange rates (Getty Images/Bloomberg/Chris Ratcliffe)
A website displays bitcoin currency exchange rates. A growing number of businesses and organizations accept payments in bitcoin, including computer maker Dell, PayPal and United Way Worldwide. (Getty Images/Bloomberg/Chris Ratcliffe)

Financial transactions increasingly are taking place outside the traditional government-backed currency system via a variety of so-called digital currencies or cryptocurrencies. The best known of these, bitcoin, is accepted by a growing number of businesses large and small, with more than 2 million transactions last month. For people with a strong libertarian bent, the involvement of governments in currency is cause for alarm. To them, digital currency is a way to achieve greater freedom. For other users, protecting privacy and avoiding the costs of the traditional monetary system, such as paying fees to credit card companies, make digital currencies attractive. But these currencies also are proving risky — their values are volatile, and some parts of the system are vulnerable to hackers. Moreover, law enforcement officials say digital currency provides criminals a way to hide the proceeds of their illegal activities. International, federal and state regulators are studying these new currencies to determine how to address the issues they pose.

ISSUE TRACKER for Related Reports
Banking
Sep. 26, 2014  Digital Currency
Oct. 05, 2012  Euro Crisis
Jan. 20, 2012  Financial Misconduct
Jan. 13, 2012  ‘Occupy’ Movement
Oct. 24, 2008  Financial Bailout Updated
Sep. 01, 2000  The Federal Reserve
Jun. 22, 1990  S&L Bailout: Assessing the Impact
Nov. 04, 1988  Behind the S&L Crisis
Apr. 26, 1985  New Era in Banking
Nov. 18, 1983  Bankruptcy's Thriving Business
Aug. 07, 1981  Banking Deregulation
Jul. 19, 1974  Banking Stability
Jul. 17, 1968  Banking Innovations
May 06, 1964  Monetary Policy in Prosperity
May 16, 1940  Revision of the Securities Acts
Feb. 27, 1937  Expansion of Branch Banking
Sep. 03, 1935  The Decline of Commercial Banking
Dec. 11, 1934  Proposals for a Government-Owned Central Bank
Sep. 12, 1934  Bank Reserves and Credit Inflation
Nov. 27, 1933  Bank Credit in Depression and Recovery
Aug. 12, 1933  Closed Banks and Banking Reform
Apr. 04, 1933  Unified Control of Banking
Apr. 09, 1932  The Glass Banking Bill
Mar. 24, 1932  The Guaranty of Bank Deposits
Apr. 17, 1930  The International Bank and the Gold Standard
Feb. 08, 1930  Branch Banking and Chain Banking
Apr. 29, 1929  Mergers of Banking Institutions
Oct. 28, 1927  The Federal Reserve Rate Controversy
May 21, 1927  Labor Banking and Finance Since 1920
Jan. 31, 1924  The Northwestern Bank Failures and the Attack on Treasury Savings Certificates
Dec. 01, 1923  Why State Banks Do Not Join the Federal Reserve System, the Effect on the System and the Issues Involved
Nov. 23, 1923  Branch Bank Controversy
BROWSE RELATED TOPICS:
Commercial Law
Financial Institutions
Regulation and Deregulation