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Bitcoin (BTC) is a digital currency first described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system. Bitcoin creation and transfer is based on an open source cryptographic protocol and is not managed by any central authority. Each bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places. Bitcoins can be transferred through a computer or smartphone without an intermediate financial institution.
What if all the bitcoin exchanges were shut down?
Here’s a thought exercise. What if all bitcoin exchanges were shut down by various governments? What would the current value of a bitcoin be?
This is an important question because of the implied outcome of the current trend by governments to shut down - or prevent the creation of - bitcoin exchanges.
The mining of bitcoin would continue but transferring them and spending them becomes a problem since there would be no quoted price. The bitcoin protocol is about mining bitcoin not pricing bitcoin. There is nothing in the protocol about establishing a market price for bitcoin; you need a market for that, but what if all the exchange markets are shut down?
OTTAWA - Canadians buying and selling an emerging digital currency are running afoul of established banks and operating in uncharted territory for financial regulators.
"The Canadian government doesn't know what a Bitcoin is, doesn't recognize the Bitcoin, and there's no regulatory agency that knows what a Bitcoin is," said Joseph David, the owner of VirtEx.
His Calgary-based website lets Canadians trade Bitcoins through an online market similar to a stock exchange. David said the two-year-old company facilitated $15 million in transactions this year.
But the company is one of several Bitcoin dealers struggling to navigate financial regulations that don't account for virtual currencies, and to cope with major banks shutting down their accounts without explanation.
Unlike traditional currencies such as the dollar, Bitcoins are not issued by a central bank, nor backed by a government. The virtual currency is governed by a computer program that allows users to exchange Bitcoins anonymously through a peer-to-peer network.
Read more: www.montrealgazette.com...
But the campaign to persuade more Canadian retailers to accept Bitcoins is already facing its first hurdle — getting banks to accept that the currency has legitimate uses.
Earlier this month, the Royal Bank of Canada closed VirtEx's account, along with the bank account of an Ottawa-based Bitcoin dealer.
"Anti-money laundering policy is a big thing, and that's what banks are concerned about," said James Grant, the owner of Canadian Bitcoins in Ottawa.
"Our problem is that we're not laundering money."
Tens of thousands of dollars were flowing through Grant's RBC account, which the company was using to make direct deposits to customers who were buying and selling Bitcoins.
Grant said the bank refused to tell him why they were closing the account, but he suspects they shut it down when they realized it was a Bitcoin business.
"It definitely crippled us," Grant said.
Read more: www.montrealgazette.com...
"We have invoices, and receipts, and customer documentation for every customer that we deal with," Grant said.
RBC refused to comment on the case for privacy reasons.
The Canada Revenue Agency does not recognize a Bitcoin as a unit of legal tender. Instead, the CRA says purchases with Bitcoins are considered barter transactions, and should be reported as income.
"When Bitcoins are bought or sold like a commodity, any resulting gains or losses could be income or capital for the taxpayer," said Philippe Brideau, a spokesperson for the CRA.
Originally posted by littled16
reply to post by boncho
It is my guess that the governments of the world will do everything in their power to de-value the bitcoin, eventually causing it to become worthless. Never underestimate the greed of big bank owned governments!