Everything is looking sunny for the decentralized cryptocurrency largely used for illegal purchases. What gives?
Does your company want to get the attention of Washington, D.C.? Here's one way: play to the crummy economy and the looming threat of China.
That's one of the lessons that can be drawn from Bitcoin's appearance before the Senate Committee on Homeland Security and Government Affairs last week. Despite warnings from law enforcement officials that Bitcoin has made its way into child pornography, firearms, illegal drugs, money laundering, and gambling, the overall atmosphere at the hearing was exceedingly friendly. In fact, officials from the U.S. Department of Justice, the U.S. Secret Service, and the Treasury Department repeatedly cited the positive attributes of Bitcoin, including: "innovative ways to move money" and "potential to support more efficient and transparent global commerce." The Washington Post called the hearing a lovefest.
How'd that happen?
Maybe The New Yorker is right, and the cultural ascension of nerds, technology, and the startup ecosystem means San Francisco is gaining power, and Washington is starting to pay attention. As the country still climbs out of a period of recession, certainly no representative wants to be the one voting against anything that could be tied to "job creation." Or anything that could lead to the U.S. falling behind other countries--read: China, which has had a burst of Bitcoin investment lately--in use of decentralized currencies.
Turns out, the Bitcoin community deliberately undertook a campaign over the summer and fall to convince lawmakers and the officials to tread carefully when it comes to regulating this, and other, payment networks. And a lot of it has to do with one man, Patrick Murck, the general counse of the Bitcoin Foundation, who's a former D.C.-based lawyer and seems like a humble, congenial guy. The Washington Postreports:
Since the spring, leaders of the Bitcoin community and sympathetic policy advocates have been engaging with federal regulators, lawmakers and other influential figures inside the beltway. The result: a near-unanimous consensus that the federal government needs to be careful to avoid hampering the growth of the world's first completely decentralized payment network.
How did Bitcoin get inside the beltway? Here's a breakdown of the charm offensive, as reported by the Post. You'll find Murck at the center of the action.
June 13, 2013: For many government officials, their first introduction to Bitcoin came during a June 13 conference that included panelists such as lead Bitcoin developer Gavin Andressen and Murck. For the most part, it did not go well. A Justice Department prosecutor compared the trading of Bitcoin online to child pornography. That set off Murck, who later turned around the tone by stressing that the Bitcoin community was willing to work with regulators: "We're all happy to live with the consequences of whatever rulemaking is open and transparent."
On the other hand, Murck met Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network (part of the Treasury Department) in the speakers' room at the conference. The Post reports that they had a conversation "that would later lead to the closed-door August meeting between regulators and Bitcoin advocates."
Late June: Around this time, Murck was also introduced to members of the Homeland Security Committee, which had been studying up on Bitcoin since April, when the value of a single bitcoin spiked to $266. The committee interviewed roughly 50 experts, and spoke extensively with representatives of the Bitcoin foundation to learn how the currency functions, and study its capabilities. These conversations with Murck and others led to last week's hearings.
August: Representatives of the Bitcoin Foundation met with executive branch officials behind closed doors in August. "Despite their initial skepticism, regulators seemed more interested in learning than in confrontation, according to attendees."
November: The pair of hearings on Capital Hill (you know, the lovefest) finally happen. The biggest turnaround was testimony from Ernie Allen, the president of the International Centre for Missing and Exploited Children, who was an organizer of the June conference. At the hearing, Allen is singing a different tune than six months prior: He says he would be against premature regulation or overregulation of bitcoin, and said he's "enthusiastic about the potential of virtual currencies and the digital economy."
For all its reputation as being libertarian and anti-government--not to mention not being run by a company or institution with money to throw into lobbying--Bitcoin is looking as savvy as anyone on K Street.