What does the White House think of cryptocurrencies such as bitcoin? originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights.
I know a fair amount about Bitcoin, having co-written some papers and a textbook about it as an academic before I joined the White House.
Bitcoin is a new kind of thing that hasn't existed in quite the same form before. Transactions can be verified entirely in software, with fewer (or vastly different) trust assumption than previous systems required. And the system is governed differently than previous currency-like technologies--Bitcoin is governed more like an open source project. Factors like these mean that Bitcoin might be able to provide value in new ways, perhaps to contribute to social and governmental goals like financial inclusion.
But cryptocurrencies also raise concerns with respect to traditional financial and law enforcement policy issues like money laundering and consumer protection. Agencies across the government are working to make sure that the basic rules of the road for financial systems continue to apply in a sensible way to Bitcoin and other cryptocurrencies.
I am also watching with interest the debate within the Bitcoin community about the block size limit. (To be clear, the government is paying attention to that debate but are not participating in it.) This is a challenge to Bitcoin's governance model, because it requires the community to come to a consensus on an issue where there seem to be high stakes and plausible arguments on each side.
This question originally appeared on Quora - the knowledge sharing network where compelling questions are answered by people with unique insights. You can follow Quora on Twitter, Facebook, and Google+. More questions: