Bitcoin is a unique concept of an instrument that can be used for settlement of consideration between persons who form part of a digital community. It was developed as a peer to peer payment settlement system in the Internet world. The community of Netizens who participate in the Bitcoin transactions decide on who gets how much of Bitcoins and which transaction is to be added to the approved chain of transactions.The community itself determines the value of the Bitcoin by simply a process of demand and supply.
The Government or the Central Bank of any country have no role either in the production of Bitcoins or in the maintainance of the system.
Hence Bitcoin is a system that belongs to the community which is part of the digital world. The Government authorities which have a role in managing the society of Citizens have no real role to play in regulating the Bitcoins which operate only in the Netizen world.
There are some transactions where the Bitcoin is being exchanged for the currencies of the physical world. This inter society transactions are the transactions that create problems of jurisdiction. The physical society Governments need to restrict their regulatory concern only in managing the inter society conversion of Bitcoins to fiat currencies and no more.
It is to be noted that Bitcoin system is governed by the “Protocol”. This is the “Master Governance System”. It is an open source document that the constitution of the Bitcoin governance is known to all. Any changes or refinements to the protocol are done by the users themselves as defined by the protocol itself.
All decisions on Bitcoins are taken democratically by the community participants.
Being a system developed only by Netizens for the Netizens by a community of the Netizens, Bitcoin is actually a matter of right of these Netizens. The restrictions that some regulatory authorities are trying to impose on the community is therefore to be treated as a curb on the democratic rights of Netizens.
If some of the Non Netizens are also adopting the use of Bitcons for settlement of payments in the physical world, they are doing so at their own financial risk. They are aware that if the value of Bitcoins fall down, they cannot go to any regulatory authority to compensate them for the loss. Despite this lack of assurance if people adopt Bitcoins as a currency of their choice, it is necessary for the regulators to respect this choice of the people.
If necessary the Government can consider regulations to ensure that the citizens of the physical world are not adversely affected by the use of Bitcoins.
However, in any democratic set up it is essential for the Government to respect the right of Bitcoin community to mine, use and trade in Bitcoins as an essential human right.
Naavi
Right On The Mark!!! Very well written Naavi.