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Could Bitcoin Become a Political Tool?

 

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Posted January 11, 2014 by

If you were wondering just how far Bitcoin can go, it has officially made it into politics. The Federal Elections Commission has been debating on whether or not to allow the digital currency, which is also viewed by many as unstable, to be a valid donation to political campaigns.

Part of the problem for the FEC is that Bitcoin doesn’t leave room for a lot of transparency. According to Campaigns & Elections magazine, “during transactions involving the currency, only the parties’ Bitcoin addresses are public.”

Bitcoin is a peer-to-peer (P2P) digital currency/payment system and “cryptocurrency,” so labelled because it utilizes cryptology to secure the currency.

bitcoin

In order to collect bitcoins, you can go to an exchange where your money is converted to the digital currency, you can “mine” for them (verify and timestamp transactions, for which you are given a transaction fee), or sell something for them. There are a finite number of bitcoins in existence.

Their instability stems in part from their unregulated status. There is no Federal Reserve or an equivalent for the currency, and the value fluctuations make it a questionable investment in the eyes of some. However, OKCupid, WordPress, and even some Subway franchises accept Bitcoin. While many retailers are keeping an eye on the somewhat controversial currency, some view it as a new way to attract customers. Other merchants see an opportunity to make more money, as the transaction fees are not as high as those from credit card companies.

The issue has now been thrust further into the spotlight in Texas, where Rep. Steve Stockman, a Republican, became the first to accept Bitcoin in his campaign as a form of political donation. Stockman and other politicians, per a November ruling by the FEC, are allowed to accept Bitcoin as donations, but are not allowed to spend them on their campaigns. If Stockman intends for his campaign to profit from the donations, the bitcoins will have to be converted to U.S. currency to be usable.

Promoters of the currency, meanwhile, revere it as something of a Holy Graila totally secure financial transaction that is unregulated by any government. It can’t be forged because each bitcoin contains its own transaction history. To introduce it into the political arena like this could be something of a true test for Bitcoin.

Stockman told Business Insider that he wished to promote the online currency, which fluctuates often and has several skeptics in the field of economics and among the average citizens.

Stockman was in New York last week for the opening of the NYC Bitcoin Center and announced his campaign would be accepting the currency as donations in his challenge against incumbent Texas Senator John Cornyn.

Stockman is no stranger to the digital world. He has gained a large following online for his outspokenness in social media and his snarky reactions to political opponents. The announcement of his candidacy for the U.S. Senate seat came as a surprise, with Stockman running as more conservative than his opponent.

Bitcoin, though young, has had a tumultuous existence. Along with a seemingly unstable value (it recently dropped in value from more than $1000 to roughly $650 in the span of a few hours), it is also a favorite by those who deal in illicit goods and services online. The infamous Silk Road, a digital black market shut down by the Department of Justice because of its drug sales, had millions of dollars in bitcoins traded there.



Joe Cunningham

 
Nerd and political junkie. Husband and father. Journalist and columnist. Unserious and opinionated. Crazy right-winger.


4 Comments


  1.  

    That’s an interesting concept. I can see why a lot of people would be skeptical about it though… Jumping from $1000 to $650 is a little scary. Then again, it’s still pretty cool that regular retailers are starting to accept it.




  2.  
    Tiffany Palumbo

    Very informative and interesting. I can see this exploding in the future, pressing goverments to lay down harsher laws on what is and is not acceptable for BC donations.




  3.  

    From what I understand, that huge jump in value was because that the Chinese stock exchange decided that they weren’t going to accept BitCoins. Personally, I question the legitimacy of a currency that is stored on a hard drive. It is only a matter of time before someone figures out how to hack it properly.





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