Launched on the Internet just a little more than five years ago, Bitcoin has been hailed as a complete reimagining of international finance—one that breaks down barriers between countries and frees currencies from the control of governments. Critics have likened the current landscape for Bitcoin and other digital currencies to the Wild West, but a more accurate comparison might be to the days of the Klondike Gold Rush.
The narrative has moved from describing a technology platform that has earned its shady reputation to a more nuanced exploration of something that is coalescing into a legitimate and growing force in the global economy. An economist and vice president of one Federal Reserve Bank describes Bitcoin as a “stroke of genius,” suggesting that the digital currency is likely to bring significant change to the financial industry.
In the absence of federal regulations concerning digital currencies, some states are scrambling to craft rules of their own to attract investors, innovators and merchants to Silicon Valley and Wall Street, for example.
Financial institutions need to start paying serious attention now and adapt quickly to the awakening “Internet of money”—or risk playing a more difficult game of catch-up later.
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