Is California's Legalization of Bitcoins a Game Changer?

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Is California's Legalization of Bitcoins a Game Changer?

 user admin 2014-07-01 at 11:33:35 am Views: 260
  • #3247

    Is California's Legalization of Bitcoins a Game Changer?
    Over the weekend, California Gov. Jerry Brown signed into law a bill that has the potential to change the way commerce is done. The bill, AB 129, written by Democratic Assemblyman Roger Dickinson, legalizes bitcoins and other digital currencies for transactions in California.

    "In an era of evolving payment methods, from Amazon coins to Starbucks stars, it is impractical to ignore the growing use of cash alternatives," Dickinson said. "This bill is intended to fine-tune current law to address Californians' payment habits in the mobile and digital fields."

    It's hard to overstate the significance of AB 129 given the economic influence the most populous state in the union has over the country and the rest of the world. According to a recent JPMorgan Chase (JPM) report, California's GDP is estimated to hit just under $2 billion for 2015, making it the world's eighth-largest economy — ahead of Russia, Italy and Canada.

    Bitcoin advocate Marc Andreessen, the famed venture capitalist, weighed in on Twitter, saying "Thank you Gov Brown & CA legislature!"

    Community Currencies, Too
    California'a numerous "community currencies" — often created to boost local businesses –- were formally legalized by AB 129.

    Ironically, in contrast to arguments often put forward by those who claim that authorizing a digital currency would be a legislative and bureaucratic nightmare, new law is only one sentence long and simply repeals a provision that banned the use of "anything but the lawful money of the United States."

    The news out of California comes during a particularly tough year for bitcoin. Earlier in the year Mt. Gox, once the world's leading exchange for trading the virtual currency, revealed that it lost more than 850,000 bitcoins (equal to $500 million at current prices), in a hacking attack. The firm later recovered 200,000 of the lost bitcoin.

    And the U.S. Marshals Service in June auctioned off 20,000 bitcoin seized during a raid on Silk Road, an Internet marketplace where authorities allege illegal drugs and other outlawed items could be purchased.

    Ultimately the federal government has final say over the use of any currency — including virtual ones like bitcoin — for commerce among U.S. citizens, businesses and legal entities, trumping even the laws of individual states. However, it is hard to ignore the actions of California in this area, which may lead to similar legislation being enacted in other states.