As the tech industry grapples with the potential benefits and risks of the digital currency Bitcoin, policymakers should take care not to impose heavy-handed restrictions on an innovative platform that could transform global commerce, a pair of researchers at George Mason University's Mercatus Center argue in a new policy paper.
As a starting point, the researchers suggest that the proper way to evaluate Bitcoin is "not necessarily as a replacement for traditional currencies, but rather as a new payments system," and acknowledge that it "exists in something of a legal gray area."
"This is largely the case because Bitcoin does not exactly fit existing statutory definitions of currency or other financial instruments or institutions, making it difficult to know which laws apply and how," write Mercatus Center researchers Jerry Brito and Andrea Castillo.
The researchers credit Bitcoin for achieving, at a large scale, what no other payments system has been able to do: provide direct, trusted exchanges of currency over a distributed peer-to-peer network that keeps track of debits and credits.
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