Government to “explore” Bitcoin

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With less than a year to go until the next General Election, Chancellor George Osborne is today to announce a new initiative sure to win over that key demographic: Weird Bitcoin zealots.

Pic from here.
Pic from here.

According to the BBC, the plan is to “explore” the implications of digital currencies, and to figure out if they need to be regulated. It is thought that Libertarian Magic Beans could help make Britain the “global centre of financial innovation”.

Let’s hope the “innovations” aren’t as disastrous as the massively intertwined network of derivatives that led to the 2008 crash.

What’s odd about Osborne’s apparent enthusiasm for Bitcoin is that surely he is a man who would argue against membership of the Euro because it removes various monetary policy controls from national governments (making it harder for the government to manipulate the economy), but at the same time he is interested in a currency that by its very nature cannot be controlled?

Similarly, there still hasn’t been a convincing explanation as to how Bitcoin will avoid the “liquidity trap“. Given that Osborne loves Quantitive Easing to increase liquidity, it is odd that he doesn’t seem to worry about it here.

What do you think? Should Britain embrace Bitcoin? Let us know your thoughts in the comments.

James O’Malley