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Why Bitcoin may be bad for you now, but great for innovation

April 4, 2013 in Bitcoin, News, Virtual currency

By Emi Kolawole 04/03/2013 (http://www.washingtonpost.com)

Before you rush out and convert every dollar in your possession into Bitcoins, stop. Seriously, don’t do it.

The virtual, decentralized currency has seen a surge of interest as of late, and reached a billion dollars in total value this week. The rise has been credited by some to Cypriots desperately looking for a way to shelter their money from their country’s banking maelstrom. But cold water has been poured on that theory, with experts finding increased media attention in the wake of Cyprus’s economic woes to be more likely the cause for the meteoric rise in Bitcoin’s value.

The rising value, however it is coming about, is leading people who once dismissed the digital currency as a risky, passing fad to start taking a closer look and even convert some of their cash. That also means regulators are stirring. The Financial Crimes Enforcement Network (FinCEN) released new guidelines on virtual currencies in March with no mention of Bitcoin. But, as Ars Technica’s Timothy Lee writes, the new regulations left no doubt as to where FinCEN was pointing its regulatory finger. (Lee’s post outlining four reasons not to buy Bitcoins also is well worth a read as is this explainer by Wonkblog’s Brad Plumer).

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