April 02, 2014

Bitcoin fans, detractors testify before House panel

April 3, 2014 – A hearing by the House Small Business Committee on the risks of the digital currency Bitcoin for small businesses drew comments pro and con, including those highlighting Bitcoin's lower processing costs but untraceable nature.

In his opening statement, Chairman Sam Graves, R-Mo., said, "There are numerous risks that a small business should consider before implementing a Bitcoin payment system. These risks include volatility of the price, security and policy uncertainty. Further, recent developments in the Bitcoin industry have cast a shadow on its security, and sustainability."

Witnesses in favor of the currency focused on the irreversibility of Bitcoin charges, which would protect a small business from fraudulent charge-backs. It was also noted that the processing costs for Bitcoin are roughly half that of credit cards.

Witnesses included Jerry Brito, a senior research fellow at George Mason University, and Adam White, of Coinbase – who defended the use of Bitcoin – and Mark Williams of Boston University School of Management, and Michael Couvillion of Plymouth State University, who discussed its risks. The latter two witnesses noted that hackers could steal Bitcoins without being traceable.

NAFCU Regulatory Paralegal Shari Pogach recently examined Bitcoin in a Compliance Blog post, and reviewed the latest thoughts from industry observers on the currency's likelihood of succeeding long-term.