At the global level, we are experiencing a severe financial crisis that is devaluing the traditional currencies legally issued by international banks in different parts of the world. This new crisis puts at risk the credibility of the entire banking system which has led different governments to look for financial alternatives.
At first, this new paradigm was localized in countries with weaker economies. But now it seems to have reached Europe and other continents all over the world.
Banking in Germany and the United States is critical to international stability. Add the fall of the Chinese currency (Yuan) and serious financial problems in Japan and Italy, and we find ourselves in the midst of this global crisis. Bitcoin, a crypto-currency, has emerged as a more secure anonymous exchange of values without intermediaries.
Governments are having trouble adjusting to the popular rise of Bitcoin; an alternative to the conventional currency.
In the United States, a federal judge ruled Bitcoin is the legal currency.
In Thailand, it has been banned. In Germany, they accept Bitcoin as a private currency and as a financial instrument. Many governments around the world are reacting to this new paradigm with mixed results.
According to statistics from Blockchain.com, the most important market maker for bitcoin worldwide, in 2016 this global currency increased its value to 125% reaching $ 1,127 dollars, revalued above $ 1,000 dollars first time 2013, when it reached $ 1,220, increasing rapidly throughout the year. Right now, as I write this article, Bitcoin is at $ 5270.22 USD.
Management of Bitcoin in Germany
The German Ministry of Finance responded to the request of the liberal deputy Frank Schaeffler, recognizing Bitcoin officially as ” units of account ” and, consequently, ” private money “, who stresses that it is a product still very unstable and that it can cause large losses of money. Recognizing this currency as “private money” allows Germany to have a legal framework to begin regulating so that a refuge for tax evaders is not created.
The Bitcoin code, the global currency is a user-to-user transaction where no tax is collected.
For example, in the case of purchases through online stores, taxes are charged no matter what currency is used.
The Federal Financial Supervisory Authority, the regulatory arm of Germany also known as BaFin, corrected the German banking code accepting bitcoins are units of value, becoming financial instruments and remaining under the control and laws of the competent regulators which may be subject to taxes; even if the currency is free of them.
Germany is now the first country in the world to have a set of clear rules applicable to Bitcoin.
With these new regulations, companies can facilitate transactions with Bitcoin and banks, requiring a capital of 730,000 euros, and having to respond to BaFin.
With this, Germany not only intends to accept the legal use of bitcoin in economic operations but to declare the commercial benefits obtained in the exchange. The representative of the legal firm Xenion, Stefan Greiner, said: “Germany is now the first country in the world to have a set of clear rules applicable to Bitcoin”.
Effects at a Global Level:
Having Germany legally recognized Bitcoin as a legitimate currency, it opens the doors for more regulation, which is opposed by Bitcoin followers, because, unlike other currencies, it is not backed by any government nor does it depend on trust in no central bank.
Bitcoin fans claim its nature being independent of governments protects the identity of users from theft and fraud. While other more conservative traditional money experts believe that this lack of regulation by the state or the bank lends itself to money laundering and fraud. The European Union has not yet set its official policy, but Fidor Bank has asked Germany for a license to open a bitcoin exchange office.
Bitcoin was created, allegedly, Satoshi Nakamoto. That is the name used by the unknown person or group of people who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation. As part of the implementation, they also devised the first blockchain database. In the process, they were the first to solve the double-spending problem for digital currency using a peer-to-peer network. They were active in the development of bitcoin up until December 2010.
It is believed that by 2140, up to 21 million units of Bitcoin will be created. The future remains unwritten so we shall see how it all develops.