Bitcoin and Beyond: Current and Future Regulation of Virtual Currencies

Abstract

Bitcoin is a virtual currency transaction protocol.It also is a type of virtual currency.One of Bitcoin's unique features is that it is decentralized; it is not created or issued by a single person or entity.Rather, it is "mined" by miners that are issued bitcoins in exchange for solving complex math problems with special software.Bitcoins may be converted to governmentissued legal tender (commonly referred to as fiat currency) or other types of virtual currency through an exchange, or they may be used to purchase goods and services from any of the tens of thousands of merchants who accept bitcoins for payment.The Bitcoin protocol enables the transfer of bitcoins and also can be used for other purposes, such as providing the infrastructure for smart contracts, escrow systems, smart property/title systems, and much more.Many other virtual currencies exist.Some are centralized virtual currencies that are created and issued by a single entity.Some of these virtual currencies may be converted to fiat currency, but others may not.Many are "closed loop" virtual currencies that may only be used to obtain goods and services of the issuer.