Trump team eyes bitcoin, blockchain ascent
Bitcoin, a digital currency, was created in 2008. Shares of Bitcoin are sold on internet exchanges where users remain anonymous. As the value of the cryptocurrency continues to hit record highs, here’s how it works.
The list of those delving into blockchain technology seems to be expanding by the day, including investors, technology shops, banks and curious minds executing simple Google searches.
Add another to the list: the Trump administration.
“We follow blockchain technologies for a number of reasons, including economic, innovation, national security and public safety," said White House Deputy Press Secretary Hogan Gidley.
Blockchain is the mechanism that facilitates bitcoin, the digital currency that has seen a rapid rise in value, intrigue and debate. At its core, blockchain is an open-sourced, decentralized system that allows for bitcoin transactions to take place. Proponents say it's virtually impenetrable by hackers and is the modern day solution for cutting out third parties in transactions, while critics contend it also acts as an untraceable gateway for criminal activity.
Blockchain is not exclusive to bitcoin. Banks want in as well. JPMorgan Chase (NYSE:JPM) Chairman and CEO Jamie Dimon appears to have a love-hate relationship with bitcoin. He announced in October a blockchain pilot program with the Royal Bank of Canada and Australia and New Zealand Banking Group.
Dimon is no fan, calling it a "fraud," but he also said he does believe blockchain will be useful to speed up transactions, saying, "God bless the blockchain."
The Federal Reserve’s new vice chair of supervision, Randal Quarles, said the central bank is closely watching bitcoin. Quarles warned last week that bitcoin and other cryptocurrencies could pose dangers to the financial system as they become more wide scale. "While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage," Quarles said.
Quarles believes the Fed should separate the concept of digital currencies from new innovative technologies and said that the Fed is monitoring financial industry consideration of adopting cryptocurrencies. He also warned against the Fed issuing its own digital currency.
In November, the White House Press Secretary Sarah Sanders said for the first time the administration is "monitoring" bitcoin, citing a meeting in which Homeland Security Adviser Tom Bossert raised the issue. However, it's the technological evolution of blockchain that is seen as the more pressing focus.
"Blockchain has the promise to be used creatively for a number of cybersecurity and other issues, and it is important for us to remain informed on this and other new and emerging technologies," Gidley said.