Where Bitcoins fit into government IT
Digital currencies such as Bitcoin are becoming very popular all around the globe as more companies and organizations begin accepting them. While some businesses seem willing to embrace the change with open arms, others, like the U.S. government, are choosing to tread carefully when dealing with this emerging cryptocurrency, according to TIME Magazine.
The U.S. Consumer Financial Protection Bureau (CFPB) recently released a statement detailing the risks the public takes when investing in digital currency and has opened the group up to receive complaints from consumers involving the payment method, the source asserted. The virtual money has not been declared legal tender in the U.S., slightly limiting its range of applications, but the direction of trends could see entire countries adopt a form of Bitcoin in the future.
This raises the question of where digital currency fits into the world of government IT.
The risks that come with Bitcoins
Unlike the currency exchanged at normal banks, Bitcoins don't come with the same amount of protection that traditional forms of payment generally do, the source stated. Bitcoins are vulnerable to a host of problems that can catch the unfamiliar consumer off guard if they dabble in the area without any knowledge of it.
"Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market," CFPB Director Richard Cordray said in the federal statement.
Among some of the murky factors of the money is the unclear exchange rates and costs of acquiring Bitcoins, reported Forbes. The rate compared to the U.S. dollar climbs and falls rapidly without warning, forcing the people who invest in it to often stand on unsure footing.
There are many companies out there that operate under the premise of helping consumers navigate these sometimes confusing policies, charges and risks. All of the prices change depending on what group people interact with, and without the Federal Reserve backing the currency, anything Bitcoin providers say goes.
The cybersecurity concerns going into digital currencies can be just as treacherous as the concept. This fosters a prime environment for hackers and scammers looking to capitalize on unsuspecting people making their way in the cryptocurrency market with their 64-character password to their digital wallet as their only real line of defense, the source stated.
While some companies offer their own forms of protection and reimbursement, there's nothing helping consumers if a provider goes out of business or suffers a major data breach. Once Bitcoins are lost or stolen, there's no way to get them again.
The government's own digital currency
During the Cryptolina Bitcoin Expo, a number of experts in the field brought up the idea and belief of the U.S. government is creating its own form of cryptocurrency, according to Cryptocoins News. Despite the many concerns the money raises, there are some advantages the government can see from adopting it.
Digital currency can help the business process management of the costs associated with creating and issuing physical money, the source asserted. Currency like the penny costs more to create than what it's worth, but with something like Bitcoins, the government can save resources rather than wasting them.
Carol Van Cleef, a regulatory compliance consultant for financial services companies, believes the monetary system the country presently uses is too slow compared to alternatives for the demands of today and the online marketplace.
Though there are many risks associated with cryptocurrency, some countries like Ecuador are more open to a regulated version of it. Ecuador sponsored its own digital money to take Bitcoin's place after banning it so they could better control the system.
As more companies and countries adopt pioneering currencies like Bitcoins, the dangers may subside. Until then, people might expect government IT workers to do nothing but keep a weary eye on its progress until further developed.