It kind of answers the question that I had been contemplating for quite a while now. As a background, let me provide a brief history of currency as I understand it.
Without going to ancient times, just looking at modern currency, we started out with the Gold standard. I remember learning about how a country had to have Gold in its treasury to back up the currency it issues. The idea was that the currency which is basically a promise to pay value is backed with actual value. Also the authority to issue a currency vested only on the Sovereign state. We as citizens or corporate are not allowed to print currency. This system helped make sure that the financial system was underpinned with trust and certainty.
Further, countries agreed to common controls and measures to ensure that currency is tracked and there are mechanism to prevent them from being misused in any way by terrorists, criminals or sanctioned regimes. Some emerging economies wanted to use the measures to restrict outflow of currency and build a buffer for their economies by fixing exchange rates.
Then the first round of dilution came with a new arrangement (Bretton Woods) where the US $ became the global reserve currency and the gold standard was removed. Petroleum was pegged with the US $ and the IMF was created.
We have been through many iterations of US Debt ceiling being raised. The USD is like a too big to fail bank. The countries that hold a massive amount of USD debt are likely to be the loser if US defaults. This makes the debt ceiling event every time a cliff hanger. Every one knows that the ceiling has to be raised but also realizes the enormous mountain of debt being created.
We have also had economic imbalances that led to the Quantitative Easing cycles in two continents which is yet to unwind in Europe and is on the verge of starting to unwind in the US. The day of cheap printed money is coming to an end and the interest rates can only go up as the funding dries up and we have to see how the market can handle the sucking out of capital.
Despite all these flaws, the financial system has managed to maintain credibility and checks and controls to prevent the bad guys from doing bad things across the world.
With Bit Coin, my understanding is that it is not backed with any guarantee. It is not known if the issuers can provide the value on demand on a consistent basis. There is no audit trail and mechanism to prevent money laundering. There is no audit trial to identify who is sending money and who is receiving. All these things lends itself to the currency being the choice for smugglers, terrorists and money launderers. I am not saying all the Bitcoin users are money launderers etc. There are lots of genuine Bitcoin holders for speculative purposes. However, the lack of essential audit trail makes the Bitcoin attractive to the wrong crowd.
What ever we have invented for good, has been abused by bad elements. The Computers were supposed to do good, we still have virus and malware authors misusing it. Guns were supposed to be for defense, they are also used by criminals. Recently, there was the case of a Pharma company hiking the price of its drugs significantly to boost its profit. Given these trends, Bitcoin even if intended as a good development is most likely to be tarnished by the undesirables.
So I was intrigued by inaction by governments when new Bitcoin ATMs were opened thus providing a formal window to move regulated funds into unregulated currency and be moved around. When I hear Jamie Damon make his proclamation about Bitcoin, it was like validation. I hope either the governments regulate Bitcoin quickly so that it can continue to grow and flourish or ban it. Inaction will only make innocent people loose lot of money if any knee jerk reaction happens or if some major abuse (such as Bitcoin operators going bankrupt) happens.
The job of the government is to anticipate, guide and regulate innovation as well as educate to ensure that the citizens do not undertake risks that they do not understand. Unfortunately, the governments seem to be behind the curve. Be it the case of Uber, Bitcoin or the emerging innovation in the area of Gene editing, Artificial intelligence or flying cars.