July 6, 2014 at 12:23 pm ET
Americans Don’t Know Much About Bitcoin, But Their Government Is Learning More
As recently as last month, most American voters said they had heard little to nothing about bitcoin. But that could change following recent actions taken by both the federal government and the State of California.
Last month Gov. Jerry Brown, a Democrat, signed legislation that allows for cash alternatives in commercial transactions, repealing a state law that prohibited deals in “anything but the lawful money of the United States.” In the same week, the U.S. Marshals Service auctioned off almost 30,000 bitcoins seized during a raid on the online marketplace known as Silk Road, which authorities say was selling illicit drugs.
Actions like this from lawmakers and government agencies, as well as some national retailers, are raising the profile of the virtual currency that came online just a few years ago. Still, polling figures show they still have a long way to go both in raising awareness and encouraging bitcoin usage.
Sixty-four percent of likely voters say their familiarity with bitcoin is minimal, according to the results of a Morning Consult poll published last month. Many in that camp were older, middle-class respondents, with younger and wealthier voters more likely to say they had a better understanding of the digital currency.
“At this point, just your average person doesn’t have a reason to know what it is,” said Jerry Brito, director of the Technology Policy Program at George Mason University’s Mercatus Center. “What matters now is what the folks in the finance industry and the government know about it.”
On that front, he said, things are improving. “I’m seeing fewer and fewer misconceptions. I’m still having to explain to some people in government from scratch what bitcoin is, but more and more folks are beginning to understand exactly what it is.”
Misconceptions still abound, not just about the complexities of bitcoin but about the significance of California’s new statutory language, according to some experts who have been following the digital currency for the past few years.
“We are talking about the decriminalization of a wide variety of commonly used things rather than the legalization of bitcoin” in California, said Ryan J. Straus, a principal at the Seattle law firm Riddell Williams P.S. who specializes in regulatory issues surrounding emerging payment systems such as bitcoin. “It’s not legal tender, and neither are airline miles.”
California’s actions and the recent bitcoin auction underscore the regulatory differences between the federal government and the states, where banking regulators who are setting licensing rules for businesses using digital currencies.
“There’s been very little regulation at the federal level,” Brito said. “Where the regulation is happening today is at the state level. That’s where the action is.”
A Government Accountability Office report released last month found that most of the federal focus has been on criminal activity related to crypto currencies, with not as much attention paid to consumers as investors, despite “the reported loss of consumer funds maintained by bitcoin exchanges, volatility in bitcoin prices, and the development of virtual-currency-based investment products.”
“Federal agencies also have begun to collaborate on virtual currency issues through informal discussions and interagency working groups primarily concerned with money laundering and other law enforcement matters,” the GAO said in its report. “However, these working groups have not focused on emerging consumer protection issues, and the Consumer Financial Protection Bureau (CFPB)—whose responsibilities include providing consumers with information to make responsible decisions about financial transactions—has generally not participated in these groups.”
For now, the majority of American consumers don’t seem eager to use bitcoins, nor do they think the government should even allow individuals to use the virtual currency for purchasing goods and services, according to the Morning Consult poll results. Of those who did support a stamp of approval from the government, most were under the age of 45.
And while the majority of Democrats, Republicans and independents said they were unlikely to use bitcoins, with Republicans being the least likely, the two groups with the highest percentage saying they’re very likely to use bitcoins were self-identified liberals and Tea Party supporters, at 11 percent and 12 percent, respectively.