Bitcoin: A Primer for Policymakers

Jerry Brito · Andrea Castillo

Dec 2013 · Mercatus Center at George Mason University

About this ebook

As the world’s first decentralized digital currency, Bitcoin has the potential to revolutionize online payments systems in a way that benefits consumers and businesses. Instead of using an intermediary such as PayPal or submitting credit card information to a third party for verification—both of which often include transaction fees and other restrictions—Bitcoin allows individuals to pay each other directly for goods or services.

The characteristics that make Bitcoin so innovative have also made it a target for regulators, who fear that the cryptocurrency will aid tax evasion, money laundering, and other crimes. While it is true that it can be used for nefarious purposes, the same can be said of cash. But, unlike cash, Bitcoin transactions are recorded in an online ledger.

In this new primer published by the Mercatus Center at George Mason University, Jerry Brito and Andrea Castillo describe how the digital currency works and address many of the common misconceptions about it. They also analyze current laws and regulations that may already cover digital currencies and warn against preemptively placing regulatory restrictions on Bitcoin that could stifle the new technology before it has a chance to evolve. In addition, they give several recommendations about how to treat Bitcoin going forward.

Here, at the forefront of the debate, Brito and Castillo both support innovation and provide much-needed clarity for policymakers and law enforcement.

A Spanish edition of this book is also available from the Mercatus Center.

About the author

Jerry Brito is a senior research fellow at the Mercatus Center at George Mason University and director of its Technology Policy Program. He also serves as an adjunct professor of law at George Mason University. His research focuses on technology and Internet policy, copyright, and the regulatory process. His op-eds have appeared in the Wall Street Journal, the New York Times, and elsewhere. Brito is a coauthor, with Susan Dudley, of Regulation: A Primer, and the editor of Copyright Unbalanced: From Incentive to Excess. He hosts Surprisingly Free, a weekly half-hour podcast featuring in-depth discussions with an eclectic mix of authors, academics, and entrepreneurs at the intersection of technology, policy, and economics. He also contributes to the Technology Liberation Front, a leading technology-policy blog. He has created several websites to foster transparency and accountability in government, including OpenRegs.com, which provides an alternative interface to the federal government’s regulatory docketing system. Brito received his JD from George Mason University School of Law and his BA in political science from Florida International University.

Andrea Castillo is a program associate for the Spending and Budget Initiative at the Mercatus Center at George Mason University. She is a coauthor of Liberalism and Cronyism: Two Rival Political and Economic Systems with Randall G. Holcombe, and she blogs at Neighborhood Effects and is a columnist for The Ümlaut. She received her BS in economics and political science from Florida State University.