New Digital Currencies. What does this mean for politics?
The expansive rise of cryptocurrencies is one way the market is responding to recent hacking attempts and data breaches. In simplistic terms, the idea of cryptocurrencies were developed to bypass verifying and processing funds through centralized banks by instead using mathematical algorithms called “blockchains” that must be decrypted to verify the transfer of funds. These blockchains record endless transactions in chronological order.
Although bitcoin is the most well-known, other platforms built on blockchain technology have started to gain traction. For example: Ether, with its unit of currency Etherium, is used as a means of enacting digital transactions such as buying/selling services between companies. The new currency most similar to bitcoin is Ripple’s XRP. This San Francisco startup claims $11.06 billion transactions in the second quarter of 2017. Blockchain technology is the way of the future.
On May 7, 2014, the Federal Election Commission voted to allow political donations via bitcoin as long it sells the bitcoins and converts them to USD before being deposited to the campaign’s bank account. However, the commission did not approve using bitcoin to obtain goods and services for the campaign. This ruling leaves a lot of uncertainty for the political community and room for future conversations regarding cryptocurrencies.
How will this new technology affect politics? Currently, Rand Paul was the only U.S. Presidential Candidate to use bitcoin as a way of accepting payments. Because of the unique regulatory compliance associated with political campaigns, how will politics adapt to accepting these cryptocurrencies? As with everything, the demand feeds supply. Although the demand is low for accepting these types of payments, it only takes one blockchain to change the algorithm.