Digital Currencies legalized in California

http://johnrosenbaumlaw.com/2014/07/california-legalize-bitcoin/
Digital Currencies legalized in California
California has legalized the application of BitCoins and other digital currencies inside the state by eliminating certain text in California’s Corporations Code which prohibited use of “anything but lawful money of the United States.”
The move represents an expanding trend amid states to clarify digital currencies and their legality as use for purchasing goods. Some noted that before signing this bill (AB 129) a great many other currency forms were technically illegal, including “Amazon Coins” or “Starbucks Stars”.
The last weeks have observed other progress in direction of digital currency adoption, with commercial juggernauts like NewEgg.com, 1-800-Flowers.com and Expedia joining the BitCoin bandwagon by accepting the e-currency for payments. BitCoin is now so widely accepted, that a family has taken to the road on a BitCoin-oriented attempt at living off the currency as exclusively as possible. So far they have been quite successful, being able to pay for gas, food and hotel all with BitCoin.
At this stage I realize that only a small portion of the reading audience actually is aware what BitCoin is. Sure it’s a trending expression many have heard often, but most have little idea as to the specifics.
Put simply, BitCoin is a peer-to-peer currency which holds no tangible value (for instance, the gold standard). Instead the value of BitCoin is rooted entirely in the value that the market places on it. Currently, a single BitCoin is worth just under $650. It’s for this reason that generally transactions are carried out in fractions of a BitCoin, the most popular denomination being the “millicoin” (or rather, one 1/1000 of a BitCoin, about $0.64 at the time of writing this).
Most people are left scratching their heads at the point of such a system, or exactly why someone would invest in it when there are plenty of viable options on the market for tangible investments. It’s a legitimate concern, and to answer the question it’s the potential for huge gains.
The advantages of BitCoin are that each transaction is fairly anonymous, that you can send money from one side of the world to the other with no accrued fees, and instantly. The currency transcends international borders, being utilized and traded in just about every country on the planet. It has no central system that can manipulate it (i.e. the Fed), instead the system is as strong as each user.
Sounds great huh? Well for all the positive aspects, there are also down sides. Without regulation the system is hugely erratic. There are currently 13,000,000 BitCoins in circulation. The most there will ever be is 21,000,000. This is fixed. Unlike the amount of dollars in our system, there cannot ever, by design be more than 21,000,000 BitCoins produced. But consider that this number will be lower given that BitCoins can be quite easily lost, never to be recovered. Of course, US Dollars can as well, but the difference is a new one can be printed, and everyone moves on with their life.
So, keeping that in mind, if BitCoins are to gain mainstream popularity their value will skyrocket. Good for those holding them, bad for those not. An additional problem with this is that there will be inherently a group of people whom have been with BitCoin (back before the value was less than a dollar). These people hold thousands of them, and anytime can flood the system and cause the value to plummet. This has happened, when from December 5 to December 7 the cost of a BitCoin dropped from a high of $1,140.00 per coin, to a low of $585.00.
The legitimization of virtual currencies in California and elsewhere is surely an exciting thing. How we will be completing financial transactions five or ten years from now is yet to be seen, but there is a good chance that the regulations we see addressing the issue now are a strong indication for things to come. Investors who take the time to learn about the systems now, will find themselves at a great advantage if digital currencies ever become the law of the land.