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I think of myself as a reasonable person; I am not a government hater, nor a conspiracy theorist. I understand that 9/11 was an act of terrorism, that President Obama is from Hawaii, that JFK was shot by one person, and that not everybody who fails to fully embrace Bitcoin is in the pay of big banks. Even I, though, sometimes wonder about the motives of some governments in their dealings with virtual currencies.

Their refusal to accept Bitcoin for what it is leads to a Catch-22 situation that can, at times, lead to even the most rational, unbiased observer looking for an ulterior motive. This week, for example, following another example of an unregulated “business” using Bitcoin as a vehicle to scam people, the government charged with protecting those people issued a statement that laid blame at the door of not only the victims but also the things that were stolen.

In Hong Kong the Bitcoin “investment scheme” MyCoin has reportedly disappeared, along with over $350 million. The Hong Kong government’s response was to issue a warning about Bitcoin and digital currencies in general. That probably doesn't raise many eyebrows; we have all become accustomed to that response, but replace “Bitcoin” with almost anything else of value that could be stolen and the Hong Kong Monetary Authority (HKMA)'s reaction would be outrageous. There is no talk about investigating or attempting to prosecute the crime, just a warning. The attitude that comes across is “What do you expect if you own a virtual currency?” Replace those last two words with gold or U.S. dollars, or almost anything else for that matter, and the statement becomes an insult.

People are defrauded of millions of dollars every day, and often the gullibility of those who lose their money to fraud is, quite frankly, staggering. I mean, if you send money to a Nigerian Prince in need or agree to pay somebody to buy your stuff on Craigslist then it is hard to summon up much sympathy for your plight. Many schemes, though, are more sophisticated with seasoned investors being scammed. In many cases the victims obviously didn't do enough due diligence, but even in those cases authorities will make a big show of actively pursuing the criminals.

The problem that those same authorities face when it comes to Bitcoin, however, is that it is hard to devote resources to investigating and prosecuting a crime when the thing stolen is not recognized for its inherent value. The refusal of governments to accept that Bitcoin is a currency is at the root of the problem.

Merriam-Webster.com includes in their definitions for currency phrases such as “circulation of a medium of exchange” and “a common article for bartering.” Bitcoin is accepted as payment on the internet by thousands upon thousands of merchants and is used for payment between individuals; a simple fact that makes it a “common article for bartering” and a “medium of exchange.” It is, literally by definition, a currency.

As for the motive for not recognizing that Bitcoin is a currency, it is more likely that simple human nature rather than some grand conspiracy is to blame. Furtive imaginations see secret meetings between some global banking cartel set on ruling the world, and governments with an agenda to hatch some devious schemes to preserve their power over us. As with all government conspiracy theories there is, however, one basic problem. Keeping the plot secret would need a greater degree of competence and efficiency than anybody who has ever dealt with a government would believe exists.

Far more believable is that it is a combination of two very human faults: hubris and laziness. Admitting that Bitcoin is a currency would involve admitting that there are those that see it as preferable to the national fiat currency, and the regulations and rules that would have to be drafted as a result would demand an understanding of a new technology and a lot of work. Far easier to pretend that everybody loves the currency that you are charged with regulating, even if that means not protecting your citizens against a particular type of crime.

Whatever the reasons, history tells us that even governments must eventually accept what is obvious to everybody else. Bitcoin is used by millions around the world to buy things; it is, therefore, a currency. Once that is accepted, it follows those that are defrauded of Bitcoin by criminal activity deserve more respect than they are currently being shown.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.