by Kevin Dowd
Institute of Economic Affairs
June 18, 2014
A private money is a widely accepted medium of exchange or payment issued by a non-governmental body in the absence of any legal privileges. Private monies do not have to be generally acceptable, only widely accepted. The Liberty Dollar and e-gold are two examples of private monies that became widely used and were eventually shut down by the federal government. Today, Bitcoin has emerged as a prominent new private currency. It should not suffer the same fate as its predecessors. The appropriate government response to Bitcoin and other cryptocurrencies is to allow competition on a level playing field between alternative forms of money. As with provision of any good or service, competition would best promote good money and drive out bad.

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