From: Pee@4free.onatree   
      
   For beleaguered bitcoins, Canada is friendly territory Add to ...   
   ANNA NICOLAOU   
      
   Special to The Globe and Mail   
      
   Published Friday, Jan. 17 2014, 5:14 PM EST   
      
   Last updated Friday, Jan. 17 2014, 5:26 PM EST   
      
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   Canada may prove to be a sweet spot for bitcoin, setting it apart from   
   emerging markets where governments are cracking down on the virtual   
   currency.   
      
   Tufts University's Bhaskar Chakravorti isn't surprised Canada is opening   
   more bitcoin ATMs at the same time that China's central bank is putting the   
   brakes on it. According to Mr. Chakravorti, bitcoin is on a predictable path   
   to thrive in the West and fail in emerging markets.   
      
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   "If [alternative currencies] are going to take off anywhere, it will be in   
   countries like Canada or Sweden," said Mr. Chakravorti, associate dean of   
   international finance at Tufts University. "These countries are usually   
   open-minded about technology, and at the same time there is enough   
   regulation to at least minimize banking crises."   
      
   Governments across Australia, Canada, Germany and the United States have   
   essentially decided to leave bitcoin alone for now.   
      
   Meanwhile, Chinese and Indian governments have been increasingly wary of the   
   virtual currency. China's central bank banned financial institutions from   
   bitcoin transactions on Dec. 5, and later forbid yuan deposits into BTC   
   China, at the time the largest bitcoin exchange in the world. The Reserve   
   Bank of India issued a warning against bitcoin on Dec. 24, prompting major   
   exchanges to shut down. Thailand declared buying and selling of bitcoins   
   illegal last July.   
      
   Bitcoin will never take off in emerging markets because these regimes won't   
   allow it, and the divergence in policy will make bitcoin just another   
   novelty for the Western elite, says Mr. Chakravorti.   
      
   The past few years of easy monetary policy have drawn huge volumes of   
   speculative investment into emerging markets, but as the U.S. Federal   
   Reserve pulls back on its unprecedented stimulus, these markets are now   
   vulnerable to capital flight. The World Bank warned on Tuesday that capital   
   inflows to developing countries could fall as much as 80 per cent in the   
   next several months, as markets across the globe adjust to the Fed's   
   tapering move.   
      
   "Hot money rushed into emerging markets, and they got fat and lazy," says   
   Mr. Chakravorti. "These countries are anxious about monitoring currencies   
   because the money needs to be paid back now." They will grow even more   
   protective of capital controls, he predicts, as governments in India, Turkey   
   and China fight against corruption drains to their economies.   
      
   This division has yet to play out in the bitcoin market. The United States   
   is by far the largest user base of bitcoin, representing 27 per cent of all   
   active bitcoin nodes. However, China and Russia come in second and third,   
   respectively, with about 8 per cent of global nodes each.   
      
   Mr. Chakravorti ultimately doesn't see bitcoin as anything more than a   
   "glorified hobby," largely due to the wild volatility of its price.   
      
   Bitcoin's decentralization is a large part of its appeal to libertarians,   
   and alternative currencies have grown in popularity in light of last year's   
   Edward Snowden leaks.   
      
   Bitcoin is a technologist utopian dream, says Mr. Chakravorti, and this and   
   investor speculation has propelled the cryptocurrency to stardom.   
      
   "A growing community in the West has become very skeptical of government,"   
   says Mr. Chakravorti. "Bitcoin is a manifestation of that. It could be   
   cardboard chips, or bitcoins, as long as it's not backed by government."   
      
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