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Online Gambling Site Bets On Bitcoin To Avoid U.S. Laws
SomePgmr writes with a story about an online gambling site planning to use Bitcoin to sidestep U.S. regulations that effectively ban online gambling. From the article: "Michael Hajduk had sunk one year and about $20,000 into developing his online poker site, Infiniti Poker, when the U.S. online gambling market imploded. On April 15, 2011, a day now known in the industry as Black Friday, the U.S. Department of Justice shut down the three biggest poker sites accessible to players in the U.S., indicting 11 people on charges of bank fraud, money laundering, and illegal gambling. ... Infiniti Poker ... plans to accept Bitcoin when it launches later this month. The online currency may allow American gamblers to avoid running afoul of complex U.S. laws that prevent businesses from knowingly accepting money transfers for Internet gambling purposes. 'Because we're using Bitcoin, we're not using U.S. banks — it's all peer-to-peer,' Hajduk says. 'I don't believe we'll be doing anything wrong.'"
It'll be nice to have an established poker site taking Bitcoins. Not that I want to disparage the current bitcoin poker sites (I like seals with clubs) but they just don't have the polish and finish to which I've become accustomed.
Is 1563649 a prime number?
And good job. Base your business off a virtual currency with ZERO backing and no control whatsoever.
And it's worse than US Dollars exactly how now?
Science advances one funeral at a time- Max Planck
Because the right people don't make money with it.
Science advances one funeral at a time- Max Planck
yep -and I am sure that Vegas, Atlantic city and the mob are putting their money and politicians into making sure it stays illegal regardless of the currency used
-I'm just sayin'
No control? That's an interesting way to look at it. Bitcoin is controlled by the consensus system that underlies it, if you decide you want to violate the rules then you are split off automatically into a parallel universe where whatever you do won't be recognized by your trading partners. That is a much stronger form of control than traditional currencies have. To change the rules requires the economic majority to upgrade (and thus force everyone else to upgrade with them, so trade can continue). It's pretty democratic, in that sense.
Contrast this to, eg, the US dollar, where control has been deliberately passed to a quasi-private branch of government known as the central bank. Its unelected leader pulls the levers of monetary policy in an attempt to plan the economy.
So both types of currency are controlled, just in different ways.
And platinum...don't forget the platinum...
There is no God, and Dirac is his prophet.
Sounds like a dumb idea, until you realize that Chuck E. Cheese and similar businesses have, for decades, been using a similar tactic to avoid running afoul of gambling laws: You're not playing for gifts or money, you're playing for worthless tokens!
The fact that said worthless tokens can be exchanged for things with monetary value is, apparently, non sequitur.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
Yep! This'll stop the government from coming after you! Not!
It should, actually.
Otherwise, the government could come after anyone who plays Monopoly, too. Or anyone who plays poker with virtual gold coins in an MMORPG.
The US hasn't been able to back its currency with gold since Nixon formally abandoned the gold standard (and in reality, much before that). Land? What currency has ever been backed with land? Can I go to the US government with a stack of $100 bills and say "ok, I'd like the land that backs this currency now please?". Er, no. The US, like most countries, doesn't back its currency with anything. The only thing that people can exchange dollars for with the government is .... more dollars.
Not too long after Black Friday I had the same idea of using Bitcoin currency instead of real moolah. A site called Betcoin had already done this using the jpoker/jspoker library. I frequented the site for a while and even went back to it months later. In both cases the volume of people on the site was extremely low and the amount of bitcoin compared to real USD value was paltry even in comparison to the Full Tilt Poker $0.25/$0.50 tables. There just wasn't enough money in circulation on the site and not many people wanted to stake their futures on the volatile Bitcoin currency in the poker world. Plus, anyone that did any decent research just found various overseas and Indian-owned online casinos (harder for the US Gov to prosecute Indian territory casinos in Canada) and could exchange money by select Visa merchants, cash proxy sites, or by money order.
We should not forget about the plutonium.
"No fear. No envy. No meanness." Liam Clancy
Proving Bitcoins have value is trivial - there are exchanges where they are traded against other currencies for non-trivial prices, so they clearly have value. What more proof could you demand?
Yes, you can charge back with credit cards. This is great for the credit card companies who then lose the incentive to make their systems more secure, because merchants (ie, the poker companies) lose the money. With Bitcoin you cannot, so the deck is metaphorically stacked in favor of the merchant vs the punter. It's a little better than the reverse because most merchants at least have reputations they want to protect and aren't going anywhere, unlike buyers who can disappear in an instant. But Bitcoin does have ways to offer buyer protection - it's discussed in the very first page of the white paper describing the systems design. The protocol allows for dispute mediators who can decide who gets the money (buyer or seller) but who cannot steal the money themselves.
Of course the government has to outlaw gambling. It is dangerous and addictive, encourages crime and exploits the poor. Except the state lotteries, of course - those are somehow none of the above.
The US backs its currency with a fleet of nuclear-powered aircraft carriers. That's far better backing than land or gold.
I don't believe we'll be doing anything wrong
shortly to become
I didn't believe we were doing anything wrong
how many pairs of boxer shorts should you own?
There is more to online gambling law than that.
There are different laws for making bets, taking bets, facilitating payments (this is what usually gets prosecuted), accepting advertising for gambling, displaying advertising for gambling, and even differences in regulation between types of gambling (sports betting, gambling machines, card games, etc.)
Then there are issues with corruption (throwing the game), and money laundering. For better or worse, organized crime loves gambling because it is easy to casually shift funds from one account to another without a paper trail.
On top of that, the government wants their cut in tax revenue.
//TODO: Think of witty sig statement
Is the US going away tomorrow? No.
Are they going away next year? No.
Are they going away in 5-10 years? No.
Is "A. Random H@X0R" going away tomorrow? Who?
Are they going away next year? Who?
Are they gone in 5-10 years? Who?
Essentially currency is based on trust.
For anyone who's not a complete, gullible rube, Bitcoin fails the "smell test" there.
Chas - The one, the only.
THANK GOD!!!
Its not terribly useful in the real world?
I mean honestly, can I buy food with it? Gas? How many merchants within 50 miles of my home (DC area) are currently accepting bitcoins? What about amazon, or ebay / paypal? Newegg?
Sure, I could transfer it to other people, but its also a pretty volatile currency. I have no reason to believe the value sent will reflect anything near the value once I exchange it into dollars, if I can even perform the exchange (since it requires Bitcoin exchanges or a willing purchaser).
Its kind of like trying to transfer money by trading stock: sure, it sort of works, but who really wants that kind of volatility? What supermarket would ever want to do that?
Actually, like most countries the U.S. backs its currency with the authority to tax .
The dollar has value because it can pay a dollars worth of taxes.
When Germany jumped into the eurozone, adoption of the euro was extremely slow until the year that Germany required all taxes be paid in euros, and in that year almost everyone converted.
"His name was James Damore."
The Rentenmark was backed by land.
That isn't what backing means. Every single reply to my post has the same issue. Backing does not mean "the issuing authority has assets they can sell" and it doesn't mean "the issuing authority can force me to use their tokens through the barrel of a gun".
To say a currency is backed by something has a very specific meaning, which is that there is an asset literally "behind" the currency. The currency itself is merely a proxy for the backing material, one can be exchanged for the other at a specific rate. The gold standard meant you could, at least in theory, go to a bank or the government, hand in some currency and walk out with gold bars.
So given this clear definition it's meaningless to say a currency is backed by "the authority to tax". That authority might incentivize a large population to obtain these tokens and thus give them some value - but that isn't backing. It's taxation. It's also wrong to say a currency is backed by the ability to sell something like land - OK, so the government sells some land it owns. What does it sell that land for? Oh, right, it sells the land for dollars. So if I lose confidence in the dollar and want to hand them in, in return for the asset that backs them, the government selling land and giving me back more dollars doesn't help. I'd need the actual land itself and there'd need to be an actual somewhat fixed exchange rate between dollars and land. But there isn't.
If you want to argue that dollars have value because the US government taxes its citizens in that way, go right ahead. That argument doesn't lead to "Bitcoins are worthless because no government taxes in them" though. Bitcoins obviously aren't worthless because they started out having no value when they were first created, and obtained value over time as people learned about them. The system is an existence proof that you'd be wrong.
Only if a debt is created actually. I can offer to sell anything I own for barter, gold, bitcoins, or even euros, and I can, quite legally, refuse any currenct, including US currency...so long as no debt is created. Should a debt be created, then I would have to accept some amount of US currency to settle it (though I am still not required to exclusively accept it).
"I opened my eyes, and everything went dark again"
I don't get it. What do you have against Bitcoin? Has it killed your dog or something?
Your post is a stream of non-sequiturs. Yes, the primary exchange was hacked ... once ... and it resulted in a minor loss that the exchange covered from their own profits. Users did not lose any money. Yes, very tiny ad-hoc "one man and his dream" exchanges have also been hacked, but hardly anyone used them, so again, impact was very minimal. Do you think US banks never get hacked or robbed? Think again.
Many US banks have unbelievably woeful security that results in accounts being routinely emptied. Consumer accounts are insured by the government but business and organizational accounts aren't, yet many of them are protected by nothing more than a password or secret question/answer. That's absurd. Now nothing stops you under-protecting your Bitcoins, but at least you can upgrade to more security if you want. You're not at the mercy of your local bank.
What on earth makes you think that starting a "virtual business is more trivial than a physical business"? Did you step out of a timewarp from the 70s? Do you think competing with Amazon is inherently easier than competing with your local supermarket? Exchanges, as you note, rely heavily on their users trust in their security (as do all financial institutions). That's what stops them "simply reforming under a new identity". They'd be starting from zero and have no advantage over anyone else. And FYI financial regulations do apply to Bitcoin exchanges as they would any other online currency exchange. That's one reason the big ones all demand government issued ID in the same way a bank would.
Feel free to laugh at people who are using a next-generation financial system. It's been many years and Bitcoin is still around and doing fine, so I doubt anyone will care.
1) I didn't appeal to authority.
That would have required me mentioning an authority. I said that the designer had no understanding of economics. Not that he/she was ignorant of the writings of this or that particular set of economists or economic theory.
2) I didn't say deflation led to depression.
What I did say is that the use of BitCoins was going to be constrained by their inherently deflationary nature. As in, if acceptance of BitCoins rises, deflation will occur as demand increases. Expectation of that deflation encourages hoarding, which discourages their use, and therefore, acceptance. Geek Translation: BitCoins are stuck in a Deflation/Acceptance/Supply race condition.
3) Credit IS the lifeblood of modern economies.
Improvements in productivity, technology, agriculture, lifestyle, etc., all require access to capital. There are three ways to accrue capital:
A) Save until you can buy it. While this sounds all wholesome and good, it makes, say, the expansion of a business, the research necessary to bring a new drug to market, or the purchase of an automobile required to transport yourself to a better job rather difficult. Puts you in kind of a Chicken and Egg problem without credit. (I can't make money until I buy/build X, but I can't buy/build X until I have money.) Therefore capital spending of all kinds would be reduced drastically.
B) Borrow it. Bonds, banks, your buddy down the street, whatever.
C) Acquire investors. Wow, is that expensive. Even the most brain-addled MBA can explain that selling a portion of your business is usually the most expensive way to raise money. There's a reason that companies rarely execute stock offerings past their IPO... You only sell stock to either execute an IPO (so your other investors can bail) or to raise money you cannot raise by borrowing it.
Just because a bunch of bankers lent out more money than they should have to unworthy borrowers at unsustainable rates does not mean credit is a bad thing.
you are not even required by any criminal law to accept legal tender in payment of debt.
should the debtor offer you legal tender and you refuse, then you attempt to collect the debt at a later time the debtor can (and will if they are smart) raise your refusal to accept payment as a defense to your subsequent attempt to collect payment.
Snowden and Manning are heroes.
Is the US going away tomorrow? No. Are they going away next year? No. Are they going away in 5-10 years? No.
Is the US going to print 80 billion dollars more next month? Yes.
Is the US going to print 80 billion dollars more the month after that? Yes.
Is the US going to print 80 billion dollars more the month after that? Yes.
Is the US going to print 80 billion dollars more the month after that? Yes.
It's not the 'going away' part that's the concern.
I'm pretty shocked by the generally disparaging remarks regarding bitcoin. Nearly *all* currencies are speculative to some degee, just think of the exchange market. Investing in euro's doesn't seem like such a great idea at the moment but that certainly wasn't the case before the credit crunch. As long as the supply is limited (which it is) and there's a demand, bitcoins will have value. Many of you are assuming there is no demand, clearly you haven't visited the silk road. Bitcoin serves a purpose, it's digital cash, pure and simple. As long as people value *relative* anonimity in digital transactions (and there will always be a section of the population that does), there will be a demand.
Is the US going away tomorrow? No.
Is the US government and banks going to continue to manipulate the US dollar for the foreseeable future? Yes.
Is "A. Random H@X0R" going away tomorrow? It doesn't matter. Bitcoin is a decentralized currency. Bitcoin is not dependent upon "A. Random H@X0R" for it to be trusted.
Where does the trust in bitcoin come from? Well if you don't know anything about bitcoin, you probably shouldn;t trust it. If you know something about computer science and theory of computability, you'd know that bitcoins are actually much harder to acquire than a government issued currency, and is therefore much harder to manipulate (e.g. like gold). A trillion US dollars can be created virtually with a keyboard stroke. The only thing stopping this from happening is the people in charge. What stops a trillion bitcoins from being instantly created is the laws of physics and math.
A lot of currencies have collapsed from rampant inflation exactly because the people in charge could *not* be trusted.
Some people trust government officials more than the laws of physics and math. I personally don't.
The value of the dollar is what you can buy with said dollar in the united states which barring a bit of inflation here and there(some inflation is a good thing) is about the same as it was last year or the year before.
If you're talking about the currency exchange rate, that value is set by the currency exchange market and is therefor bound by no sense of reality or sanity whatsoever in much the same way as stocks. The Australian dollar was trading at about 93 cents to the US dollar right before Lehman brothers and two months after it was sitting at 58 cents. Our economy barely had a hiccup and the US one was in the toilet, but the value of the US dollar rose dramatically. The most important factor causing the US dollar to drop has dick all to do with quantitative easing or the trillion dollar coin(which actually won't affect inflation at all since the effect on the money supply is essentially zero), mostly it has to do with the fact that the US economy is in the toilet and US interest rates are near zero, with interest rates being the bigger factor.
People who invest in Bitcoins are idiots. It is absolutely worthless. And even though it is worthless, I will still buy your Bitcoins for $10 USD each just so you won't be stuck in a jam of holding onto those worthless Bitcoins.
If you are not allowed to question your government then the government has answered your question.
No, but the taxation often provides the tipping point.
A national currency is marked by 2 things: that you can (or must) pay your taxes with it, and that the employees of that government (most especially the military) accept it in payment. As long as both of those are true, even with serious inflation, the national currency has value.
Socialism: a lie told by totalitarians and believed by fools.
Firstly, if you didn't mean to be offensive, perhaps you should have avoided directly insulting my intelligence and education.
I had a much longer rant planned, but then I realized you misunderstand the nature of my objection to the economic understanding of the BtC designers. (And, to be fair to you, I didn't mention it in my original post.) I have no problem with the idea of an electronic currency of fixed, limited, pre-determined, supply. While unsuited as a national currency, (there's a reason every single modern economy uses fiat currency; though some economies do it better than others) it can, nonetheless, be a very useful tool, and the idea is certainly a worthy experiment in technology and economics. I merely believe that the particular expansion curve chosen was a stupid one. I believe that it ramped up too quickly, leveled off too soon, and the long-term increase in the supply is too low. A better-chosen curve would have struck a better balance between staving off deflation and inflation. (It started too quickly, and then became deflationary/economic growth limiting.) They were too optimistic about the uptake of BtC's, and did absolutely nothing to account for any kind of significant long-term growth in their use after the "intro" phase was complete. This is why the value of BtC's has been so unstable and deflating so much.
Now, on to my (now) shorter rant:
While a large portion of economics is indeed a large pile of untested bullshit, the same could be said about any branch of science. Just as we do not seriously question classic Newtonian mechanics as a useful model for predicting the behavior of masses, nobody seriously doubts things like the fundamental relationship of Supply and Demand (used as a general model.) Conversely, there are many unproven branches of physics (i.e. String Theory) for which the evidence is little stronger than the abstract theories produced by the egg-headed economist of your choice. We CAN do economic experiments to test theories (such experiments are done all the time at the micro level, and are also done at the macro level by central banks, although the results of those experiments take much longer and the results aren't usually very clear-cut.)
I ignore divisibility for the simple reason that I do not argue (as many BitCoin skeptics do) that BitCoins are illiquid simply due to the relatively high value of 1BtC. I know that is incorrect.
I ignore velocity (which is certainly a legitimate means of expanding an economy without increasing the supply of currency the economy is denominated in) because BitCoins have given us no reason to believe that their velocity will be higher than any other currency, (and reasons to think it would be lower, namely the lack of a functioning credit market.) and there is an upper bound to how much of an increase is possible. As a side-note, since the supply curve has leveled off too quickly, and will continue to get even flatter, almost ANY economic growth (over the small value of the BtC expansion curve) will have to come through velocity increases... that rather limits the total size of the economy, and therefore BtC adoption. The ability to adjust the money supply based on the current and expected size of the economy is why every modern economy uses fiat currency, although, as earlier mentioned, some do it better than others.
I don't know if you are one of the people that believe this (I'd like to think you aren't), but large increases in the value of a currency are NOT a good sign if you want it to be a viable currency. Increases ARE good if you are investing in said currency. A currency is most useful when it is STABLE, and, barring that, reasonably predictable and not severely deflating. That is, if you want a credit market at all. (Inflation of a steady doubling per year could theoretically be baked into interest rates, you can't do that with a currency deflating by a similar proportion, like BtC's did last year.) And the current intra-day volatility of several percent make it utt
So don't buy them if you think it's a scam. In the meantime, I can make use of a nice currency that is not under the control of any country, both as a consumer and a merchant. It's fairly anonymous / not easily trackable. It sets a stoploss, like cash -- if you cheat me in a Bitcoin transaction, you get at most the Bitcoins I sent you and no method to get more of my money. We don't need a bank to use Bitcoins -- they can be sent over the Internet with no third party intermediary, and there are Bitcoin escrow services to verify I received the product before I release the payment to you. Political systems routinely use currency as a way to control people. If people do not need the currency of a political system, that particular weapon becomes impotent. That's why the establishment opposes Bitcoin. I personally think Bitcoin is a great currency that helps me right now, so I'll continue to use it, "gullible rube" or not.
The value of the dollar is what you can buy with said dollar in the united states which barring a bit of inflation here and there(some inflation is a good thing) is about the same as it was last year or the year before.
Barring a bit of inflation here and there? Seriously, what? Do you know what's happened and how much currency debasement there has been in the last five years? No inflation is ever a good thing. It massages the egos of humans into believing that their investments are going up and paint over that everything else is as well.
Our economy barely had a hiccup and the US one was in the toilet, but the value of the US dollar rose dramatically.
Comparing the price of one currency to another when they are all being debased is a fallacy. Over the last five years it is pretty clear that dollar has declined markedly in value. In case you hadn't noticed there are a lot of dollars around. Everyone has them and that doesn't make it terribly valuable.