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Could Bitcoin Go Legit?
Velcroman1 writes "On May 15, the Department of Homeland Security seized a digital bank account used by 'MtGox,' the world's largest exchange, where people buy and sell bitcoins. DHS alleged, and a judge agreed, that there is 'probable cause' that MtGox is an 'unlicensed money service business.' If proven, the penalty for operating such a business is a fine and up to 5 years in jail. FoxNews.com caught up with several bitcoin exchanges, including CampBX, MtGox, CoinLab and more, to ask them how they've navigated the regulatory waters — and how to go legit." In other shady bitcoin news, it appears the demise of Liberty Reserve has caused hackers to find a new alternative. twoheadedboy writes "Despite suggestions Bitcoin might be the ideal currency for dealers on the dark web, it appears Perfect Money, a Panama-based operation, is proving the most popular alternative to the now-defunct Liberty Reserve. A source working the underground forums told TechWeekEurope that, for now, fraudsters are rapidly migrating to Perfect Money. Many vendors have started accepting it, having previously primarily used Liberty Reserve, which was shut down following the arrest of its founder and four other members this past week. Internet fraudsters might be interested in Perfect Money as it has distanced itself from the U.S., cutting off all new American registrations. However, one forum user said he was turned down by Perfect Money as their 'type of activity is not welcome.' Other currencies may yet win out."
Could Bitcoin Go Legit?
No.
While Bitcoin tends to grab headlines, there's other crypto-currency projects that are focused on merchant adoption:
http://www.feathercoin.com/about/
Oh, look, it's the weekly Bitcoin post.
No, it couldn't. Thanks for asking.
Bitcoin, whether you are a believer in government funny money or not, is a legitimate currency, like any other currency that is used as a substitution or a value representation for goods and services.
Also, the economic impact of Bitcoin is huge. People are spending millions developing ASICs to mine what bitcoins remain, even though more than half of them have already been awarded and it endeavors to be a scarce new resource. And, it's still barely profitable to mine with GPUs, so that is also a thriving industry.
I, for one, am waiting for the Bitcoin GPU bust when the ASICs come out in volume and used GPUs flood the market for cheap as people scramble to buy ASICs.
Like it or not, there are people who accept BTC as payment for goods and services, and there is a somewhat thriving market for them. That is legitimacy.
From TFA: "Despite the regulations, technology experts say that they will not prevent people from anonymously using bitcoins for illicit things like buying drugs online. The real-world analogy is cash; the government can tell when it is dispensed by banks, and to whom, but it loses track once it is dispensed."
If someone came up with the idea of "cash" today they would be a criminal mastermind.
Make thousands of wallets and make a script to make random tiny payments to your other wallets. This will increase the transaction history length. Then start spending little bits and pieces to help pollute all the bitcoins in circulation.
Any currency accepted by more than one person is 'legit'.
Now the proper question is... Will this currency last? Will it be accepted anywhere? Will it be worth hopping from exchange to exchange?
Those are good questions. And so far... No, No, Maybe...
But it was always legit from the second two people decided a bitcoin had 'value'.
Don't blame the currency, USD are used widely in the illegal trade. We are not blaming the dollar. Regulation might be needed.
Meanwhile check out feathercoin.com
Join in!!!!!
Does dice have a stipulation saying that there must be X bitcoin related posts a day?
Seriously, like most business ventures, bitcoin is just a scheme where sharks take advantage of the suckers.
Hint: You're a sucker. If you think you're a shark, you're an even bigger sucker. The sharks are never known, but their patsies sometimes end up in jail.
"Legit" is a meaningless qualifier. If a currency is legitimate when it can be exchanged for goods and services, then Bitcoin is already legit. If a currency is legitimate when it's approved of by your government of choice, then no, Bitcoin will never be "legitimate". If that's your definition, though, the real question is "why is legitimacy necessary?"
What will happen is probably what has already happened to other areas that have been persecuted by the US government at the behest of incumbent industries: they'll just move off-shore.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
In-app purchases are the exact same thing as bitcoin.
Why have the DHS not seized Apple's, Google's or anyone else's servers????
Will Google-Play be shut down????
There is also an interesting report from Krebs on Security, about how underground web actors talk about moving to new digital currencies.
The key thing to understand about government-backed currency is this: You have to pay your taxes in them. If you don't, said government can and will force you to do so. The government may also force a creditor to accept your currency to pay whatever debt you may have. In other words, it's backed up by the long arm of the law, and has value because if you choose to ignore its value guys with guns will show up to help explain the situation to you.
By contrast, Bitcoin is backed by absolutely nothing. It has no inherent value, and unlike government-backed currencies there's no use of force to back it up. In Hyper-inflation World that many Bitcoin enthusiasts think is America's future, you still have the guys with guns to demand that you use dollars to pay for certain things. By contrast, if Bitcoin goes belly-up, you have nothing except a bunch of bits that are of no use to anyone.
I am officially gone from
it's not like the u.s. has never invaded panama to apprehend a drug trafficker and money launderer before.
good luck with that.
I'm curious about something, maybe the community here can point out an answer.
There's a sizeable audience of slashdot readers that are interested in the technical aspects of digital currency, the economic aspects of using such currency, the legal aspects of such currency, the social effects of using such currency, and it's importance in combating tyrrany (the political aspects of such currency).
It would appear that some techies realized that currency control is a tool to unjustly oppress people, and decided to do something about it. The engineering (ie math) seem to be solid, the economic rationale is logically sound (more so than standard economic mantras such as "a little inflation is good"), and the potential to protect human rights is enormous.
What we have here is a rare example of people recognizing a problem and doing something about it.
Despite this, all early posts are negative. Paraphrasing, "Oh, look, it's the weekly Bitcoin post", "Bitcoins will never rise to the status of a real currency", "it'll never work because you will never be able to pay US taxes in bitcoins", "it's a joke", "it's a scam", and so on.
So far (relatively early) there are about a dozen dismissive articles, all by anonymous coward.
What's with BitCoin? Why all the negative press? I've seen no named commenter put forth a rational argument as to why it won't work - that can stand up to logical scrutiny. All arguments so far have been handily shot down by subsequent responses. (You're welcome to try, though.)
Does the government hire astroturfers to guide discussions on this site for selected topics or something? (I'm not saying that there is - I'm asking if this is a well-known fact and I missed it.)
Why all the unfounded dismissive posts about BitCoin?
Bitcoin was designed to be a giant pyramid. The ones at the top had shitloads of worthless mined coins, and they had to convince enough people to get into bitcoins to get rich out of it.
It could turn out to be useful, and that is some of the hope, but I have no doubt in my mind that it was partway founded based on pyramid logic/advertising.
It is inevitable that this world will go towards a real global economy with a common currency for all. BitCoin is a step towards that. More than likely at some point there will be a real line drawn in the sand as to "legal" currency and "black market" currency. Maybe another 20 yrs down the road.
"Cash is sufficiently secure"
Every bill has a serial number. Bill readers could be required by law for all cash transactions over, say, $50. High production volumes would make them very cheap. This could make it very, very hard to spend your cash without encountering a "read SN & report it to the Feds" device. I just can't see the Feds or any other government failing to do this within the next ten years. For that matter, do we know that the serial numbers on the bills you pick up at your ATM aren't (maybe covertly) tied to you at withdrawal now? They've got the SNs, your card account data, and your photo at the ATM.
Why wont Slashdot let me subscribe to the site in Bitcoin? Coinbase makes it easy.
If Bitcoin actually contains a chain of all prior transactions, I'm surprised someone hasn't done this already:
Suppose you start with one coin with chain size x. Split the coin in two. Now you have two fractional coins, each with chain size x+y.
Next join the coins together again. Now the chain size is 2*(x+y)+y = 2x+3y, and you only had to spend 2 transactions (13 cents) to do it.
Now repeat the process.
F(0) = x
F(1) = 2x+3y
F(2) = 4x+9y
F(3) = 8x+21y
F(4) = 16x+45y
F(n) = (2^n)x + 3*(2^n-1)y
It doesn't matter how small x was, because that 2^n term gets large in a hurry, and you then poison the wallet of anyone you trade with.
Creating a multi-GB poison coin: less than 2 * 30 * $0.065 = $3.90. /. will stop covering this garbage: Priceless.
Crashing the Bitcoin racket so
All these Slashdot articles about Bitcoin but no subscribe with Bitcoin button?
I think there's a confusion between two contrasting senses of the word "legitimate": (1) legitimate as a synonym for "legal" and (2) legitimate as a synonym for "valid". If sense #1 is intended, then no, BTC isn't legal (yet). But for many scenarios, sense #2 is already true, people accept BTC as a medium of exchange.
"Why would I want to pay in BTC? "
Because the thing you want to buy is sold in Bitcoins, and the equivalent sold in dollars are 3% or more more expensive (the Visa service charge ). Visa doesn't pay you money, it takes more and hands back a little. BTC transactions undercut that. I bought ASICs in Bitcoins and will be donating the next ones I find to EFF/Wikileaks and other things that benefit society.
"Those guys (still anonymous!) may have done good for the society, but the society cannot value the formula (that doesn't even save lives!) that high. BG's Windows does save lives, as part of many computers"
Welcome to a gold rush. Better the first/fastest miners get the gold, than some fat lazy banker. At least they did *some* of the work!
But basically I agree with your argument. You're talking about the values of one currency versus another, and the action against MtGox as an 'unlicensed money service business' shows the Feds confirming it as a currency. So you're confirming it as a valid currency, even if the Fed's are busing trying to find ways to attack it.
(first they ignore you, then they attack you, then you win)
You can buy Linden Dollars, and Farmvile dollars, and XBox credits, but you can't buy Bitcoins? So it's more than legitimate, it's got them scared.
Doesn't actually work like that. Each "coin" or wallet does not maintain it's own separate chain. There is one block chain which contains all transactions. New transactions are added to the chain with each block mined. That's simplified a bit, but more or less accurate.
Specifically what happens is a miner (disregarding mining pools for now, as a pool can be treated as a single miner for the purposes of the mechanics of bitcoin) gets a list of transactions from other miners and clients in the peer-to-peer network, each with a transaction fee attached. The miner uses this transaction list in conjunction with the most recent block hash to generate a hash of a new block which meets certain requirements (based on the current difficulty of mining, which is self-regulated by the network). This new block is sent off to the network, and once that block is used to generate another, the transactions in the created block are "verified", including the 25BTC (currently) transaction to the address of the miner, from nowhere. The miner also gets all transaction fees for transactions in the block. Not counting attempts to manipulate the block chain (i.e. forking, making a series of fake blocks and attempting to pass them off as legitimate), there is only ever the one block chain, just many copies of it.
I view BTC as less flawed than Zimbabwe dollars or US dollars because it's not a fiat currency and thus not open to hyperinflation.
(Fed reserve is printing $85 billion in funny money a month to 'buy' the government debt, so I chose to sell all dollar assets / I don't live in the USA, am not American and am free to buy Bitcoins).
I've seen this before, my father was from East Germany around the time of the collapsing USSR. Apparently they got all the USSR banks to print money to cover the debts, and it spiralled out of control. I don't remember this as a child, but my dad talks about how they blocked money transactions except with rubles and this Bitcoin attack seems similar.
But bitcoin isn't American and most of the interesting legal stuff you can buy with it, isn't American and it will outlive the collapse of the USSA.
It's been widely known that Mtgox has been cooperating with the FBI for quite a while now. Hopefully this opens their eyes to the fact they got left wearing lipstick after playing snitch for so long.
When I first learnt about Bitcoin, I considered starting an online shop to provide the sort of goods that people said weren't available through Bitcoin payments. (e.g. You can only buy drugs/WOW gold/play poker etc etc).
Considering the idea, one of the challenges I faced was how to handle the volatility. I thought I had solved that issue, except a few weeks later the first of the bubbles popped, and I realised my solution wouldn't work.
At the time, I thought it was the outcome of manipulation - a classic Pump and Dump. Even if it wasn't, I wondered if there was anything preventing anyone from manipulating the markets in this way. In the "Fiat Money" world, there are institutions like the SEC and ASIC, and, as ineffective as they are, seem to be better than nothing.
Bitcoin, by design, lacks such a central authority. How do we ensure fairness of the Bitcoin markets? I asked this question then, and a satisfactory answer has not appeared yet.
As I was previewing this post, it occurred to me that the above institutions could step in and regulate the Bitcoin exchanges. Except they haven't yet, and I don't see why they would volunteer for the responsibility.
Plan My Week for iPhone
It's just a matter of time. My company doesn't yet accept them either although we are going to with a new site we are rolling out. My company is #1 as far as GNU/Linux computers, parts, and accessories go.
You make a cogent and logical argument that BitCoin is deflationary. On first reading, I also thought that deflation would be a problem.
It turns out that BitCoin is not deflationary, as explained in this link.
This is exactly the sort of post I'm wondering about. You argue that BitCoin won't work - based on an untruth.
No one who has looked deeply into the concept has come up with a viable reason that it won't work. No one here - of all the people named or anonymous - has put forth an argument that has stood the test of logic and fact checking. It's all surmise, hastily-jumped-to conclusions, and argument by "story-telling".
I pay you two chickens for a goat, what's the difference? I think the legitimacy question here isn't so much for the medium but for the cash exchanges from government currencies to barter currency without the law required accountability.
The key problem with fiat currencies, is that governments can simply print them to pay their debts. The key definition (the one you didn't quote) is "any money declared by a government to be legal tender" because to be able to go crazy with the printing presses a government needs to exclusively control those presses. BTC doesn't give USA control.
"BTC is not just "open", it is doomed to hyper-deflation. "
BTC is *finite*, a *finite* currency is only deflationary if the value it represents increases. Thus by this statement you are accepting that Bitcoin will win! BTC is also divisible. Coins can be split. There is no 1000 loaves of bread problem with it.
"You are imagining a very fancy collapse of USSA, where everyone comfortably sits at their homes, run their computers on reliable and free electric energy, and calculates hashes of transactions that keep coming over fast and cheap Internet connection. I want that "collapse" right now, pretty please! "
Ignorance is bliss isn't it? You can't pay your bills without borrowing, and nobody will lend you money, so you have the Federal Reserve buying the debt by printing money. Ahh, but the party can go on forever, just like it did with the USSR, because USA is special... your economy will never collapse, r-i-g-h-t.
Hubris.
If the button were there, I'd use it.. Are you listening slashdot?
I'll mod you up and post anonymously to second and third that.
Which still undoes moderation? God damn it that is fucking stupid.
Boot Windows, Linux, and ESX over the network for free.
Most recently mined blocks in the bitcoin block chain: http://blockchain.info/
BTC is not a currency. It is a cheap and relatively fast way to transfer (wire) electronically "value" from one point to another. Period. It's like a CC system expect it will not take 20+ days and 2.5% + minimum charge etc to get the actual transfer done.
Calling BTC a currency is absurd.
Let me ask this: Is Paypal a currency?
And a number of the websites people like to point out when they claim how useful Bitcoin is are nothing but sites that will let you buy gift cards for major sites. Not only is that not shopping in Bitcoin (they convert your BTC to USD then buy an Amazon gift card, Amazon doesn't take BTC) but they charge upwards of 5% to do it, whereas Amazon is happy to sell you gift cards direct for no additional fee.
So far, I haven't seen ANY site that actually uses BTC as a currency, only a payment system. Big surprise, with the volatility, who would want to accept it as money? The only way it is usable is to immediately convert it to a stable currency.
Money isn't something magic, it is just a theoretical construct for facilitating trade. So money is working properly when it does that well, and is not working properly when it doesn't. Deflation works against a currency, it makes it not work well as money. When things continually deflate, it makes people hoard money which is bad. Remember when people aren't spending money what is really happening is that trade isn't going on. Money is only useful if it gets spent. If everyone has a big pile of anything that they just sit on, it isn't actually money.
You need to get past the idea that money is something special or magical, it is just our way of facilitating trade.
Also deflation is something that rather fucks over the poor in favour of the rich. Deflation means that wealth gains over time, so if you have money, you get more simply by doing nothing. It makes loans of any sort of term rather impossible. I mean can you imagine taking out a 30 year mortgage, knowing that every year that payment would get harder and harder to afford? For that matter people can become very unwilling to lend money at all, since they can get a guaranteed return just by holding it.
If you think deflation is good because it makes the amount in your piggy bank worth more, well you need to go and take ECON 200. You need to learn a bit more about how money actually works in the world. Most important, you need to understand that money itself isn't anything, it is ephemeral, it can be represented using metal, salt, rocks, teeth, paper, bits (and has been all those things), it is just a theory we use to allow for an infinite level of indirection in time and space with a trade. The real economy is people doing things, making things, fixing things, inventing things. Money is just our way of working out who gets what.
> Perfect Money, a Panama-based operation ... has distanced itself from the U.S., cutting off all new American registrations.
Last time such distancing went so well for Mr. Noriega, that Uncle Sam eventually came to visit him in Panama...
The message is: don't mess with the 400 stealth fighter jet gorilla or you will be trumpled.
So were tulip bulbs, for a brief time: http://en.wikipedia.org/wiki/Tulip_bubble
People buy and sell drugs with dollars and euros, not with bitcoins. Maybe money should be illegal ?
Not all currencies convertible to dollars are usable everywhere, e.g. you cannot use airline bonus points here either...