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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."
While Bitcoin tends to grab headlines, there's other crypto-currency projects that are focused on merchant adoption:
http://www.feathercoin.com/about/
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.
"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
There's a silkroad app?
If I have been able to see further than others, it is because I bought a pair of binoculars.
You do realize that is exactly what people who mine BitCoin want you to do, right? They make 0.0005 BTC (currently 6.5 cents) each time you move money. If you elect not to include the transaction fee, miners will typically drop your transaction on the floor.
I know I won't stop you, but then again, I mine BitCoins and could use your money. Have fun!
BTW: Weird you got a +1 for your dumb idea. Typical slashdot retard moderators.
Right, and e-gold before it. Only criminals and terrorists have any need for an alternative, secure, somewhat anonymous, non-government-controlled (really non-Corporatocracy Bankster-controlling-government-controlled) currency. Think of the children. Think of the Homeland! Do the right thing, Citizen!
The main reason is that laws will keep moving to outlaw all companies behind it at all cost. The ones that control the law don't want anything looking like a currency outside their control.
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
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?
An AC who replied to you should be moderated up. Bitcoin transactions are not always free! Small amounts of BTC (hardcoded in the software) cannot be even transferred without a fee. If you want to transfer just a fraction of a BTC then all your money will be spent on the fee, and nothing remains. Large transactions may or may not be processed, also per the will of soneone else.
This is extremely important because supplies of BTC are finite, and the currency has built-in deflation. It is already $100 USD per BTC or something - this means you have to subdivide your BTC into thousands of smaller units. Numerically, you can do it. Financially, these units are useless.
That's one of the less obvious reasons why government-issued cash is the king for legal (and not so much) transactions. Cash is sufficiently secure, is untraceable, requires no Internet, and the transaction completes in seconds instead of 30 minutes. And on top of that, you don't need to pay a fee for the privilege of transferring cash.
But, of course, if everyone starts generating transaction noise just to confuse the watchers, then BTC will grind to a halt and will be entirely unusable for payments.
Nobody said that other people didn't have a use for it.
What was said was that they were laundering money.
Why wont Slashdot let me subscribe to the site in Bitcoin? Coinbase makes it easy.
If there's anything the Euro crisis is teaching the political leaders of the world, it's that if you give up control of your nation's currency, you risk giving up control of your nation's fate and losing your political power. No one wants to be the next equivalent of the Southern Europeans groveling before the next equivalent of the Germans. Global currency in 20 years? Yeah not going to happen.
All these Slashdot articles about Bitcoin but no subscribe with Bitcoin button?
"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.
Perhaps. But people using bitcoin as a medium of exchange now can know how many early miners' coins are floating around, and will likely revalue their coins as appropriate -- just like the presence of Fort Knox affects people's judgments about the worth of gold.
This sort of thing probably doesn't bother the libertarian types most likely to use Bitcoin -- they probably perceive the founders' profit as fair compensation for developing the system.
Only criminals and terrorists have any need for an alternative, secure, somewhat anonymous, non-government-controlled
"Need" has nothing to do with it.
I count as neither a criminal[*] nor a terrorist, but recognize the ongoing dilution of US currency by (currently) 83 billion dollars a month (and that just from a single source!). I recognize that the government acts only in slightly better faith than the likes of Paypal, randomly seizing the assets of anyone it deems big enough to bother but weak enough not to fight back. I recognize that today's donations to a group of brave "freedom fighters" (c.1980, Taliban-vs-Soviets) becomes tomorrow's financial support for a "terrorist organization" (c.Now, half the planet including PETA).
People have a million and one reason to use an anonymous non-nationally-controlled currency. They have only corporatocratic protectionist laws against doing exactly that as a reason not to do so. And if that makes me a tinfoil-hat wearer, well, hand me my complimentary beanie, because GS' pet Geithner has the Aluminum-foil market cowering in Detroit begging for mercy.
* Insomuch as any of us can make that claim, given that we have a legal structure designed such that any of us, at any given time, have committed some crime TPTB can use to make us disappear for a very, very long time.
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.
, but recognize the ongoing dilution of US currency by (currently) 83 billion dollars a month
And yet you do not recognize this as the feature that it is.
http://www.usinflationcalculator.com/inflation/current-inflation-rates/
Despite the (virtual) printing of ~83 billion dollars a month the dollar is not magically dropping. Liquidity trap and all that. The ability to print more money as needed is a *feature* of the system. Any currency where you cannot do this is seriously lacking in long term sustainability and is essentially only a pyramid scheme for early 'investors' and currency manipulators.
People have a million and one reason to use an anonymous non-nationally-controlled currency
Sure, move the ability to manipulate to an unregulated self interest rather than a fiscal and monetary based system balanced by elected officials and shareholders. Brilliant.
But yes, there are millions of reasons to use a currency other than your own governments, and mostly that boils down to various iterations on 1: business in that country. 2: to avoid tax. 3: to evade tax or 4: illegal sale of goods.
I recognize that today's donations to a group of brave "freedom fighters" (c.1980, Taliban-vs-Soviets) becomes tomorrow's financial support for a "terrorist organization" (c.Now, half the planet including PETA).
This doesn't really change anything. Paying taxes to the US government while it was invading Iraq and torturing people was supporting terrorism too. Whether you had to pay in bars of gold, gold certificates, a fiat currency or something else you still had to pay it. Whether you have a bitcoin being donated or a slab of US dollars you anonymity is not impacted particularly. You only know who controls the value of one of those though.
I think it's teaching us what happens when you bail out the banks with government money, and then find that the governments don't have enough money left to run. It's still aftershocks of the Goldman Sachs et al utter fuckups that came to a head in 2008. It pisses people off immensely when their savings are going to be raided purely due to someone else's debt being forgiven (eg. the Cyprus debt is only slightly higher than the amount of money that they had loaned to Greece).
If the button were there, I'd use it.. Are you listening slashdot?
"Magically", so everybody please pay attention. The poster I am replying to believes in magic, because that's the only way he thinks the dollar would be 'dropping' in case of printing - just by magic.
Tell me, oh the wizzardly one, why does the government even bother with counterfeiting laws at this point?
I'll tell you: they don't like the competition.
Printing 85 Billion a month is inflation by definition, what you don't see is WHERE it's going, where the inflation is causing the bubbles to appear, but just because YOU don't see, it doesn't mean there is no inflation.
There is inflation, MASSIVE inflation in the gov't bond market, in the stock market, some inflation is spilling into the housing market again, plenty of it is going into the 'education' market. Plenty of it is going into the various commodities markets and the foreign markets that are providing USA with its consumer goods are absorbing that inflation by responding with money printing of their own and buying up all the extra supply of the dollars.
But it's already collapsing, even before you realise that there is inflation, it's already collapsing. The interest rates in the bond market are going up, the Chinese are buying up USA properties and companies, dumping the collected dollars back INTO USA, and of-course just like with the last bubble that burst and then all these people on TV and in government said: nobody could see this coming, same thing is going to play out this time.
It's going to be a much more spectacular collapse this time, you are going to notice it when it really implodes, but until that, just like Ben Bernanke, the Federator, you think that dumping dollars from the helicopters actually achieves anything BUT inflation.
are millions of reasons to use a currency other than your own governments
- yes, being a free individual, free person that's the main reason.
Of-course people trade currencies for gain all the time, and it has nothing even to do with 'evading taxes', not that taxes shouldn't be avoided and evaded in the first place, anybody paying taxes is destroying the economy, not helping it.
The government wants to fund something? Let it cut the spending it already has.
You can't handle the truth.
You haven't looked very hard (or at all) then.. I would think the average slashdot user would be able to find something they'd like to buy on www.bitcoinstore.com. I know it's hard because the name is so misleading, but they sell things that you can purchase with bitcoin. Oh, and the nice part is, they're actually often times cheaper than their USD equivalents because they save so much money by using bitcoin (no charge backs, and *tiny* fees compared to comparable USD systems (visa/paypal/mastercard)).
Which still undoes moderation? God damn it that is fucking stupid.
Boot Windows, Linux, and ESX over the network for free.
If sense #1 is intended, then no, BTC isn't legal (yet).
Bitcoin is and always was perfectly legal at least in EU where i live.
Of-course people trade currencies for gain all the time, and it has nothing even to do with 'evading taxes', not that taxes shouldn't be avoided and evaded in the first place, anybody paying taxes is destroying the economy, not helping it.
In context or out of context, this is the single most retarded line I've ever seen in Slashdot.
No the point of deliberately diluting value is to promote lending. All the "real businesses" you talk about generally require a liquid short and medium term loan market in order to survive since they can't hold enough capital to cover shortfalls in sales or conversely to expand to meet demand they can see but not service quickly.
And you know, meanwhile against all of this more people are lost more money to BitCoin then they have holding actual US dollars invested in real business enterprises.
And be sure to write your name down, Citizen, when you buy gold. Some people will be by, later, to pick it back up, and give you new bonds / dollars in the Glorious Prosperous Union the next time the main bank is suffering a bout of insolvency (which has nothing to do with its policies, these are simply business cycles in the market, comrade!). Like the people of Cypress and their Spring-Time Double Happiness Reverse Bank Bailout, you are the one who is actually receiving the better deal! Those securities will one day be worth at least 100% more than their current worth! A doubling in value at least!
I am John Hurt.