California Sends a Cease and Desist Order To the Bitcoin Foundation

An anonymous reader writes in with bad news for the Bitcoin Foundation. "California's Department of Financial Institutions has issued a cease and desist letter to the Bitcoin Foundation for "allegedly engaging in the business of money transmission without a license or proper authorization," according to Forbes. The news comes after Bitcoin held its "Future of Payments" conference in San Jose last month. If found in violation, penalties range from $1,000 to $2,500 per violation per day plus criminal prosecution (which could lead to more fines and possibly imprisonment). Under federal law, it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department," according to Forbes. Penalties under that law could be up to five years in prison and a $250,000 fine."

Comments

Uh

[Anonymous Coward]

When did the foundation become a money transmitter? Oh yeah, it didn't.

Re:Uh

[NFN_NLN]

“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

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[gl4ss]

next up: php conference getting sued for security flaws in websites implemented in php.

I don't think they quite thought it through that bitcoin foundation can not cease bitcoin transfers.

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[sFurbo]

Don't think they thought it through? The foundation is theoretically unable to comply, so they have no way to avoid being closed and the executives put in jail. What part of that seems not thought through?

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[Osgeld]

"Hemp is of first necessity to the wealth & protection of the country." – Thomas Jefferson

"What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not that his plans may be rendered unlawful before they can be executed?" -James Madison

dont fucking pick and choose, it makes you look like a nut

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[davester666]

And once that happens...California's problems are finally solved.

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[Anonymous Coward]

Fuck, I'm missing a moderation choice.

That's a "-1/+1 Tried to be snippy smart-ass but actually told good honest truths inadvertently."

AC not to undo other moderations.

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[sFurbo]

Forever!

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[Kell Bengal]

Actually, I'd argue both Jefferson and Madison are talking sense here. Jefferson points out that a valuable commercial product should be exploited. Madison says that risk amelioration is important to encouraging business innovation.

How does failing to mention them (valid statements, if unrelated to the GPs point) constitute picking and choosing?

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[Anonymous Coward]

It's Slashdot, the truth tends to piss people off around here.

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[Kell Bengal]

And if the Bitcoin Foundation actually transmitted monetary value you might actually have a point.

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[magic maverick]

Quite.
I think that the foundation could send back a nicely worded letter to the effect that they write software/sponsor the writing of software (delete as applicable). They do not sell cars, sell drugs, or engage in money transfer. They should not be held any more responsible for the use their software is put to, than Microsoft is responsible for MS Word being used to write threatening letters to people.

Also, dear the editors, specifically samzenpus, please link to the original source, in this case Forbes, rather than to some random other website. You might also link to the cease and desist letter itself.

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[Smirker]

The Department of Financial Institutions clearly doesn't use AdBlock. (last page cease and desist letter)

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[Anonymous Coward]

the foundation doesn't transfer any money or bitcoins. The exchanges like mt gox do but that's a whole other story.

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[barv]

exclusive "OR" huh?

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[Anonymous Coward]

Of course you pick and choose. Otherwise it makes you stupid.

You pick the good stuff and reject the crap.

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[DKlineburg]

Is that 3: Profit!

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[Jawnn]

Uh, yeah, it did, the moment it became responsible for enabling the transactions. You can't have it both ways. It's either currency, or it is not. Jeezuz, what kind of geek fantasy world must one live in to think that bitcoin would actually become some legitimate alternate currency and then not end exactly the way it appears to be ending.

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[MitchDev]

Not until the big earthquake hits and California sinks into the Pacific, then their problems are all solved....

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[king neckbeard]

So, is Smith & Wesson responsible for people in certain areas using guns as a currency? Whether or not bitcoin is a currency has nothing to do with whether or not the Bitcoin Foundation is engaging in money transmission.

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[freudigst]

Was that some major fail attempt to make a point? Cease and desist congratulating yourself.

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[Mathinker]

If you can't figure that one out yourself, I don't think I'm going to be able to help you via a post on Slashdot.

Or was your meaning more like: it won't make any difference whether we give the finger or pretend to comply (TPB vs. Kickass Torrents), either way we will be eventually "shut down" (and California has the same chance of shutting down bitcoin as Internet governance has of actually shutting down TPB or KAT), so we might as well have some fun first (before we have to dissolve and reform)?

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[BlueMonk]

Could it be argued (with even any small degree of merit) that they have the ability to make new client software available that would institute new features that include the ability to track transactions in a way that would comply with laws? And since they released the original client (did they?) they might be held responsible for releasing an updated alternative client. Do you foresee this happening, and then nobody adopting the software and then legislation going into effect to try to ban the use of the old software?

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[BlueMonk]

This is starting to look like DMCA all over again. Person creates software and claims they can't be held responsible for how it's used. Argument and legislation goes into effect pointing out that the software cannot be used for anything legal, and is this illegal to use/develop (can't remember that important detail). Software becomes illegal and original person is left only with the option of creating legal alternatives.

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[ezdiy]

Thus solving the problem once and for all

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[lightknight]

There you go again, trying to use logic when politicians are around.

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[Jah-Wren Ryel]

So, is Smith & Wesson responsible for people in certain areas using guns as a currency?

Forget guns, how about holding Proctor & Gamble responsible Tide Detergent being a drug currency!

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[bluefoxlucid]

If this country built a strong cannabis industry, right now, what would the benefits be?

Cannabis in the Industrial Hemp strain does not produce enough THC to get you high. The THC-production-ready strains represent an emerging market thanks to recent changes in the legislative climate.

All cannabis will grow in less-ideal conditions. It is easily grown and harvested on land unfit for the growth of more sensitive crops. See discussions about switchgrass for this concept; the benefits here are the same. Better land utilization means increases in economic wealth, as land is a wealth-bearing asset which holds less value when unused (You own land, but produce nothing? You can SELL it, but you're not gaining wealth by PRODUCING on it).

Industrial Hemp provides strong fibers which you can blend with clothes in 30% hemp 70% cotton to make cotton-like fabric of extremely light weight--sort of like silk--with high durability. Higher hemp content would be perfect for labor-clothes (i.e. denim), as it's ridiculously hard to cut and tear. Hemp is also very smooth and so very comfortable. Spun hemp fiber, being that hemp has better tensile strength, doesn't break down as easily under the stresses of wash and wear, and so produces less lint, so the clothing lasts longer.

Longer lasting, higher-quality clothing made from lower-cost materials means poor people can purchase clothing at a discount price and less often. They are then able to more effectively manage their money, improving their economic situation. The middle class and the rich similarly benefit, ending up with more money to spend elsewhere and stimulate other economic sectors. This represents an increase in wealth via a decrease in the destructive turn-over of goods (i.e. things don't wear out as fast, so are not destroyed as often; and the lower resource intensiveness of production reduces the amount of wealth sunk into creating the good, thus greatly increasing the wealth of society by replacing a high-cost good with a low-cost good of equal or greater value).

Hemp seed is highly nutritious and can be used for feed or food. Hemp seed oil can be processed into biodiesel fuel. Again, this allows for the use of unsuitable land toward a valuable economic end, thus increasing the wealth of society.

Hemp damages the cotton industry. The cotton industry, being large and powerful in the time of slave-negros, thus lobbied congress as is American tradition to produce protectionist laws. Hemp was, for a time, heavily regulated; moving onto hemp production would today require some relatively large start-up costs, despite that the process of spinning plant fibers into thread and yarn is largely the same. It would also incur a frightening amount of risk due to the risk of accidentally growing recreational cannabis (the plant is the same, the seeds look the same, and pollen on bees and in the wind from nearby grow operations could taint your crop and produce high-THC seeds). Government regulation of recreational cannabis would require regular DEA inspections, meaning expensive permits to cover the cost of these inspections, as well as the risk of determining that cross-pollination has created a hybrid and your entire crop can give folks a weak buzz--so you must now raze and burn it at your own expense, a huge loss of wealth.

We would have been better off if we didn't ban the stuff. Jefferson was, in a way, right. Maybe a little overzealous--it's a great crop with wonderful uses and a huge amount of economic benefit, but it's not the absolute top-priority of anything--but he was right.

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[rtb61]

Let's go with the bitcoin wikipedia definition http://en.wikipedia.org/wiki/Bitcoin "described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system". The growing problem with bitcoin, in making it more acceptable and with a view to improving it's value, there is a direct public relations marketing effort to make it appear more like a genuine currency. The more like a currency it becomes the more subject to greater regulation it becomes. Vain attempts at denial of what it is whilst simultaneously attempting to make it that, resembles the childish claims of toddlers who think they are outsmarting everyone by using an illogical lie, that something is only what it is when it suits them and when it doesn't it longer is that but something else.

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[Anonymous Coward]

http://www.snopes.com/quotes/jefferson/banks.asp

Don't believe every falsely attributed quote you read on the internet.

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[Atzanteol]

I'm not sure I follow. By your logic does the US mint "just make rectangular pieces of paper?" And if people *happen* to use them as currency then that's up to them?

Bitcoin's own website calls it "an open source P2P digital currency."

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[Merk42]

I think the point is it's the equivalent of sending a Cease and Desist order to the W3C over a malicious website, or maybe to Microsoft about a malicious program that happens to run on Windows.

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[PopeRatzo]

Here's a better one:

" âoeI hope we shall crush⦠in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country." - Thomas Jefferson

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[nitehawk214]

It's Slashdot, the truth tends to piss people off around here.

Your statement pisses me off.

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[Anonymous Coward]

Closer to 60, but fascism really doesn't have anything to do with this particular situation.

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[Archangel Michael]

Do you realize, that inadvertently THIS legitimizes Bitcoin as "money".

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[Archangel Michael]

MTGOX doesn't transfer money, it exchanges money for goods. Unless California is saying Bitcoin is a legitimate currency. I'm not sure the idiots running CA fully understand what claims they made in attempting to regulate something that is, inherently not able to be regulated.

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[Richy_T]

They did not release the original client. They are, in fact a fairly recent formation and arguably have no authority over Bitcoin (though in truth, several people important in the community are part of the Foundation and would have influence).

This kind of bullshit is exactly what many expressed reservations about when plans for the foundation were made public. Centralization creates a target.

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[Curunir_wolf]

Actually, I'd argue both Jefferson and Madison are talking sense here. Jefferson points out that a valuable commercial product should be exploited. Madison says that risk amelioration is important to encouraging business innovation.

Yes, but Madison was making a more important point about overbearing government regulation (this is from the Federalist Papers arguing for a Constitution that limited government authority). Risk is always a consideration in starting a new business venture, but Madison's point was that when governments go around outlawing things arbitrarily, or, worse, is unable to provide any assurances to a prospective entrepreneur as to their ability to engage in certain commerce, then business innovation will simply cease.

An important lesson for today. In California, if you're shopping for a piece of land to start a business, it's a huge gamble, because in most places the local planning board is unable to tell you what you can and can't do on that land. You have to roll the dice by purchasing the land, explaining your land use proposal, paying the application fees, and hoping that you'll be allowed to use your property.

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[fustakrakich]

Oh well, so much for that...

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[BlueMonk]

Well, this should be entertaining seeing how this plays out. I see the following possibilities:

1. They prove they're a ridiculous and wrong target, case closed;
2. They begrudgingly negotiate some kind of corrective action that they have the power to take, and some believe will have some effect, but probably instead leads back to conclusion #1;
3. They are dissolved, and the problem doesn't go away, leading back to conclusion #1.

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[Curunir_wolf]

The House actually passed an amendment to the farm bill the other day that would legalize hemp production for academic research purposes by colleges and universities. So there is some hope. Unfortunately, the farm bill itself failed to pass, primarily due to opposition to food stamp cuts and too-generous subsidies.

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[DerekLyons]

If this country built a strong cannabis industry, right now, what would the benefits be?

If hemp is such a wonderplant... why isn't it, in the numerous countries where it isn't illegal, grown in gigaton quantities?
 

despite that the process of spinning plant fibers into thread and yarn is largely the same.

"Largely the same", but not really the same. (US) Football and (the rest of the world) football are largely the same too if you step back far enough - but such abstractions aren't all that useful in the real world. And you've left out the all important step of obtaining the raw fiber - look at a puff of cotton fresh from the field and a length of hemp stem fresh from the field and you'll understand why cotton was (and is) King of natural fibers.

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[Lazere]

Of course there is. If I write software for a financial institution (a classic style one, not bitcoins) and that institution doesn't get the proper license, am I liable? Of course not and I fail to see how the bitcoin foundation could possibly be either.

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[SteveFoerster]

When did the foundation become a money transmitter? Oh yeah, it didn't.

Neither was e-gold, but this is exactly what the feds used to bring them down.

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[bluefoxlucid]

Cotton lobby. Did you miss that part? They assassinated the hemp industry. They taught us this in HIGH SCHOOL where they insisted that smoking pot one time would give us permanent brain damage and kill our babies. They taught us hemp was great but that evil lobbyists got it banned. Mind you they didn't give us a product comparison, but they did tell us how it got banned in the first place.

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[bluefoxlucid]

Yes. As I sad, there would be a lot of start-up cost. The process of processing plant fiber is largely identical; but removing it from hemp is a lot more intensive than plucking cotton puffs and milling out the seeds with a mechanical comb. Once you've harvested it, you can effectively drop that shit right into what we have now with minimal manufacturing adjustments.

The fact that this isn't just sew-and-go is important: the industry has been beaten down, and bringing it back represents a lot of market risk. People will ask, "If it's so great and cheap, why isn't anyone selling it?" That's your answer: they have to put down capital and take big risks to find out if the market will care. You have a superior product? Well we have cuter advertising so lol. Everybody likes Ambercrombie and Fitch and why should Ambercrombie and Fitch put up for a better product that might change the look-and-feel of their insanely popular brand? That's a risk you can fuck off with. Who you gonna sell hemp to?

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[Myopic]

It's easier than that. They should simply thank California for its letter and state that they have ceased and desisted as requested. Done.

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[Jawnn]

So, is Smith & Wesson responsible for people in certain areas using guns as a currency?

No, of course not, but then Smith and Wesson never built/operated/regulated a system that enabled their products to be used as currency. Nice mixing of dissimilar fruits.

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[Richy_T]

4) They turn up for the trial and California has sold off all its courthouses to Powerhouse Gym to fill in holes in its disastrously out-of-control budget.

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[DerekLyons]

The process of processing plant fiber is largely identical; but removing it from hemp is a lot more intensive than plucking cotton puffs and milling out the seeds with a mechanical comb. Once you've harvested it, you can effectively drop that shit right into what we have now with minimal manufacturing adjustments.

Ah, so the processes is identical except for all the parts that aren't. Or, to put it another way, you're just repeating yourself - are you being intentionally obtuse are are you just that clueless? And no, you can't just substitute one fiber for another with "minimal adjustments". (Again, the "Football = Football" analogy is relevant - you seem to no not realize the difference between abstraction and the real world.)
 

Who you gonna sell hemp to?

If it's so superior - lots of people. You seem blithely unaware that the fashionista are far from the only market segment. You seem clueless that the Western world is far from the whole of the world.

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[lgw]

. Unless California is saying Bitcoin is a legitimate currency.

I'm not sure what you mean by "legitimate currency"? I'm not sure that distention exists in law. California seems upset by the case where A sends $US to B using Bitcoin as an intermediary - the nature of the intermediary isn't important, merely the fact that A puts $US in, and B gets $US out.

You could do the same thing with MtG cards, of course (can you still sell those on MTGOX?), and Cali would likely be equally upset if it seemed people were just using the cards as a way to transfer $US, and not as a collectable.

Of course, they seem fundamentally confused by the role of the foundation in the first place, so who knows. Heck, to me they seem fundamentally confused, full stop.

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[lgw]

Do you realize there is no such thing as "legitimizing X as money" except in the heads of bitcoin fans?

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[Algae_94]

Can we stop saying this? This will not happen. Even if a massive earthquake occurred that could cause changes of this magnitude, the North American Plate does not go under the Pacific Plate. It is a transform fault.

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[colenski]

You mean the 29,000 tons produced annually worldwide? http://en.wikipedia.org/wiki/Hemp

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[You're All Wrong]

GIven that the material was made completely illegal, then four years later was something that the government wanted everyone to grow, you can be sure that the government's views on it have at least once been entirely bogus. Add to that the fact that the time when it was made not just legal but encouraged was the time when the country was at its greatest need (war time), it's fair to conclude that the prior alternative view was the fake one.

OK, we don't need sails as much nowadays (almost all sails were hemp at one time), but hemp is also a useful ingredient for some polymers, so it does have modern uses too (ones that Dupont probably don't want to see encouraged, for example. And Dupont ain't the least corrupting influence over the government, one might say. http://www.corporatewatch.org/?lid=172 )

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[mangu]

"I love licking a young woman's pussy first thing in the morning" - Thomas Jefferson

"Boobs are awesome" - James Madison

Besides the problem of people picking and choosing quotations, how can you determine if they are authentic or not?

"I hate quotations" - Ralph Waldo Emerson.

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[VortexCortex]

Do you realize, that inadvertently THIS legitimizes Bitcoin as "money".

Careful there Archangel. Stop and think for a moment. World of Warcraft. Eve Online. Second Life. Rune Scape. MUDs. Do I have to spell it out for you? Your god is dead. You can't just run amok claiming legitimacy anymore. This doesn't make Bitcoin into money any more than it does WoW gold.

Selective enforcement of the laws is a tool of great evil, Michael, no mater how holy you the rules are.... Typical angel. We dwellers nearer to the Earth's core aren't blinded by the brilliance of any authority.

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[davester666]

What? And give up all hope of this happening? What other disaster could happen that will wipe out California that we can hold onto?

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[Zynder]

Alright then, it will slide in a northerly direction until it is out into the Pacific Ocean....is there really a difference?

This map shows this

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[strikethree]

When you said this:

Risk is always a consideration in starting a new business venture, but Madison's point was that when governments go around outlawing things arbitrarily, or, worse, is unable to provide any assurances to a prospective entrepreneur as to their ability to engage in certain commerce, then business innovation will simply cease.

All I could think of was the current patent system. :(

Penalties/fines

[Sooner Boomer]

Can they pay those with bitcoin?

Re:Penalties/fines

[Anonymous Coward]

All your bitcoin are belong to US

Re:Penalties/fines

[hobarrera]

No, but you can use Microsoft Points.

Old meets new

[mcrbids]

So, the purveyor of mathematical computations that can be traded and/or sold via a network of cryptography meets a foundation that sells the idea of value via paper receipts.

This could get rather interesting...

Future regulation

[cold fjord]

As Bitcoin grows more successful, there will be increasing interest in subjecting it to regulation, just like any other financial instrument.

Re:Future regulation

[icebike]

But its not an institution.

You might as well enjoin the wind from blowing because it transports things without a license.
The foundation does not handle or transfer funds any more than meteorologists control the winds.

Re:Future regulation

[emt377]

As Bitcoin grows more successful, there will be increasing interest in subjecting it to regulation, just like any other financial instrument.

The thing is it's not positioned as a financial instrument, but a currency. Financial instruments - their issue, trading, and reporting - is quite regulated as well. The whole anonymity aspect isn't going to play well no matter how it's dressed up.

Re:Future regulation

[lxs]

In a world where seismologists can be jailed for not predicting an earthquake anything is possible.

Re:Future regulation

[Macthorpe]

No it's not. Only an idiot actually believes that. In order to be a real currency, you kinda have to have a lot of people use it to directly buy and sell things.

You can already buy and sell things with Bitcoin. Example: Bitlasers. So where is the line? How many items have to be sold before it becomes a currency? The logical answer would probably be "one".

Re:Future regulation

[Neo-Rio-101]

Once it has worth of its own (the ability to receive a salary and to buy bread and pay rent w/o relying on converting to an outside currency) then it will be a currency. Right now it's a digital commodity, much like gold or gemstones.

And that will never happen, because governments will want to be paid tax in the currency of the land. That means that conversion will always have to exist, and whilst it always exists, they will regulate it.

Governments and the banks will fight tooth and nail to maintain the monopoly over their money that they enjoy. They won't stand for a second to have all their assets devalued because nobody wants to trade with them.

Re:Future regulation

[AmiMoJo]

The law tends to make you responsible even if you didn't built in a off switch. That's why the guys putting up designs for 3D printed guns need to be careful. Now they are widely distributed and there is no way to recall them they may well be liable under anti trafficking/export laws.

Saying "it's out of our hands now" is usually not a good defence. Having said that it seems that the original author of the BitCoin protocol would be the one who is liable, and no-one knows who he or she is.

Re:Future regulation

[Teancum]

That is like saying the author of "The Anarchist Handbook" is liable for somebody building a bomb after being "inspired by" the book. Or similar kinds of actions. I suppose some guys in Hollywood have had lawsuits over various suicides and other nonsense.... and those lawsuits just get thrown out as well.

Your comment about the 3D printed guns is hardly a good reference as well since that has yet to work its way through the judicial system. While it is a "roll of the dice" in terms of what the final outcome might be, there have been numerous situations where the law meets new disruptive technologies. California is in a slightly better situation than most in terms of having to cope with advanced technology and its impact upon legal principles, but there still are a whole bunch of Luddites that lurk in the shadows trying to jump onto anything that seems new or innovative.

In regards to Bitcoins, I think the big deal may be for those who are users of the software and may be liable under this particular law. I have a feeling that would just introduce a sort of Barbara Streisand effect into the debate with thousands of Californians who will purposely download the software just to "stick it to the man" and open the whole thing into a major political debate that will ultimately need to be resolved by the state legislature (with consequences at the ballot box for missteps). I can only imagine the 1st amendment issues alone that might be brought up if a particular piece of software is declared illegal simply because of its protocol. The Federal government tried that with calling some types of software as a "munition" and therefore couldn't be exported (like PGP and the related GPG), but in the long run ordinary citizens weren't prosecuted either, certainly not on a widespread basis. I have a hard time seeing that happen in the case of Bitcoin being something new.

Re:Future regulation

[Cenan]

They were not jailed for failing to predict it, but for giving (provably) false assurances that no earthquake was eminent. Subtle difference, and one the "science community" seems to conveniently forget when bringing this story up.

The seven defendants, who belonged to the National Commission for the Forecast and Prevention of Major Risks, were accused of offering an unjustifiably optimistic assessment to the local population a week before the disaster. By then, the area had been hit by some 400 tremors over a period of four months and a local researcher had warned of the risk of a major earthquake, largely on the basis of abnormal radon emissions.

But after an extraordinary meeting of the commission in L'Aquila, one of the experts told a press conference that the situation was "normal" and even "favourable" because potentially destructive energy was being released through the tremors. The prosecution, which brought charges of multiple manslaughter, maintained that lives could have been saved had people not been persuaded by the assurances to remain in the area.

They were in a position of authority on the subject, yet they failed to exercise due diligence with respect to their own research. They ignored evidence that did not fit their own world view, and they presented their own as fact. The correct answer would have been "we don't know, take precautions", when asked. They didn't give that answer, and because of that 307 people died and 1,500 were injured. 80,000 lost their homes, but that would have happened regardless.

Re:Future regulation

[Anonymous Coward]

They aren't actually selling in bitcoin you know. Those prices fluxuate around wildly. The dollar amounts stay fixed. What they do is allow you to auto convert your fake money into real money.

>The logical answer would probably be "one".
I believe you just proved how stupid you are. If you have to convert your money into other money to be able to buy staples (food and shelter, etc) then it's not real money. It's the same thing as buying shit in WoW gold.

Re: Future regulation

[Anonymous Coward]

http://www.reddit.com/r/Bitcoin/comments/1ggwiu/just_bought_groceries_with_bitcoin_first/

Your move.

Re:Future regulation

[F.Ultra]

So if I charge you with a fixed EUR rate but with a varying EURUSD rate (due to me living in Europe and thus having my prices set in EUR) this makes the USD not a currency?

Re:Future regulation

[stiggle]

I swapped half a pig for some brick laying and potatoes.
Does that mean a pig is now a unit of currency as I used it to buy goods and services (off the same person).

Re:Future regulation

[curious.corn]

Nicely summarized, bravo.

Re:Future regulation

[nospam007]

"I swapped half a pig for some brick laying and potatoes.
Does that mean a pig is now a unit of currency as I used it to buy goods and services (off the same person)."

Indeed and if you try to send pigs via wire....

Re:Future regulation

[Anonymous Coward]

Just because someone predicts it won't happen doesn't mean it's not going to.
If you want to be sure you won't die in a volcano eruption don't build your house in the middle of a fucking volcano.
Same goes for other people who complain about natural disasters.

Re:Future regulation

[Mathinker]

> governments will want to be paid tax in the currency of the land. That means that conversion will always have to exist,
> and whilst it always exists, they will regulate it. [emphasis mine]

The problem with your argument is the pluralities involved: Government #1 is going to be very unhappy when income, paid to you in bitcoin, is only converted after you move it to Government #2. Unless, of course, you think that all the governments of the world are going to be able to coordinate on this issue (it still wouldn't help them to maintain some of their current business models, e.g., progressive taxes based on total annual income).

Re:Future regulation

[Phurge]

Except Paypal of course.

Re:Future regulation

[pipatron]

It does, because a lot of other merchants sell things at a fixed USD rate.

Re:Future regulation

[Anonymous Coward]

"Right, except these fuckers knew damn well that there was evidence that contradicted their prediction,"

I don't know where you get your information from, but no. If you're referring to the radon data, that's widely regarded as unreliable. There was nothing about those tremors indicating an imminent earthquake. Many times tremors like that are triggered in earthquake-prone areas of the world and nothing further happens. There is no reliable statistical correlation. There was no reliable contrary scientific evidence. That it is Italy meant there was always the potential for a major earthquake, but there was nothing about those tremors that suggested an increased chance of one. Thousands of seismologists world-wide signed a petition to that effect. And, yes, the scientists on the Risk Commission did say multiple times that there was no way to predict an earthquake, that there was nothing special to be concerned about from these tremors, and that this being Italy there was always a chance. There's nothing inaccurate about that statement in whole. At worst, people are taking bits and pieces of their public statements out of context and then saying "Aha! That bit is wrong."

Also, the people in L'Aquila (and for that matter much of Italy) were living in practically medieval buildings with poor earthquake protection. The real villians are the municipal authorities who allowed centuries-old buildings to be occupied at all in an earthquake-prone area without at least having a long-term plan to assess and upgrade them. These scientists were used as scapegoats.

Re:Future regulation

[yacc143]

Nope, it makes it a "fake currency" to keep the analogy correct :)

Re:Future regulation

[AmiMoJo]

The transaction is taxable in many places, although since pigs are not currency you would have to pay the government with real money.

Re:Future regulation

[Attila Dimedici]

There was not any evidence that was considered reliable (or is even now considered reliable) that an earthquake was imminent. However, there was no evidence at all that an earthquake was not imminent and the jailed scientists said that a major earthquake was categorically not imminent. The latter is why they were jailed. One can argue that it was inappropriate to jail them for that, but it was certainly inappropriate for them to make the claim which they made (that there was nothing to worry about). What they should have said is that a major earthquake was no more likely to occur than at any time over the last "x" number of years, rather than that a major earthquake was not about to happen.


Posting this as a response to some of those who pick up on a point of factual disagreement (and posted anonymously) to dismiss your primary point, which was that these scientists were guilty of making claims which actual science did not support.

Re:Future regulation

[Archangel Michael]

" progressive taxes based on total annual income"

All taxes are regressive. The rich can always avoid some or most of the taxes imposed on them. It is one of the reasons they are rich.

And if you count all the taxes and fees and whatever else government takes as its pound of flesh, it approaches 50% of wages for middle class. Progressive my ass.

Re:Future regulation

[Rich0]

They were not jailed for failing to predict it, but for giving (provably) false assurances that no earthquake was eminent. Subtle difference, and one the "science community" seems to conveniently forget when bringing this story up.

If it isn't illegal to say there will be a quake when none happens, why would it be illegal to say there won't be a quake when one does happen?

The problem with this sort of thinking is that it basically leads to useless perpetual states of alarm. That's why you'll never see the doomsday clock set to 3 hours to midnight, or the now-retired homeland security threat level set to green. There is never incentive to say that everything is fine, and always incentive to tell everybody they could die in 30 seconds so that they can't say they weren't warned.

Re:Future regulation

[Cenan]

The problem with this sort of thinking is that it basically leads to useless perpetual states of alarm.

Yes it does and it should (in this case), because we don't really know much about the process that causes earthquakes. That is the whole point really, these scientists went on record saying that nothing would happen, yet it did, to the tune of 307 deaths. Had they not abused their position of authority, and instead told the truth: "we don't know", this would have been a non story.

As to the doomsday clock and the homeland security thingamagig, I don't have any comment on that, luckily I don't live in a country that employs such blatant scare tactics to generate a perpetual state of fear in it's citizenry.

Re:Future regulation

[jeremyp]

You might not be able to regulate the wind, but you can regulate people who use the wind to transport goods. For instance, you could regulate the makers, traders or owners of sailing boats.

Similarly, if bitcoins are to have any value, people must be able to exchange them for goods, services and other forms of money and it's quite possible to regulate the institutions and software that make those transactions possible.

Having said that and having looked at the Bitcoin Foundation's web site for two minutes, I find it hard to see how they have been engaged in money transmission except to transmit people's donations to the developers of software. If this is illegal without a licence, many organisations and individuals must be guilty of the same offence. Only the other day, my brother transmitted some money to me for an old laptop and I'm quite sure he has no money transmission licence. Still the law might be different in the UK.

Re:Future regulation

[MrL0G1C]

Of course you can send pigs by wire, what do you think stocks and futures are. How many thousands of pigs do you want?

Re:Future regulation

[jtnix]

Interesting movie for you to watch: Off The Map

wherein a federal IRS agent comes out of somewhere to nowhere new mexico and audits a family that trades farmed and wild harvested goods to supplement the Social Security income from the veteran father of the family.

TLDR: Yes, trading goods counts as taxable currency in the US of A.

Re:Future regulation

[Zynder]

You sound like you were in that earthquake. Care to elaborate?

Re:Future regulation

[icebike]

situation was "normal" and even "favourable" because potentially destructive energy was being released through the tremors.

This is still the most often repeated information today around the world for small swarms of quakes over long fault lines.
If it had been proven wrong even a tenth to the time, don't you think the seismologists would stop saying it?

Re:Future regulation

[Cenan]

If it had been proven wrong even a tenth to the time, don't you think the seismologists would stop saying it?

Yes I do. The point is not so much whether statistics back them up or not. The field of seismology hasn't evolved enough to do much other than look at statistics and guess at what is going to happen, most of us know this. But these scientists went one further, and in doing so, they crossed the line between true science and that murky region that lies between it and religion. Knowing full well that they had no basis on which to make any assurances, they did anyway, I presume because the data from a million other quakes told them that the likely outcome would be nothing.

They forgot to mention that they really didn't know. And the worst part of it is, that the people whose life depended on a straight answer were lied to. Had the scientists been honest, they'd have said something along the lines of "our data tells us that nothing is probably going to happen, but we don't know, take precautions". As it stands, their advice was followed, because these people were perceived to be experts with integrity, that is the horrible part of this story.

Their appeal is probably going to lessen the sentence, their jailing is just as much a knee jerk reaction as it is justice. They misrepresented their data, and people died as a consequence, but they were jailed from the assumption that all 307 people could have been saved, I'm doubtful of that. But the trial serves as a good reminder that you can't just go around propping up your pet theory, and worry about your reputation in the science community - sometimes what you say has dire consequences, and you might want to back it up with some facts, or at least temper what you say with some error bars.

Re:Future regulation

[Rich0]

Yes it does and it should (in this case), because we don't really know much about the process that causes earthquakes. That is the whole point really, these scientists went on record saying that nothing would happen, yet it did, to the tune of 307 deaths. Had they not abused their position of authority, and instead told the truth: "we don't know", this would have been a non story.

The problem with that is science doesn't "know" anything at all. We don't "know" if the Sun will explode this afternoon. It seems awfully unlikely, but the fact is that we don't have that many data points where our sun exploding is concerned, and even if we did we couldn't be certain. The best we can do is extrapolate from some observations hundreds of light years away or more.

Would things have been any better if the scientists said that they considered an earthquake extremely unlikely, just as I will go on the record and say that it is extremely unlikely that the sun will blow up before dinner?

Re:Future regulation

[Cenan]

Would things have been any better if the scientists said that they considered an earthquake extremely unlikely, just as I will go on the record and say that it is extremely unlikely that the sun will blow up before dinner?

Yes it would. The problem here is that they failed to stress that their answer was their best guess. They built their answer on the assumption, that since 400 minor quakes had released tension energy from the layers below them, an actual earthquake would be minimal due to this prior release. But nobody knows this, it is a guess that more or less plays ball with our understanding of Newtonian mechanics, but it also assumes that the energy in those layers aren't being replenished faster than the minor quakes can release it.
The minor quakes could just as easily be the overflow energy from layers that are at maximum tension, and not the security valve they thought it was. Another point is that they overheard another researcher who disagreed with their assumption, he measured abnormal amounts of radon emissions and was concerned enough to evacuate his own family the day prior to the quake. But his data was not taken into consideration, despite their own model being a guess at best.

Re:Future regulation

[Rich0]

Another point is that they overheard another researcher who disagreed with their assumption, he measured abnormal amounts of radon emissions and was concerned enough to evacuate his own family the day prior to the quake. But his data was not taken into consideration, despite their own model being a guess at best.

All models are guesses at best. For any disaster there will ALWAYS be somebody who saw it coming. The problem is that on every day there is somebody who sees a disaster coming that never arrives.

Society loves scapegoats. When somebody tells you anything about the future, you can be certain that they aren't.

Good

[Anonymous Coward]

..

Fear... and Control...

[Vapula]

Like the US attacked the Irak when it began to accept payument for Petroleum in Euro instead of dollars, it's attacking Bitcoin as it becomes a viable alternative to dollar...

Re:Fear... and Control...

[Osgeld]

except that is more believable

Re:Fear... and Control...

[_4rp4n3t]

Can I have your drugs?

Dunno - got any Bitcoins to pay for them with?

Re:Fear... and Control...

[Vapula]

This meant much... A good part of the strength of the dollar as money is linked from his status as "reference currency", including for Oil trading.

If Oil producers begin to make trasactions in Euro, it means that Euro get more momentum and dollar less, which could be very bad for US economy...

Irak was the first country to accept such trasactions, attacking (and ruining) Irak on false account of mass destruction weapons was also giving a strong message to other countries : don't mess with us and our "supremacy"...

Can you give any other plausible reason ? there are many other Oil producing dictatures... So, why Irak and not another one ?

Boy, those Californians

[Anonymous Coward]

Boy, those Californians sure are up to date with all this technological stuff.

(This is like sending a C&D to the Heart Foundation for performing unlicenced heart surgery.)

Canada

[mmontour]

Last I heard, Canada was still OK with it as long as you pay taxes on any applicable transactions. I don't know how long it will last.

When did bitcoin(tm) become a currency

[Anonymous Coward]

These bitcoin things are a commodity similar to a mineral so it should really be known as a virtual mineral rather than a currency as you mine the stuff and label it same as other commodities.

Re:When did bitcoin(tm) become a currency

[Gwala]

There are lots of commodities that trade so far above their intrinsic value that they are fiat.

E.g. Gold.

Re:When did bitcoin(tm) become a currency

[jalopezp]

How in the hell are you measuring the intrinsic value of gold? Note that the intrinsic theory of value (where one measures the value of an item by objective properties of it, such as the raw materials or labour that went into producing it, or whatever else) has not been accepted by almost any economic thinker since Marx. The modern consensus is the subjective theory of value, where the value of an object is determined by observing the relative worth that individuals put into it.

That is to say, the only reasonable way to determine the value of any commodity is to take the price at which it trades.

Re:When did bitcoin(tm) become a currency

[Gwala]

The parent argued that commodities have intrinsic values. I am arguing by counter that there are commodities who have no real intrinsic value beyond the same intrinsic value of fiat currencies.

For example, Oil has value as a store of energy - its value is generally based around the value at which it is economically useful for a particular input. Gold on the other hand, has very few economic uses (rust proofing wiring, and a few other marginal uses) - and the majority of the value it is 'worth' in its commodity price is actually the same value stored in a currency like US dollars.

Re:When did bitcoin(tm) become a currency

[king neckbeard]

He said no intrinsic value. That is the truth. There is no intrinsic value in a fiat currency, save perhaps the paper it is printed on.

Re:When did bitcoin(tm) become a currency

[rossdee]

"There are lots of commodities that trade so far above their intrinsic value that they are fiat."

Like Ferraris ? I think the company is still owned by FIAT

Re:When did bitcoin(tm) become a currency

[jalopezp]

So you are saying that gold has few industrial applications and that the high price of gold is due to its use as a store of value. Similarly a banknote such as a dollar has no industrial applications and its value is derived entirely from the fact that people accept it in exchange for goods. This is all true, but it does not mean that gold is a fiat currency.

Gold is an effective store of value for the following reasons:

• It is easily divisible, which means you have precisely as much as you need.
• It is heterogenous - this diminishes the transaction costs of turning gold back into other assets.
• Its future value is predictable (you might disagree on this topic, but thousands of people invest in gold, and it is no more volatile than other investments)
• It is scrace

As long as we need to store wealth for the future, an asset with the properties above will be a good way to do it. A fiat currency, at first sight might also be a good way to store value, and indeed some people keep current accounts and cash under their mattresses. But the important distinction is in its scarcity - gold's limited plysical supply against the dollar's regulated minting. While gold needs to be mined from the earth at a large cost (under ideal market conditions, the marginal cost of extracting a gram of gold from the earth would be equal to its market price), the government can (and routinely does) produce more currency for pennies on the dollar. This does not only enrich the state, but also erodes the value of each unit of currency, making it a worse store of value. The most basic difference between fiat currencies and commodities is not whether or not they have any industrial uses, but whether or not their value depends on real or artificial scarcity.

So I disagree that gold (and silver, and other such commodities) are comparable to fiat currency. And further, I agree with (g^n)p that bitcoin (with its limited supply) is more similar to a commodity than to a fiat currency, much in the same way that gold is not considered a currency any more, not because it is not used as a medium of exchange or store of value, but because governments do not accept it as payment for taxes.

Re:When did bitcoin(tm) become a currency

[Archangel Michael]

The one thing about gold, is it is hard to corrupt (corrode) (certain strong acids) and doesn't evaporate or disappear. Weight Density (mass) is also quite high, making it easy to transport high weight in small pouches (pockets). It is also "pretty".

Re:When did bitcoin(tm) become a currency

[pla]

Gold on the other hand, has very few economic uses (rust proofing wiring, and a few other marginal uses)

Gold has far, far more uses than you might realize. Look inside your computer some time - Most PCI slots and card edge connectors; most memory slots and connectors; the CPU socket and pins - All gold. Or hell, don't even bother cracking the case, just peek at the back. All that shiny yellow on the USB, DVI or VGA, and even your dime-a-dozen RJ45 jack? Gold, gold, gold. And going deeper, inside every single chip in your computer, you'll find thinner-than-hair gold wires used to link the chip itself to the pins.

Older tinted windows (the kind that don't have the tint flake off after a few years) - Gold. Fillings and replacement teeth - Gold. A few classes of drugs. Jet engine turbines.

Though we usually think of it as only valuable for its rarity, gold actually has quite a few useful chemical and physical properties that make it invaluable across a wide variety of industries. If not for its rarity, you'd see it used a hell of a lot more - Instead, because of the cost, we make do with spreading it so thin you can literally measure the coating by number of atom, or use suboptimal replacements (such as crappy organic pigments that fade or flake off after a few years).

Re:When did bitcoin(tm) become a currency

[lgw]

Nothing has intrinsic value unless you can use it directly (eat it, ride it, whatever). Few currencies fit that bill, though Texas did once have a cattle-based currency

Re:When did bitcoin(tm) become a currency

[JazzLad]

My (old) pennies are worth 2 cents ...

So Bitcoin is money?

[Anonymous Coward]

Cool! That's a great endorsement if ever there was one.

Bitcoin is money, it's official! And sending bitcoins is sending money! And bitcoins in a reserve are covered by baking deposit insurance just like any other money!

" it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department,"

Which they don't do, nice try, but if you shut them down, you don't make squat difference to bitcoin.

Re:So Bitcoin is money?

[Anonymous Coward]

what insurance? theres nothing there to protect bitcoins

monitary insurance is not a given, its a program set up by the people who issue it, bitcoin does nothing of the sort

time to accept that all your privileges have been given to you by someone else that had a little more vision than ME and MINE

stupid prick

Re:So Bitcoin is money?

[TapeCutter]

Banks pay "insurance" to the federal reserve, it's a chunk of money they must deposit at reserve interest rates. The amount of imaginary money they can loan to people is determined by the size of that chunk of money. Should the whole thing go tits up the fed uses that money (and more) to prop the system up (bailouts). Certainly not an ideal state of affairs but the alternative of "let them fail" doesn't explain how the economy is rebuilt after the banking system collapses and the rioting has subsided.

However bitcoin claims to be a currency, not a bank. The problem there is that in the not so distant past certain business owners paid their workers in a currency that could only be spent at the "company store". Bitcoin also gives a much better return for money laundering than paying a bunch petty criminals to wash it by hand at the slot machines.

Personally I think if they don't want to be part of the public banking system then they should stop promoting it as a currency and start pretending it's virtual bling, start by posting the exchange rate in grams of gold or number of IPV4 addresses it can rent, rather than $US.

Before they tackle BitCoin

[Ghjnut]

I'd like to see what a fine-toothed comb turns up after running through the legalities of PayPal's business practices.

Re:Before they tackle BitCoin

[Macthorpe]

Nothing, because they're licensed?

Re:Before they tackle BitCoin

[Ghjnut]

I've heard that they essentially operate as a bank, but technically aren't classified as one. This means they can get away with shady banking practices without being held to the standards that legitimate banks operate under.

Re:Before they tackle BitCoin

[tftp]

I've heard that they essentially operate as a bank, but technically aren't classified as one.

The technicalities are all that matters here. If PayPal meets the requirements of the law then it's in the clear. PayPal survived quite a lot of due diligence when eBay, an entity with good knowledge of the relevant law and with money to hire competent lawyers and accountants, bought them.

So that's it then

[hack slash]

Confirmation from an American authority that Bitcoin is a legitimate form of money.

A form of money they have absolutely no control over.

[Nelson Muntz] Ha-ha! [/Nelson Muntz]

Re:So that's it then

[Neo-Rio-101]

Remember what happened to Jesus after he kicked around the Money Changers?

Re:So that's it then

[H0p313ss]

Remember what happened to Jesus after he kicked around the Money Changers?

I didn't expect the Spanish Inquisition!

Oops, wrong script, I'll come in again...

What have the Romans ever done for us eh?

Re:So that's it then

[Yvanhoe]

If Jesus only used Tor to give sermons, he could not have been betrayed by Judas.

Re:So that's it then

[F.Ultra]

I think the church might call that Blasphemy ;)

Re:So that's it then

[sociocapitalist]

Confirmation from an American authority that Bitcoin is a legitimate form of money.
A form of money they have absolutely no control over.
[Nelson Muntz]
Ha-ha!
[/Nelson Muntz]

Or they might be talking about USD transfers to buy/sell bitcoins (and yes I know that doesn't apply to the foundation any more than bitcoin transfers does)

Re:So that's it then

[TapeCutter]

What have the Romans ever done for us eh?

Are you wrefering to my fwwriend Biggus Dickus?

Re:So that's it then

[MickLinux]

Jesus fully accepted his death, and did not run away. The point about the betrayal was not that he was tricked, but that a friend betrayed him--itself an enormously painful event.

Re:So that's it then

[lxs]

Remember what happened to Jesus after he kicked around the Money Changers?

No but I do remember what happened to Wesley Snipes after he refused to pay his fair share of taxes.

Re:So that's it then

[DerekLyons]

Confirmation from an American authority that Bitcoin is a legitimate form of money.

I've said it before and I've said it again because it doesn't appear to be sinking in, Bitcoin fanatics live in a serious Reality Distortion Field. The federal and state governments don't give a rats ass whether you conduct your financial transactions in dollars, Bitcoins, or jars of hamster poop - all they care about is that you abide by the regulations when you start using them for a method of exchange or start acting like a bank or currency exchange. (Which is why Ithaca Hours and other local currency systems are still around - and Liberty Dollars are not.)

Re:So that's it then

[jeremyp]

I want an empty post with just my sig in it, but Slashdot won't let me.

Re:So that's it then

[Anonymous Coward]

No but I do remember what happened to Wesley Snipes after he refused to pay his fair share of taxes.

He got cast as Blade?

Re:So that's it then

[lgw]

Confirmation from an American authority that Bitcoin is a legitimate form of money.

There's simply no such distinction. There's no national regulatory agency that defines "this is legitimate money, that is not" in the first place. Bitcoin is not the national currency of any nation, and beyond that it's just something you can trade and collect.

Re:So that's it then

[bikin]

Where are the moderation points when you need them...

Bitcoin hasn't gone away yet?

[KaLeVR1]

The way I translate this is that the US Gvt waited patiently for this to fold under its own weight and collapse. Now it looks like it's catching on so they've decided to try to kill it. Good Luck. I guess the creator remained anonymous for a reason.

Re:Bitcoin hasn't gone away yet?

[anyaristow]

The thing about geeks is their "look what I made" braggadocio is even bigger than their idealism, so *somebody* knows who created bitcoin. And the namedropping "I know who created bitcoin" also trumps idealism. So if somebody with resources wants to find out who created bitcoin, they will succeed.

Re:Bitcoin hasn't gone away yet?

[Attila Dimedici]

That is an interesting translation since the U.S. government was not involved in any of the actions described in the article. This was the state of California. I know many people, even people born and raised in the U.S., have trouble understanding that actions taken by state governments do not necessarily reflect policy decisions and/or opinions of the federal government, but nevertheless it is true.

Catch-22

[guttentag]

I wonder why California felt the Bitcoin Foundation was in violation of the law, which states that the following entities are exempt from this licensing requirement:

An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearing house transfers, or similar funds transfers, to the extent of its operation as such a provider.

If they're going to claim that the Bitcoin Foundation is engaged in the business of money transmission, wouldn't it be because they consider them to be the "operator of a payment system" as described in the law? Which would appear to exempt them from the licensing requirement.

Re:Catch-22

[CaptQuark]

Never let the law get in the way of suing someone...

Re:Catch-22

[Anonymous Coward]

No, the 'payment system' you mention is the kind of thing a restaurant or shop does. They don't need to be licensed, but a central entity that works like a bank does have to. If it looks like a bank, flies like a bank and quacks like a bank, then it is a bank and should be licensed.

Re:Catch-22

[slew]

That's nice.
Except for the part where the bitcoin foundation only distributes software.

Except by the own admission, they "standardizes, protects and promotes the use of bitcoin cryptographic money for the
benefit of users worldwide." Also, they appear to intend to use foundation money to lobby and fund a group of core developers.

Actions they take when they protect and promote, say if they involve actual sale or exchange of bitcoin (e.g., accepting donations from external developers/lobbyist in bitcoin converting them to USD on their behalf and kicking that money back to fund external developers/lobbyist) may not be looked upon so benignly...

Of course, right now, it's just a warning...

Re:Catch-22

[rmdashrf]

Apart from that, doesn't the state of California just imply that Bitcoin is a real currency?

Re:Catch-22

[Teancum]

Assuming this policy making board gets what they want... either that the foundation becomes licensed to do business in California as a financial transaction agency (aka a "bribe" as it means the policy board collects some additional revenue) or the foundation is shut down.

What exactly do they think is going to happen if the foundation is shut down? That the software will stop being used or that nobody will be distributing Bitcoin clients? For something published under the GPL?

Re:Catch-22

[pentadecagon]

It's more about intimidation. Now everybody knows the government doesn't like bitcoins, and considering the recently discussed surveillance capabilities nobody can pretend anymore bitcoins are anonymous. The result is 1984-like:
Most people will think twice before using a presumably monitored internet for engaging in something the government doesn't like.

Re:Catch-22

[king neckbeard]

So, they are a lobbying group that might dogfood to a certain extent. That's like saying that a credit card industry lobby group might need to be registered as a money transmitter because they sometimes pay for things with credit cards.

Re:Catch-22

[jbolden]

Most likely ignorance. They just don't understand how BitCoin works and the role of the foundation. A reasonable response to a cease and desist letter is to inform the issuing authority you aren't the one performing the act they are asking you to desist from.

Re:Catch-22

[Anonymous Coward]

I believe this would mean you need the license to mop floors at a stock exchange. You are engaged in that business after all - if you leave the floor wet a broker could break a leg and that would affect the market...

The foundation is providing software that is used in money exchange. Where to draw the line? Software, hardware, building maintenance, security, information gathering? Does a print house printing cheque books for banks require the federal license? That's pretty much equivalent service.

Re:Catch-22

[magic maverick]

Even better, the Bitcoin software is BSD, not GPL.

Re:Catch-22

[slew]

So, they are a lobbying group that might dogfood to a certain extent. That's like saying that a credit card industry lobby group might need to be registered as a money transmitter because they sometimes pay for things with credit cards.

No, but say if such a lobbying group decided to sponsor/issue a branded credit card to their members as a benefit, they might be walking in the shade of grey...

Re:Catch-22

[slew]

Assuming this policy making board gets what they want... either that the foundation becomes licensed to do business in California as a financial transaction agency (aka a "bribe" as it means the policy board collects some additional revenue) or the foundation is shut down.

What exactly do they think is going to happen if the foundation is shut down? That the software will stop being used or that nobody will be distributing Bitcoin clients? For something published under the GPL?

You can make that argument with just 'bout every one of the professional licensing boards (medical board, bar association, contractor's licensing, etc). The short answer is they don't care what happens, they just want to regulate it. It's basically just a state sponsored guild (not unlike a union).

Re:Catch-22

[tftp]

Bitcoin Foundation doesn't do the transfers, but they enable others to do the illegal thing. (As I said earlier, I don't necessarily agree that those things ought to be illegal, but that's what they are today.) Assistance in committing a crime is a crime in itself.

Take locks and lockpicks, for example. A manufacturer can sell them only to licensed locksmiths. The same applies to certain firearms (or all, if you are outside of the US.) In many countries even manufacturing a firearm without license is a crime.

Bitcoin is intended for worldwide transfers, but it lacks an interface for the government to insert their monitoring equipment into. This already violates a bunch of laws, like those against money transfers to terrorists. There are also laws about reporting transfers above $10K or some such limit. Is it legal to produce software, and to train people to use this software, if the primary mode of operation of that software is against the law?

Re:Catch-22

[jbolden]

Is it legal to produce software, and to train people to use this software, if the primary mode of operation of that software is against the law?

I'm not sure. But this strikes me as borderline and borderline needs to be specifically regulated against. The legislature needs to decide what constitutes writing software to assist money laundering and be more specific. Using existing law strikes me as ex post facto law.

Re:Catch-22

[tftp]

Someone already mentioned DMCA. Established rules permit outlawing something that does not have "sufficient non-infringing function." It is already illegal to possess lockpicks, unless you are a licensed locksmith; or certain drugs, unless you are a pharmacist, or if the drugs are prescribed personally to you. The society (I don't say "the law" here) is correct in shunning things that are hardly ever used for good, but are commonly used for unwelcome activities.

Courts and lawyers always use existing laws because that's all they have. Only the legislature can make new ones, and it takes a long time. Besides, why do we need a new law here if BTC is a currency exactly like GBP or CDN or RMB? BTC was itching to get into the "big boys' club" but suddenly discovered that membership comes with strings attached. As the popular wisdom says, "Be careful what you wish for..."

Re:Catch-22

[jbolden]

It is already illegal to possess lockpicks, unless you are a licensed locksmith; or certain drugs, unless you are a pharmacist, or if the drugs are prescribed personally to you.

Those are explicit laws. Were there an explicit law against creating code designed to assist unregulated money transfers then there wouldn't be much argument.

Besides, why do we need a new law here if BTC is a currency exactly like GBP or CDN or RMB? BTC was itching to get into the "big boys' club" but suddenly discovered that membership comes with strings attached.

There is some question that BTC is a currency under existing law. But your claim was that there is a law against writing software to assist in unregulated money transfers and there is no existing law.

Courts and lawyers always use existing laws because that's all they have. Only the legislature can make new ones, and it takes a long time.

And in the meanwhile they don't get to charge people.

Re:Catch-22

[tftp]

There is some question that BTC is a currency under existing law.

Perhaps. But I see it as a currency. BTC has enough flaws, no need to gratuitously add unearned ones :-)

But your claim was that there is a law against writing software to assist in unregulated money transfers and there is no existing law.

There is no need for a specific law when a general one works fine. For example, there is no law against jaywalking across 17th Street, 127.8 feet away from the traffic light, and at 2:37:08pm on Thursdays. But there is a law against jaywalking anywhere and at any time - and you can be sure that you can be cited for that if you get caught.

In this case there is no law against writing software to assist in unregulated money transfers. However there is a law against contributing to illegal activities. If unregulated money transfers are shown to be illegal, here you go. It would be equally illegal to write software to break into government networks, or to write software to steal money from banks, or to write software to blow up chemical plants... You can wiggle out only if you can clearly show that you acted in good faith. For example, a Fry's salesperson will not be prosecuted who sold a computer to a hacker who then hacked into a secure network and stole secret plans. But even that presupposes that the sales guy did not know about the criminal intent. If he did, too bad for him.

There are many laws that regulate the banking industry. The lawyers who sent that letter to BTC Foundation obviously found one that is relevant. I cannot debate the merits of their case, but sometimes the government doesn't need merits. It has power to arrest everyone involved and deny them bail for a year, while their trial is being prepared. Then they can say "Sorry, no case... you are free to go." But there will be *some* case - nobody knows what arcane laws are out there, in these books of codes and regulations. Nobody is innocent; but if you are, then a convenient crime will be manufactured for you. How about an unprotected sex in Sweden, for example? They'd only need a complaint from one party.

Re:Catch-22

[DanielRavenNest]

In fact, nobody transfers "bitcoins". Their only existence is as numbers in the "Block Chain" database. The Block Chain is a write-only database. In order to determine the current balance for an account number, you have to read all the transactions for that account and add them up. Therefore you cannot "move" or "transmit" anything. You can only write new transactions that are added to the existing data.

The database is also a shared distributed one. Everyone with a full client has a copy of the whole thing, but nobody's copy is "the original" or special in any way. Every copy is as valid as any other.

The only valid argument for a thing of value which can be transmitted would be a bitcoin wallet or the private keys they contain. Since they are just data files, they *can* be sent from person to person, and constitute value if any of the bitcoin account numbers they control have a balance. But almost nobody sends wallets, and certainly not via third party "wallet transmitters".

Re:Catch-22

[Teancum]

You can make that argument with just 'bout every one of the professional licensing boards (medical board, bar association, contractor's licensing, etc). The short answer is they don't care what happens, they just want to regulate it. It's basically just a state sponsored guild (not unlike a union).

The question is how do you control something which is uncontrollable shy of putting this into the hands of ordinary police officers who bash their way into random homes (against the 4th Amendment.... but who is counting here) and try to prosecute when they've found Bitcoin running?

My point is that they are trying to regulate a consumer-level technology here that is not owned by anybody nor managed by anybody either. While the Bitcoin Foundation might be able to make a persuasive argument about a major change in protocol, that can't be forced upon the community by the state government either.

Yeah, it is a guild mentality that is prevailing here, but it is like a hoard of farmers in the countryside have decided to take over the business of the guild and have turned out to have an even better product than the guild members. It is something that should turn the guild leaders white with fear, and helplessness about being able to do anything about it. Controlling the foundation won't do a thing.

Re:Catch-22

[maxwell demon]

It doesn't matter whether bitcoins are technically transferred. What matters is that I can take some dollars and pay them in return to some change in the bitcoin network being done (in cooperation with me and you) which ultimately enable you to get the same amount of dollars from someone. That's money transfer. The technicalities on the bitcoin side don't matter. All that matters is that I put dollars in, and you get dollars out.

Re:Catch-22

[Teancum]

If they are trying to regulate the Bitcoin/U.S. Dollar exchanges, going after the Bitcoin Foundation is by far and away the worst possible move you could make. They don't have a thing to do with any of those exchanges at all and forcing that organization "into compliance" won't have any effect.

Going after Mt. Gox or other exchanges certainly would be something to consider, but even that is likely to be futile. At best all that can really happen is that the major banks or even folks like PayPal will be getting into the game, at which time Bitcoins will be completely legitimized. The current effort is at best an attempt to "uninvent" computer software that is already available to anybody who wants to use it.... and it can't even be stopped with patents or copyrights. Of course in this situation the people who started using Bitcoins as early adopters weren't interested in royalties from "intellectual property" as they knew it was going to be an uphill fight just to get acceptance in the first place.

Re:Catch-22

[pla]

Assuming this policy making board gets what they want...

The foundation physically cannot comply with the request, and CA knows that.

Sure, the foundation could jump through the hoops, pay the right people off, and get itself registered as requested. And then what? How exactly do you file a CTR, as required by law, against an anonymous[*] trading partner for amounts over USD$10k (equivalent)? How do you report taxable investment income or file a 1099 for that rent-a-coder expense over $600 payable to "d33znu75", last known address "31uwXjtqEbMgnnebBvupShBdwfXhVT5Mnb"?


What exactly do they think is going to happen if the foundation is shut down? That the software will stop being used or that nobody will be distributing Bitcoin clients? For something published under the GPL?

Nothing more or less than driving the use and possession of Bitcoins underground. Right now, you and I can, more-or-less comfortably, talk about using Bitcoin for a variety of purposes. We wouldn't (unless completely stupid) so cavalierly discuss large-scale drugs or arms deals in a public forum. The government can't stop Bitcoin any more than it can win the war on drugs or stop people from speeding, but it can at least force those things to keep a low profile so the government gets to look like it has a clue.


/ Yes, we all know Bitcoin lacks "true" privacy, but it works pretty damned well for the kind most of us care about (you can find every bitpenny I have on the blockchain, yet still wouldn't know my IRL identity). And governments - no paranoid conspiracy theories required - Hate the sort of privacy that matters. They don't want traceability, they want taxability.

Shutdown procedure

[anonymoustommi]

Guessing they go the general guidelines shown by DRM-industry, first they troll on developers making it possible and then on users doing it. I wonder if laws need to be rewritten as has been done globally with anti-piracy stuff, or if the current ones can be interpreted in disfavor of bitcoin community? In the end they make their own legitimate digital currency, which they cant print as they please.

This doesn't surprise me

[jonwil]

Any time someone invents a way of moving value/wealth around, its going to be subject to regulation by governments looking to prevent its use by criminals and bad guys to move their ill-gotten gains and hide where their money came from.

Doesn't matter if its Bitcoin, US dollars, Second Life currency or cute cat pictures, if it can be used to buy stuff in the real world and has a real-world value, the governments of this world are going to want to regulate it.

Re:This doesn't surprise me

[Anonymous Coward]

So naïve... Governments will want to regulate it, but not for the reasons you say, but because, as one Rostchild famously said: "Give me control of a nation's money and I care not who makes it's laws"

no NO NO NO

[kawabago]

It's the secret laws they're breaking. We aren't allowed to know what those laws are, but rest assured, these entities are guilty. Trust your government. or else.

Server farms in Ecuador

[Chrisq]

Server farms in Ecuador are looking really attractive

Re:Server farms in Ecuador

[Anonymous Coward]

I believe most web hosting/vps companies in Ecuador and much of S. America actually host in Miami, so Caveat emptor.

My experience from living in Brazil, is that hosting is expensive and unreliable, ymmv.

I would certainly like to hear from those with more positive experiences.

Re:Server farms in Ecuador

[Anonymous Coward]

You're joking right?
I just came back from Ecuador a few weeks ago after spending 6 months.

Ecuador has a nationwide network of highspeed fiber optic connections to every major city, it's a ring around the entire country.
Major cities have STM256 and DS3 is the norm in town to town connections. They also have microwave and satellite linkages to back haul in case of a fiber cut.

Even rather minor towns like Salinas offer Fiber Optic broadband to the home.
I had 4G LTE service from Claro in Montanita (a small backwater on the coast that's famous for surfing).
Telconet has Tier III & Tier IV datacenters sitting right in the middle of major cities like Guayaquil & Quito.

CNT the national telephone company has DSL available everywhere and while it's not exactly reliable, the fact is it is there.
HughesNet offers Satellite broadband for the same price there as it is in the USA. CNT is the primary reseller.

All the cities bigger than about 10k people (most of them), also have Cable internet on par with Comcast or Cox.
You do need to be a resident to take advantage of most of these options, but be advised they are there.

That's just Ecuador BTW,

Peru is currently in the process of deploying a nationwide highspeed fiber optic system called Dorsal Red.

My experience in SA is that at least in Ecuador you can expect to get internet services on par with USA services from about 5 or 10 years ago especially pricing wise. It's not the best in the world, but it certainly beats living in rural USA and the options available are much better than rural USA offerings.

Re:Server farms in Ecuador

[locopuyo]

It varies and depends what you consider "rural USA".
My parents live in a town with a population under 2000 and no bigger town within 20 miles which is considered rural according to wikipedia. In their town they have access to fiber optic, cable, dsl, and 4G LTE internet. The fiber moved in 5 years ago. 10 years ago there was Cable and a bunch of DSL providers and the cable speeds were a blazing 10 Mbps.
But I have also heard of 2500 population towns where the fastest internet you can get is still a crappy 1.5 Mbps dsl.

Is it barter or is it currency, already?

[edelbrp]

Am I a chicken farmer or minting government coins?

Re:Is it barter or is it currency, already?

[edelbrp]

Exactly. It's about taxing the flow of currency, virtual or not. And that tax might be government or private.

This is a result of Aaron Greenspan

[Anonymous Coward]

[Anonymous to prevent frivolous litigation, these are my opinions-- do your own googling for more facts]

Aaron Greenspan is a multiple time loser college buddy of the Zuckerberg and aspiring troll. After failing to make it big with facebook he's run a series of failed startups that all had names that begin with "face" for some reason his latest was "facecash", some kind of paypal alternative. But he was unable to meet California's onerous requirements for orgs transferring USD in that state (Paypal's moat, I guess). His response has been to troll just about anyone will let him get away with it-- including suing dozens of silicon valley startups with this weird pro se litigation that accuses them of having an easier time with the regulators than he did.

In his latest volley of accusations that CA is behaving inequitably he specifically singled out Bitcoin-- god knows what digital coins have to do with his paypal wannabe "facecash", but that someone else was getting along happily was apparently enough to bring his ire.

In any case, what you're seeing now is CA playing CYA and sending out some nastygrams to everyone Aaron has accused them of failing to enforce against. This makes the complete ineptitude of CA make a little more sense: their C&D seems clueless because they simply don't care.

Fallacies

[gd2shoe]

dont fucking pick and choose, it makes you look like a nut

Oh give me a break. This is an attacking-the-messenger fallacy. If you want to accuse him of appeal-to-authority, that's fine, but your quotes in no way invalidate his.

Further, everyone says something crazy at some time in their lives. If you try hard enough, you can find a crazy quote for anyone famous. Unless everyone, ever, have all been insane, you've got to give some lee-way.

(Besides, your James Madison quote actually makes sense. Sometime the only progress we've achieved have been from visionary merchants, and not prudent ones. It has also been said that you can only count the number of businesses that have been created, but can never count the ones that could have been, but were dissuaded by inept or corrupt governance.)

Re:Fallacies

[Impy the Impiuos Imp]

I alwo fail to see how the rebuttal quotes prove anything "insane" about the FF. Both are quite reasonable, too.

Presumably he was on about fear of government intervention (marijuana, or making new things illegal) vs. claims of one government money supply as a good thing. But that "contradiction" seems to be something cycling around leftist disasterbation circles rather than anything inherent in either the founding fathers or more modern libertarian concepts.

Banks made their own money, and debts, including government ones, were to be paid back typically in with the same bank's money. To stop bankers from jerking things around, the government creates its own money, even thouh nominally it's a private company constructed by Congress.

If the detractor wants to talk about keeping out competition from other currenies, fair enough, but I doubt he's looked into it even that far.

Re:Fallacies

[Anonymous Coward]

"too lagit to quit" - MC Hammer

pulling quotes out of thin air and posting them as the final word to an argument shows a mindset that those people were infallible when it clearly shows they were not

using a quote to support an opinion or argument shows that you were not the only one to have that same opinion or argument and that someone greater than yourself had reasonable points

XBox Live Points

[Anonymous Coward]

Next up they'll send a Cease and Desist order to the makers of the Bittorrent protocol. That will stop piracy dead in its tracks!

Are XBox Live Points money?

http://www.xbox.com/en-US/Live/MicrosoftPoints
"Microsoft Points are the coin of the Xbox LIVE Marketplace realm. Microsoft Points is a universal system that works across international borders, and is even available if you don't have a credit card. "

Re:XBox Live Points

[DKlineburg]

Would that than make all F2P illegal? You "Buy" fake currency to "Buy" things?

Re:XBox Live Points

[fustakrakich]

Are XBox Live Points money?

Can they be transferred?

Re:XBox Live Points

[ADRA]

If I remember the laws correctly, you either fall into:
1. Gift cards -- Not taxed on sale and are treated as cash in terms of its issuing currency
2. Point systems (like xbox/online games) -- Only convert INTO a virtual currency and can only be used in that world, though they can be exchanged for real things. Since there's no direct way to convert from XBox points back into real money, they are exempt. PS: Are Xbox points even transferable? That would be another important facet of regulation. I don't know if regualtors care if a company is simply holding money. If you want to look at how systems like this getting exploited, look at Pachinko parlors in Japan about the whole three way conversion scams which are basically built to get around gambling restrictions

Re:XBox Live Points

[CCarrot]

If I remember the laws correctly, you either fall into:
1. Gift cards -- Not taxed on sale and are treated as cash in terms of its issuing currency

I foresee a brisk business in Bitcoin Gift Cards coming up...

Satoshi Nakamoto foresaw this

[knwny]

This is precisely the reason why we will never know who Satoshi Nakamoto is.

Re:Satoshi Nakamoto foresaw this

[sgbett]

It's an elaborate double bluff. Satoshi is the US govt/Fed/IMF or some similar consortium of 'money controller', who are quite aware that the current monetary system is out of control.

They have built bitcoin, they own a controlling amount (or are in the process of buying it... they have infinite money to do so). Over time they will engineer themselves into a position of owning a controlling amount of the network (having infinite money to devote to a data-centre or two of miners).

The endgame is that they are going to be processing most blocks and therefore collecting the bulk of transaction fees. The protocol allows the finder of a block to choose which transactions to include, meaning they can effectively block transactions that don't pay sufficient fees.

Then we are back in exactly the same situation as now, except there is no actual cash that people might transact off the books. The USD becomes the black market currency. The majority of the new BTC wealth in the hands of the few, and everyone else paying tax for the privilege of transferring money.

Carerful what you wish for :)

Re:Satoshi Nakamoto foresaw this

[magic maverick]

That's funny. Except that it's too easy for other nations (also with an "infinite" amount of cash) to simply get together and push US Govt. out of controlling 51% of the network. They don't even need to get to 51% themselves, just to whatever percentage stops the one entity from controlling the network. There so many various people mining now, I doubt that it's at all likely that the US Govt. has or would easily get to 51%.

Copyright violation?

[fufufang]

I thought Cease and Desist is for copyright violation only?

Re:Copyright violation?

[dkf]

I thought Cease and Desist is for copyright violation only?

No, it's a lawyer's letter saying "Stop doing that or my client will sue you". That's really all it is.

Re:Good riddence

[MobSwatter]

Piss on anything different that actually might undermine power afforded to banking institutions that have ultimate control to manipulate society to engage in war, population control and any number of pretty screwed up shit. Can you really blame them for trying?

Heh

[Arancaytar]

The Bitcoin Foundation doesn't have anything to do with the operation of the Bitcoin network. At least when they went after MtGox et al, they had some chance of making an impact by limiting the transfer of funds into and out of the currency. This here is a bit like prosecuting Bram Cohen for writing the protocol specification for BitTorrent.

Monopoly..

[DeBaas]

maybe they'll go after Parker Brothers/Hasbro next

Not gonna fly

[Captain_Chaos]

Well this is not going to work of course:

1. It's not money (it's a commodity)
2. They're not transmitting it (the users are)

Re:Not gonna fly

[tftp]

BTC is not a commodity because there is no demand for numbers that comprise a Bitcoin. The USD is not a commodity either. But a gold coin is, and a bar of iron, and a chicken. The gold coin is a commodity money; a bar of iron is a commodity that is rarely a money; a chicken is a commodity that you can use for barter.

With regard to "they are not transmitting it," the laws are pretty clear on the subject of facilitating an illegal act. In other words, if the prosecution wants you convicted for that, it will happen.

As an example, you cannot give a gun to a known killer and then say "I didn't kill anyone." You'd be an accomplice right away. A gun dealer is prohibited from selling you a firearm if he believes that you are going to use it for illegal purposes. BTC has no other purpose than to facilitate money transfers bypassing the government-sanctioned banks and their reporting systems.

Re:Not gonna fly

[lgw]

I'd say it's a collectable, not a commodity. "Commodity" implies not just standardization, but some industrial use (e.g. corn, copper, etc).

Context is everything

[Camael]

"Hemp is of first necessity to the wealth & protection of the country." – Thomas Jefferson

Jefferson was right, and that statement far from painting him as a cokehead actually shows that he was a shrewd businessman.

These are the facts :-

1) Botanically, marijuana equals hemp. These are basically two names for the same plant.

2) Hemp was historically useful for rope, paper, and clothing, and was long promoted in Virginia as an alternative cash crop.

3) Jefferson farmed grew hemp on his Virginia farm commercially.

4) No great social stigma was attached to smoking pot in the late 1700s and early 1800s — pot use wasn't considered a problem until the early 1900s.

So, what was the problem with Jefferson's comment again?

Re:Context is everything

[Anonymous Coward]

Hemp could still be a very useful resource if that stigma did not exist. It is not only good for its fibers, but also a very good protein source

Re:Context is everything

[Attila Dimedici]

4) No great social stigma was attached to smoking pot in the late 1700s and early 1800s — pot use wasn't considered a problem until the early 1900s.

You forgot to mention that the main reason that pot became an object of opprobrium in the western U.S. was because it was the intoxicant of choice among Mexican immigrants. In the Eastern U.S., it was its association with jazz musicians (a group which was primarily black and Latin American at the time). The fact of the matter is that smoking pot came to be viewed as a problem because it was attributed as the cause of certain minorities forgetting their place.

Re:Context is everything

[TheCarp]

> 1) Botanically, marijuana equals hemp. These are basically two
> names for the same plant.

Yup. Adding to this, few people had even heard the term "marijuana" (which, if it arose new today, would be considered an ethic slur) when it was made illegal.

It wasn't until much later, 70s/80s when French botanists bred a low THC strain of cannabis and began pushing for a legal distinction between the two; enshrining into the law the use of a plant which could only be obtained from them (talk about shrewd business)

> 3) Jefferson farmed grew hemp on his Virginia farm
> commercially.

Not only that, but look at his buddy George (thats Washington) and the instructions that he gave is slaves. Specifically they had been instructed to sew hemp seed and collect it for several crops, and then, once a large enough seed stock was available, to kill the males on the next crop.

I am aware of no claims of benefit to removing the males on in a crop intended strictly for rope or canvas use. GW grew the sticky icky for the head.

> 4) No great social stigma was attached to smoking pot in
> the late 1700s and early 1800s â" pot use wasn't
> considered a problem until the early 1900s.

There are some interesting connections between this and both Alcohol prohibition AND the mormon church. The first state to ban cannabis was actually Utah, an event which followed the return of many still polygamist mormons back to the area after having left to mexico years earlier. The story goes that some had picked up cannabis smoking in Mexico and this was an attempt to make them unwelcome. Texas then apparently picked up on this and decided to ban it on the supposition that they should prevent the problem from coming there.

Around this same time we saw Alcohol prohibition end, and the newly created "Federal Bureau of Narcotics" (precursor to the DEA) which had been created partially to fight illegal alcohol, had precious little left to do, and their main man Harry Anslinger went on his crusade to give his agency a purpose, and to deamonize the weed.

I highly recomend checking out the Senate testimony at the time, including the portion where a Doctor from the AMA is told to go home because he stood against making cannabis illegal, calling it an important medicine.

Re:Context is everything

[wisnoskij]

They are not the same. Different varieties of the same plant.
Smoking hemp would be about equivalent to smoking a handful of straw.

Re:Context is everything

[msauve]

Well, that was the story W. R. Hearst used to sell his crusade against "marihuana." Actually, he had great investments in forest land as a source of paper pulp for his newspapers. Hearst thought that hemp threatened those investments.

Re:Context is everything

[Anonymous Coward]

Good point. And we all know that jazz leads to dancing which leads to sex which leads to broken hearts, broken lives and sad faces graffitied on alley walls while single mothers die with needles sticking out their arms. Therefore, weed == evil == Snowden. Go USA.

Re:Context is everything

[Gr8Apes]

Today, yes, in the 1700s and 1800s, no. To round out the facts, the general hemp plants grown at the time were not as strong as some available today, only because they hadn't done as much hybridization.

Re:Context is everything

[Archangel Michael]

"newly created "Federal Bureau of Narcotics" (precursor to the DEA) which had been created partially to fight illegal alcohol, had precious little left to do"

And people expect the IRS to disappear if/when we get rid of Income taxes. Once created, no government entity willingly disappears. Which is why we should be VERY careful about assigning new powers to a government agency. That beast will never cease to eat.

Re:Context is everything

[wisnoskij]

I think it likely that the hemp grown at the time would be significantly less strong than even the common weak varieties today.

Re:Context is everything

[TheCarp]

There seem to be a few ways of looking at the question. I never read this article before, as my previous statement was based on a different article that I read many years back and can't properly cite. Here is one telling the same story though:
http://www.forces.org/Archive/articles/245-The+Early+State+Marijuana+Laws+History+Of+The+Non-Medical+Use+Of+Drugs.html

Well, from state to state, on the theory that this newly encountered drug marijuana would be substituted by the hard narcotics addicts or by the alcohol drinkers for their previous drug that had been prohibited, state to state this fear of substitution carried, and that accounted for 26 of the 27 states -- that is, either the anti-Mexican sentiment in the Southwest and Rocky Mountain areas or fear of substitution in the Northeast. That accounted for 26 of the 27 states, and there was only one state left over. It was the most important state for us because it was the first state ever to enact a criminal law against the use of marijuana and it was the state of Utah.

The wikipedia article on the legal status of cannabis doesn't mention this as far as I can find, however, it does show several previous laws which included cannabis, not to directly ban it, but to try and classify it as a poison and put it in the hands of doctors and only available by prescription as a medicine.

Re:Context is everything

[TheCarp]

Actually, the law came first, then the low-thc "hemp". There was no real distinction other than the basic variant types Sativa, Indica, and Ruderalis.

After it was banned, some french botanists bred a new variety of cannabis with very low THC content. They then pushed for laws internationally to define "hemp" as cannabis with an artificially low THC content, so low that it could only be achieved, without a breeding program, by the purchase of their seeds.

Of course, there was little to no hemp industry at that point, and the thc content so low that nobody cared and they easily got these regulations passed.... creating, for the first time, truely low THC hemp.

While its true there are natural variations in THC content, and some natural strains have less than others, prior to their breeding program (which I believe was in the late 70s or early 80s) I am not aware of any streain that was "equivalent to smoking a handful of straw." unless you had already taken off the flowers, and turned it into...well....straw.

Re:Context is everything

[skovnymfe]

No, it was "banned" in 1937 because it was in direct competition with the oil, timber and chemical industries. Hemp didn't have the same kind of lobbying powers the others did.

Re:Context is everything

[argStyopa]

This is usually the sort of argument that's far more credible if it wasn't always made by someone who's basically just a pothead trying to make scoring weed simpler, usually with a sort of vapid 'Woody Harrelson'-stoned sort of look on their face.

Seriously, the points may be entirely credible, but the message is badly corrupted by the typical source.

Re:Context is everything

[HornWumpus]

Bullshit. There is lots of virtually no-THC hemp growing all over the American midwest. Nobody grew it commercially sense the 70s or 80s and it is everywhere. It's called 'ditch weed' for a reason.

We used to call the cops on wild hemp fields, keep them out of trouble and keep the crap pollen out of our patches.

Re:Context is everything

[Gr8Apes]

TBBA - It appears even the most minor google search will prove that hemp (cannabis) was not only a source of fiber for textiles and rope, but a common medicine as well. I sincerely doubt that would have been the case if it was significantly less strong than the common weak varieties today.

Re:Context is everything

[Anonymous Coward]

This is usually the sort of argument that's far more credible if it wasn't always made by someone who's basically just a pothead trying to make scoring weed simpler, usually with a sort of vapid 'Woody Harrelson'-stoned sort of look on their face.

If you're basing the credibility or other merits of an argument on the appearance of the presenter, as opposed to History, facts, and logic used, then frankly speaking you've got no business being part of the discussion to start with.
Especially when you're trying to argue that pot makes you a worthless losing while referencing an A-list celebrity with an 8 figure income.

Re:Context is everything

[Algae_94]

Why shouldn't it be easier for a pothead to score weed? It's not like it's particularly hard for them now; it's just illegal. I'd rather them be a minor drain on society by playing video games at home all day, instead of a major drain on society by being in prison all day.

Re:Context is everything

[Maxo-Texas]

With the current high level of interdiction, imprisonment, etc.. a friend of mine told me they were paying $3 a joint back in 2009. Haven't spoken to them sense but if anything it's probably gotten cheaper.

At $3 a joint- that's cheaper than booze for purposes of intoxication.

Enforcement after reshuffle...coincidence?

[Camael]

So, this enforcement happens just when the newly set up Department of Business Oversight comes into operation. Coincidence?

In 2012, Governor Brown introduced a wide-ranging government reorganization plan to improve efficiencies within state government. As part of the Governor's Reorganization Plan (GRP), the Department of Financial Institutions (DFI) and Department of Corporations (DOC) will become divisions under the new Department of Business Oversight, effective July 1st.

The core functions of the DFI and DOC Departments will remain the same, and consumers, financial institutions and other stakeholders will continue to receive the same level of excellent service. The examination, enforcement, legal, licensing and other programs will be organized under the Division of Financial Institutions and the Division of Corporations under the new Department of Business Oversight (DBO).

The new Department of Business Oversight will license and regulate all state-licensed depository and non-depository financial services and institutions.

Bitcoin miners are in breach of the law?

[Grantbridge]

From the wording of the letter, it sounds like bitcoin miner's could be breaking the law of California as they are engaged in money transfers by including other people's bicoin transactions in the block the add? Will bitcoin mining be illegal in the state of Califormia? (Without a licence) Or could you mine without including any transactions just to get the 25Coins?

Re:No 'run-on-the-bank' with bitcoin

[Grantbridge]

Actually since you can sign messages from bitcoin wallets, a bank could sign a message saying you have a certain amount of bitcoin credit available to you. They could do this several times over for the same coins, and act just like a bank in the real world. The only question if would anyone accept promises of bitcoins in the same way as promises of dollars. There is nothing about bitcoins that prevents notes being used, in the same way as gold as a currency didn't stop bank notes.

Re:We can't handle the truth!

[paiute]

He was a little old to be just a colonel in the Marines, wasn't he? He should have been up or out long before that exchange.

Re:Good riddence

[Anonymous Coward]

Is global warming _really_ your best argument against bitcoin? Bitcoin doesn't create C02, terrible ways of producing energy do. With ASICs on the market hitting 4.5gHash/s on 30 watts, that's less than an incandescent lightbulb uses to stay lit. It would be _trivial_ to run on solar.

Re:Good riddence

[pipatron]

This is also bullshit, as all calculations makes every transactions more secure. It's not "wasting" anything just to make it slower.

Re:Good riddence

[bluescrn]

Compared to mining gold/diamonds, mining bitcoins has a fairly small impact on the environment, and nobody gets hurt in the process.

problems with their claims

[Tastecicles]

BC aren't transmitting money, if anything's being transmitted it's the users doing it. That is a demonstrable fact.
There is no physicality in the packets being transmitted, therefore no "money" changes hands. It's just zeros and ones in a large and decentralised computer system.
BC are doing nothing new, SETI@Home, Folding@Home et. al., have been running a community loose cluster situation for years. If SETI@Home "units completed" points were called "BitCoins" instead, would the Treasury be going after them?
I think it's purely down to the fact that more and more people are using BitCoin and shucking the Dollar whenever they can, cutting out the Federal Reserve middleman and depriving them of tax revenue is what's got them upset. I got an answer to that: I'll keep my Dollar in cash. I'll still use the Dollar, but your banks aren't getting a sniff. I'll spend it in the community and encourage my community to keep that cash circulating in the community instead of taking up space in bank vaults. Because once cash circulates, it's not under the control of the Treasury or anybody else except the buyer and the seller. Treasury are happy because they're seeing Benjamins floating about but they're none the wiser as to whether or not it's hitting bank accounts, in fact they don't give a shit - as long as no other cash currency or pretender replacement (like the United States Dollar or the Bradbury Pound) is seen, they'll be complacent.

Re:problems with their claims

[DragonWriter]

There is no physicality in the packets being transmitted, therefore no "money" changes hands.

Surprisingly enough, none of the state and federal laws and regulations I've seen covering money transmitters and other money service businesses include a "physicality" requirement, so, while this would be a neat argument if the law actually included this rule, as it is it seems to be a rule invented just for the convenience of making the argument, not one which actually relates to the applicable legal reality.

If SETI@Home "units completed" points were called "BitCoins" instead, would the Treasury be going after them?

The applicable laws are much more concerned with how things are used than what they are called.

Re:problems with their claims

[tftp]

There is no physicality in the packets being transmitted, therefore no "money" changes hands. It's just zeros and ones in a large and decentralised computer system.

This is a weak argument. Do you have a bank card, or a credit card? Most transactions are electronic, but you can hardly say that money doesn't change hands.

BC are doing nothing new, SETI@Home, Folding@Home et. al., have been running a community loose cluster situation for years. If SETI@Home "units completed" points were called "BitCoins" instead, would the Treasury be going after them?

Definition: Money is a good that acts as a medium of exchange in transactions. If your goods are usable primarily as a medium of exchange in transactions then they are money, and they will be regulated as money. I never heard that SETI@home credits could be used to buy coffee at Starbucks.

I think it's purely down to the fact that more and more people are using BitCoin and shucking the Dollar whenever they can, cutting out the Federal Reserve middleman and depriving them of tax revenue is what's got them upset.

Of course. When somebody does something, look for financial reasons first. I don't think, though, that BTC use reached a significant level yet. None of my acquaintances even heard about BTC, let alone used it. If told, they'd never touch it with a parsec long pole because they have no reason to. They are all adults, by the way, and have no desire to "stick it to the man." They just want "the man" to leave them alone; laying low is a good strategy for that. Painting oneself as a rebel ... not so much.

I'll keep my Dollar in cash. I'll still use the Dollar, but your banks aren't getting a sniff.

It's your right to pay more for the same product. You know how that happens? Merchants are prohibited from asking a higher price for c/c transactions. So they bump up all prices for those few percent that Visa and others skim off the top of your purchases. If you pay that in cash, it's not the bank that receives the money, it's the merchant. The bank gives you a kickback in form of air miles, or points, or something to make it worthwhile for you to use the card. The local merchant gives you nothing.

There is also the problem of credit history. If you don't have any, you won't get a loan when you need one. I hope that works for you; but most people need a loan to buy a car, and a mortgage to buy a house. Otherwise they can buy these items only by the age when they don't need them. Credit card earns credit history for you. Cash does not.

Re:problems with their claims

[JesseMcDonald]

There is also the problem of credit history. If you don't have any, you won't get a loan when you need one. I hope that works for you; but most people need a loan to buy a car, and a mortgage to buy a house. Otherwise they can buy these items only by the age when they don't need them.

I hear this repeated often, but it seems like a myth. I've never owned a credit card, and yet I had no trouble getting a loan for my car or a mortgage for my house, both on favorable terms and at a younger age than most. If you rent for a few years before buying a house, as most people do anyway, and always pay your utility bills on time, that will net you more than enough credit history without relying on credit cards. What they're looking for is a history of making regular on-time payments, and a low debt-to-income ratio.

Re:problems with their claims

[tftp]

I think the volume of payments also matters. You cannot make regular $10/mo payments for a newspaper subscription and hope to get a $5M mortgage. Credit cards also give more information about your spending discipline. In your case you didn't need much. But who can say that it works for everyone, in every situation? A c/c is convenient way to pump a lot of money (all your day to day expenses!) through a facility that is directly affecting your credit rating. It costs you nothing, you risk nothing, and you don't need to pay for a whole month.

Re:problems with their claims

[Tastecicles]

I've never needed a loan. Ever.

I have this thing called discipline. It means I don't live beyond my means.
I also have this thing called a work ethic. If I want something badly enough, I work to earn enough cash to pay for it, or I go without. That way, when it's in my hands, I OWN IT FROM THAT MOMENT ON.

Call me old fashioned, or weird, or whatever. It's also something I've instilled in my kids. That said, I have also developed the habit of leaving my moneyhole balances at zero at the end of every week.

Any currency is a financial instrument

[sjbe]

The thing is it's not positioned as a financial instrument, but a currency.

Currency or money is a form of financial instrument. All currencies are financial instruments though not all financial instruments are currencies.

If it quacks like a bank?

[transporter_ii]

Feds: PayPal not a bank: http://news.cnet.com/2100-1017-858264.html

Link is old. It may be one now, but for many years it walked like a bank, flied like a bank, and quacked like a bank.

Plenty of control

[sjbe]

Confirmation from an American authority that Bitcoin is a legitimate form of money.

I don't think anyone has argued that it was anything other than a form of money. It meets all the criteria of one. Of course that doesn't necessarily mean using bitcoin is a good idea (it is VERY risky) but it certainly is a form of money.

A form of money they have absolutely no control over.

Keep on believing that. There are *plenty* of regulations that cover any activity you care to use bitcoin for. Bitcoin is hardly the only other currency in existence. It is an asset and a financial instrument and as such any use of it within US borders or in countries with appropriate treaties with the US is covered under the regulations dealing with assets and financial instruments. Furthermore new laws governing financial transactions involving bitcoin can be passed at any time further regulating its use. The US also has a LOT of influence internationally and is pretty good at getting other countries to pass similar regulations even when doing so might not be a good idea. Claiming that the US government would not have any influence here is quite naive.

Survived hundreds of years of quakes?

[raymorris]

The real villains are the local authorities who allowed buildings that had been safe for centuries to be occupied.

FTFY?

Re:Survived hundreds of years of quakes?

[Grishnakh]

Large earthquakes only hit certain places with sufficient magnitude every few centuries or so. Same goes for volcanoes: the city of Pompeii was probably considered safe too, as it had been there a long time before Vesuvius erupted.

California Is Wrong

[Jane Q. Public]

U.S. Constitution, Article 1, Section 10:

"No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility."

In order for California to consider it as money, it would have to declare Bitcoin to be "money", but the Constitutional explicitly prohibits it from doing that.

Re:California Is Wrong

[Jane Q. Public]

Having said that: the same clause in the Constitution prohibits States from recognizing the current U.S. dollar (fiat money) as "money", too. That hasn't stopped them.

When is this un-Constitutionality going to stop?

Re:California Is Wrong

[jeremyp]

It seems to me that clause applies to individual states. It doesn't say anything about what can be done at federal level.

Re:California Is Wrong

[DragonWriter]

In order for California to consider it as money, it would have to declare Bitcoin to be "money", but the Constitutional explicitly prohibits it from doing that.

No, the Constitution prohibits California from making bitcoin "a tender in payment of debts".

It doesn't prohibit California for considering it "money" in the context of any rule where being "money" doesn't make it legal tender.

Not that that matters, because the rules which set the definition of money transmitter that California is applying are federal rules, and they treat any "value that substitutes for currency" the same way as "currency" or "funds", and the federal agency responsible for enforcing the regulations has already detailed their application to de-centralized exchanges of virtual currencies, so, even if there was an issue of the reserved federal power to define legal tender involved, California would be fine because it is simply following the Feds, not establishing its own definition.

Re:California Is Wrong

[DragonWriter]

Having said that: the same clause in the Constitution prohibits States from recognizing the current U.S. dollar (fiat money) as "money", too

The provision says nothing about "recognizing" or "money", it says something about "making" and "tender in payment of debts". The states do not "make" the US dollar legal tender, Congress did that, as it is power under the Constitution; the states merely follow the federal law in recognizing the result of that act, as they are obligated to under the Supremacy Clause.

Re:California Is Wrong

[tftp]

"No state shall [...] coin money;"

If coining money is not allowed to the state, is it allowed to an individual? The Liberty Dollar shows that it is not. It may be not fair, but it is legal because courts say so.

In order for California to consider it as money, it would have to declare Bitcoin to be "money", but the Constitutional explicitly prohibits it from doing that.

Forign money always existed, but it was not made a legal tender in payment of debts. The Euro is certainly money (for now,) but CA neither prints Euros nor accepts them as payment. I personally do not question that BTC is money - it is that, just as shark's teeth may be money, and sea shells, and gold bars, and pieces of paper with pictures on them. However trading in BTC skips the taxes. Taxes may be unfair too, but they are written in the laws. By the book CA is correct by going after money transfer services that bypass a plethora of laws that control banks. Personally, I don't think taxation is a necessary evil, but that's a question for a different day. Right now the only question is whether BTC is used (or can be used) for illegal operations. I think the answer to that is "true" because it can be used for anything, and illegal operations are a subset of that.

Re:California Is Wrong

[Jane Q. Public]

"It seems to me that clause applies to individual states. It doesn't say anything about what can be done at federal level."

It doesn't matter. If a State can't accept it or make it acceptable as money, then Constitutionally, it doesn't matter what the Federal government does. If you read that carefully, legally a State cannot accept a U.S. dollar for the purpose of paying taxes, or legalize the paying of ANY debt within the state, government or private, with U.S. dollars.

Hey, I didn't write the thing. Just read it, and read about its history.

Re:California Is Wrong

[Jane Q. Public]

The provision says nothing about "recognizing" or "money", it says something about "making" and "tender in payment of debts".

You need to look up what this means. It says that a State cannot accept, or make acceptable, ANYTHING for payment of a debt within that State but gold or silver.

That means nothing but gold or silver can legally be used to pay taxes, or pay a bill, or buy anything (since purchasing something is paying a "debt" for product received).

It doesn't matter what the Federal government says, if the States are constrained in this way.

Re:California Is Wrong

[Jane Q. Public]

"No, the Constitution prohibits California from making bitcoin "a tender in payment of debts".

It doesn't prohibit California for considering it "money" in the context of any rule where being "money" doesn't make it legal tender."

You are trying to make a distinction that doesn't exist. Money is tender. Tender is money. There is no difference.

If you REALLY want to split hairs and get technical, tender is money that is used to PAY for something. But in practice there is no difference because money that can't be used to pay for anything really isn't money.

And I'll repeat my reply to the others who responded: Constitutionally, it doesn't matter what the Federal government says, if nobody within the States can legally use anything but gold or silver as legal tender.

These things were put in the Constitution for good reasons. If one were to accept your argument, the only conclusion would have to be that the founders just threw that in there for laughs. Somehow, I don't think so.

Re:California Is Wrong

[Jane Q. Public]

"If coining money is not allowed to the state, is it allowed to an individual? The Liberty Dollar shows that it is not. It may be not fair, but it is legal because courts say so. "

Interesting comment but not really relevant to what I said. A State is Constitutionally prohibited from recognizing Bitcoin as legal tender. It's that simple. Weasel-wording doesn't change that.

Re:California Is Wrong

[Harik]

If you believe this, remember that if you're ever tried in a court where the flag has gold fringe you can shout FREEMAN ON THE LAND and they have to let you go.

Re:California Is Wrong

[tftp]

Orthogonal to all that: but does CA have authority to regulate flow of foreign money on its territory? For example, if you want to send 50,000 Euros to AQ, should the state have any say in that transaction?

What I'm pointing out here is that the constitutional requirement only prevents CA from collecting taxes and fees in other currencies. It does not require CA to ignore money flow in other currencies. If that were to be so, we'd be all paid and paying with foreign currency, and then no taxes would be necessary because our income in USD would be zero.

Re:California Is Wrong

[Jane Q. Public]

"If you believe this, remember that if you're ever tried in a court where the flag has gold fringe you can shout FREEMAN ON THE LAND and they have to let you go."

Don't be an ass. I never said anything like that, and I am not one of those people.

But I AM rather curious: what is it about someone who quotes the Constitution that makes you automatically assume they are crazy?

I think that says a lot more about you than it does about them.

Re:California Is Wrong

[Jane Q. Public]

"What I'm pointing out here is that the constitutional requirement only prevents CA from collecting taxes and fees in other currencies."

No, it doesn't. It prohibits California from recognizing ANYTHING other than gold or silver as legal payment for ANY debt within the state. It isn't just about taxes and fees. It says "make anything but gold or silver a tender in payment of debts". It doesn't just say State debts, or debts to the State.

But I will point out that even if that were true, California is STILL violating the Constitution by accepting U.S. dollars.

Someone else pointed out that dollars are Federal, not State, but that doesn't matter. The Constitution still prohibits a State from accepting them.

As for foreign payments: legally they are supposed to go through a bank or exchange and converted to U.S money before they can be used for payments anyway. So that's not really relevant.

Re:California Is Wrong

[tftp]

No, it doesn't. It prohibits California from recognizing ANYTHING other than gold or silver as legal payment for ANY debt within the state. It isn't just about taxes and fees. It says "make anything but gold or silver a tender in payment of debts". It doesn't just say State debts, or debts to the State.

It doesn't have to say that. The state is only entitled to collect taxes and fees, that's why the requirement only applies to that. In other words, you cannot pay your taxes in Euros. As I read, it cannot even force you to accept USD from me if our private contract explicitly says that I shall pay you in gold coins.

However recognition of the state is not required for any other financial activity, in any currency. If you want to buy a widget from me for Euros, or Yens, I will sell it to you. Not illegal. You can even send me those Yens from Japan, and I will receive them through an appropriate, registered and licensed financial services company (PayPal, or just my bank.) You cannot possibly claim that foreign currencies are outlawed in CA. It's just the state does not recognize them. I don't care what the state recognizes, and the state doesn't care what I barter with - chickens or colored papers. It only wants its share of the activity, expressed in the currency that it recognizes.

With regard to gold vs. fiat USD, that was discussed elsewhere. I do not know what the answer is to that.

As for foreign payments: legally they are supposed to go through a bank or exchange and converted to U.S money before they can be used for payments anyway. So that's not really relevant.

I doubt that. It would make it impossible for you to come to California and pay me with Euro coins. But you obviously can do that, and it is obviously legal. As I recall, the tax rules only require me to convert the value of the transaction to USD in order to calculate the tax, if one is appropriate.

Businesses do receive foreign payments into USD accounts, but that's primarily because USD is the universal worldwide money. You can have accounts in other currencies, and as matter of fact I do. You can even have accounts abroad, and it is also legal (but subject to reporting.) I can receive payments in CDN, and if they land into the CDN account they won't get converted into anything. I don't have to convert them into USD. I only need to calculate taxes correctly, and that involves the exchange rate on a certain date.

Re:California Is Wrong

[maxwell demon]

Would it not be enough that it is used as method to transfer money? You pay money for bitcoins, pass ther bitcoins on, and someone else gets money for those bitcoins. Voila, bitcoins used for money transfer, without the need to consider bitcoins as money any more than you'd have to consider the electrical impulses sent between banks for money transfers to be money.

Re:California Is Wrong

[Jane Q. Public]

"It doesn't have to say that. The state is only entitled to collect taxes and fees, that's why the requirement only applies to that."

I rather think it DOES have to say that. There is nothing in it anywhere to even hint that it is limited to state monies only. It says "tender in payment of debts". It does not say "tender in payment of State debts", or "tender in payment of debts to the State". Considering the complete absence of any indication they meant something else, I suggest the words be taken at face value. And if it does not apply to individuals, why does part of that same sentence say "or law impairing the obligation of contracts"??? Are you going to say that part applies only to contracts with the State? I don't think so.

"However recognition of the state is not required for any other financial activity, in any currency. If you want to buy a widget from me for Euros, or Yens, I will sell it to you. Not illegal. You can even send me those Yens from Japan, and I will receive them through an appropriate, registered and licensed financial services company (PayPal, or just my bank.)"

Yes and no. I retract the bit about "requiring" that it go through an exchange first. But that's actually completely irrelevant. I could pay you in buckets of piss, and if you accept them, fine with me. But a State cannot "make" buckets of piss legal tender. That is the point being discussed here.

The second thing I have to say about that is no, you can't do that through PayPal. I know, because I've done it. You can accept foreign currency into your PayPal account, and you can pay in foreign currency from your PayPal account. But nobody in the U.S. can require you to pay a debt in foreign currency, PayPal or not. Again, that's the point here. And if you are required to pay a debt in local currency, sorry, but you CANNOT pay it directly with Yen in your PayPal account. PayPal will first convert it to dollars (and charge a fee for that conversion), before paying in dollars. I have bitched about that requirement more than once, but that's the way it works. Look it up.

"Businesses do receive foreign payments into USD accounts,"

Businesses receive payments in dollars into USD accounts. But if it's a BANK account, and it's foreign currency, it is converted to dollars before going into that account. In many but not all circumstances they will also charge a small fee for doing that conversion. Banks that do not routinely do Forex (foreign exchange) do not do it for free.

"I can receive payments in CDN, and if they land into the CDN account they won't get converted into anything."

That's true, as as I already stated, that's true of PayPal as well. But it's also completely beside the point. If you want to pay somebody in dollars with it, it is still first converted to USD. And often there is a fee for the service.

Re:California Is Wrong

[DragonWriter]

You are trying to make a distinction that doesn't exist. Money is tender. Tender is money. There is no difference.

You are trying to ignore a distinction which does exist. The things that need to be transmitted for an entity to be a "money transmitter", under both state and federal law and regulations, are defined in those laws and regulations, and are not restricted to "legal tender". Because the effect of these provisions -- whether state or federal -- are not to regulate what is legal tender, insofar as they can be viewed as defining "money" for their own purposes, it does not touch on the reservation to Congress of the power to make things other than gold and silver "tender for debts".

If you REALLY want to split hairs and get technical, tender is money that is used to PAY for something.

Actually, no. "Tender for debts" is anything that, when given in settlement of a debt that already exists, discharges the obligation associated with that debt. Many circumstances of payment for something don't involve creating a debt (this is generally the case where the contract is accepted by payment.)

And I'll repeat my reply to the others who responded: Constitutionally, it doesn't matter what the Federal government says, if nobody within the States can legally use anything but gold or silver as legal tender.

And this is wrong, the cited provision of Congress reserves to Congress the power to make things other than gold and silver tender for a debt. When Congress does so (as, in fact, it has), courts in the states are obliged, by the Supremacy Clause, to accept that exercise of explicit Constitutional power. ("Use...as legal tender" is somewhat of a garbled concept, because "legal tender" isn't something that an object is used for, it is something that it is recognized as in law; having or lacking legal tender status doesn't affect whether or not you can use something in a particular way, it effects the legal effect of that use should the status of a debt be contested in court.)

These things were put in the Constitution for good reasons.

Yes, they were put in to prevent state-issued non-specie currency and simultaneously to guarantee the power of the federal government to issue non-specie currency.

If one were to accept your argument, the only conclusion would have to be that the founders just threw that in there for laughs.

Incorrect, as already explained. Conversely, if we were to accept your argument that "Constitutionally, it doesn't matter what the Federal government says, if nobody within the States can legally use anything but gold or silver as legal tender" that would require reading the explicit reservation of Congress of the power to declare things other than gold or silver as legal tender as a denial of that power to Congress, which is pretty bizarre, on top of the whole confusion about what "tender for a debt" means.

Dear Bitcoin

[argStyopa]

We are uncomfortable that your fiat currency is a) starting to make our fiat currency look a little silly, and b) circumventing our ability to control the public. Please stop or we will have to get rough.

Signed,
California and the Fed

Re:'Money changers' = 'Jews'

[chilvence]

There there, of course it is. The jews, yes. We all believe you.

Changing the subject, you are doing really well for yourself, considering your mental disability. Well done.

Re:PayPal

[nedlohs]

Yes it does, but that hardly seems at all relevant.

Too big to fail or sent to jail acuses Bitcoin?

[ikhider]

Let me get this straight, the very institutions that destroy working people's pensions, use sub-prime mortgages, charge userous interest rates, rake in massive "profit" despite recessions, launder drug money for cartels, are calling bitcoin criminal? I was looking forward to alternatives to the paypal oligopoly. Before even touching bitcoin, it is first time to throw bankers into these prisons every US state is so eager to build.

if (bitcoin == money ){} else { }

[140Mandak262Jamuna]

if (bitcoin == money ){

The exchanges will/should be regulated as banks and other financial institutions.

} else {

The exchanges are retailers of a valuable commodity and pay sales tax on transactions.

}

Re:No 'run-on-the-bank' with bitcoin

[Gr8Apes]

If a dollar bank lent a dollar, they borrow one of the magically created dollars from the Fed bank, which costs them a tiny amount to borrow, and give it to you, earning money on the difference in interest rates. When they make bad loans, and have to repay actual dollars to the Fed from the tiny difference in margins they make, they collapse quickly. Hence the deposit insurance protecting a portion of the deposit is essential.

That used to be the way things worked. Now, "smart" bankers have offloaded the risk by selling those loans, so they no longer own them.

Pigs are not currency

[sjbe]

Does that mean a pig is now a unit of currency as I used it to buy goods and services (off the same person).

Probably not since the pig is not used as a medium of exchange and it is not used as a as a unit of account so it does not meet the definition of being money. (It is arguably a store of value however) While it would be possible to use pigs as currency in theory, in common practice it would simply be used in barter transactions. You can barter for goods or services. While you could channel your inner Guy Fieri and say that bacon is "money", it wouldn't be in the financial sense of the word.

Bitcoin on the other hand fits the definition of money (medium of exchange, store of value and unit of account) to the letter. Doesn't mean using it is a good idea as it is very risky and relatively illiquid. But it certainly would be accurate to describe bitcoin as a currency.

Re:Pigs are not currency

[MrL0G1C]

Money is IOUs, write an IOU for a pig, use the IOU as the medium of exchange.

WoW

[omnichad]

When is California going after World of Warcraft? Bitcoin may be the only "serious" virtual currency, but just as much "fake' money is flowing through online games.

Morons

[slashmydots]

Oh that's funny. Do they know that the bitcoin network runs itself, independent of any controlling entity? The foundation is a volunteer organization to help promote and develop the use of bitcoins. They don't actually "transmit" or touch anything. It's almost like those idiots in California heard that and then said "umm...well...I dunno umm....threaten...THEM!" and just about picked someone at random.

Re:Morons

[tftp]

Do they know that the bitcoin network runs itself, independent of any controlling entity?

No, the network doesn't run itself. People run the network; millions of people. This only means that running bitcoind will be a small crime, for which any geek can be taken in at the pleasure of law enforcement.

are consumers financial transactors?

[one_who_uses_unix]

The accusations against bitcoin could be applied to many of the citizens of the united states. Stop and think about how you have handled money over the last money - buying things for folks, getting paid back, trading small amounts of cash for services etc.

Re:No 'run-on-the-bank' with bitcoin

[Archangel Michael]

One thing to remember, as a currency, BitCoins are highly deflationary, something we haven't seen in a long long time, and I'm not sure anyone really understands the potential issues with deflationary currency. Loaning money on deflationary currency is very hard. It is one of the reasons why they got rid of the US banking system and replaced it with the FED.

Now, when you hear "Penny saved is a Penny earned*", it makes more sense.

*Poor Richards Almanac, Benjamin Franklin

Re:'Money changers' = 'Jews'

[Enter the Shoggoth]

Never forget that. It's the JEWS who are destroying your country - who runs your media, your Congress, who tells you what the 'truth' is every day on their T.V. stations, and through their (crappy) films? The JEW.

So Rupert Murdoch is a Jew eh?

The next thing you'll be telling us all is that Osama Bin-Laden was a Jew too.

When will gold become illegal currency?

[erroneus]

For a while, gold was not legal for people to have in large qualtities (The Gold Reserve Act 1934). It wasn't until 1974 that people could own gold again. How long before gold will once again become illegal?

The reasons gold was illegal are the same reasons they want to prevent BitCoin from becoming a public currency -- they don't want competition. By they, I mean the Federal Reserve Bank.

not money

[Xicor]

i think government is just getting annoyed that bitcoins have more value than dollars. that being said, it isnt money, it is the exact same thing as a virtual game currency... ppl trade it for what they want, and they set the value themselves.

When will they go after Blizzard?

[JTsyo]

They too have a virtual currency that can be used to buy virtual items or converted to real money. Probably more people playing WoW than using bitcoins. Where do you draw the line?

Re:When will they go after Blizzard?

[Shados]

The line is probably being drawn at the whole "declare the transactions while filing taxes", which Blizzard most likely does.

Bitcoin as a password cracker?

[koan]

OK I admit I don't really get what work is being done on the blocks, but it struck me as a great way to crowd source breaking encryption and cracking passwords.

What would happen

[LihTox]

What would happen if the Bitcoin Foundation just shut down, ceased to exist? What effect would that have on the use of Bitcoins as currency? And would that satisfy the "cease and desist" order?

Re:Good riddence

[thunderclap]

except the international bankers, the FED and the illuminati. No sir they don't like it. http://www.youtube.com/watch?v=cDGlN6mluGA

Not a money transmission business

[PPH]

From its website, the Bitcooin Foundation "standardizes, protects and promotes the use of Bitcoin cryptographic money for the benefit of users worldwide". I don't see where it engages in money transmission.

Mt Gox is an example of an exchange. Except they are a Japanese company, over which the state of California has no authority. And perhaps not even the US Treasurey department. The transmission of Bitcoin is being handled by AT&T, other ISPs and Internet backbone operators. It is these companies that are enabling the movement (transmission) of Bitcoin and who should be penalized.

Federal money service business regulations control

[DragonWriter]

MTGOX doesn't transfer money, it exchanges money for goods. Unless California is saying Bitcoin is a legitimate currency.

California is applying the rules of the federal regulations on money services businesses, which require state licensure of money transmitters. Those regulations -- 31 CFR Sec. 1010.100(ff)(5)(i)(A) -- define a "money transmitter" as one who provides "the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another
location or person by any means."

Bitcoin doesn't need to be a "legitimate currency" for an exchange which accepts dollars, keeps accounts in dollars and bitcoins, exchanges one for the other, and transmits dollars and bitcoins back to people to qualify as a money transmitter under the rules.

"Between or among people excluded by this section"

[DragonWriter]

If they're going to claim that the Bitcoin Foundation is engaged in the business of money transmission, wouldn't it be because they consider them to be the "operator of a payment system"

No; for one thing, I doubt very much that, insofar as it could be considered "an operator of a payment system", it would not be one that operates "between or among people excluded by this section". You seem to have skipped right over that limitation.

Re:Federal money service business regulations cont

[Archangel Michael]

"other value that substitutes for currency to another location or person by any means."

Vague and meaningless phrase that invalidates everything preceding it. Technically this part of the phrase is about "intent" and not about anything else. Because, everything can be a substitute for currency. Gold, Silver, pigs, chicken eggs. Hell, I'd classify all investment grade artwork as qualifying, meaning any art dealership would qualify.

All it takes is for a good lawyer to make the case for arbitrary prosecution to invalidate the law.

IOU != Money

[sjbe]

Money is IOUs

No, money is not an IOU though it is possible to make IOUs into a form of currency. A one off IOU is not a medium of exchange nor is it a unit of measure. It's not even clear that an IOU is a store of value since it is not fungible and possibly not predictably useful. Furthermore an IOU for what specifically? What is owed and to whom? It's possible to have IOUs become money but just writing one for a single transaction does not make it money.

Re:IOU != Money

[MrL0G1C]

Look up the history of money, the first notes where in fact IOUs for various things including gold, those IOUs then got traded and became money.

Some of those IOUs could have actually been for pigs.

Read from here onwards:
https://en.wikipedia.org/wiki/History_of_money#Trade_bills_of_exchange

Money IS IOUs, it has no other value.

Re:IOU != Money

[JesseMcDonald]

... the first notes where in fact IOUs for various things including gold ...

The gold was already money—a good used for indirect exchange—before there were notes for it. The notes just made it more convenient (while opening up a window for fraud in the form of warehouse owners issuing more receipts for gold than they actually had in storage).

From your own link (emphasis mine):

The history of money begins around 2500 years ago with the first minting of coinage in about the seventh to sixth century BC. Money is any clearly identifiable object of value that is generally accepted as payment for goods and services and repayment of debts within a market or which is legal tender within a country.

IOUs are one form of money, but not the only form.

Re:Good riddence

[scubamage]

It's from cotton and hemp plants, mostly. Not quite trees, but certainly plants.

Re:Liability is a funny thing

[Teancum]

Using Bitcoins and related software packages also becomes a political issue. It is fine to call something a public nuisance if it is something that a very small fringe group of citizens are using. It is something else entirely when a major voting block is involved.

In the time it will take for a state government to clear its throat, Bitcion will become a mainstream item where they are going to be attempting to pass laws that arrest elderly grandmothers and pre-teens using the software. That doesn't look good on the 6 o'clock news, and has a tendency of losing elections for politicians who try that kind of stunt. In other words, it doesn't even matter what "the law" says about this software, what matters much more is "public opinion" as to if it is something ordinary people should be using, as that will become the law and tell agencies trying to regulate this stuff to go to hell. It will be state legislators which will be telling these regulatory bodies where to go.... and they have the ability to stick it to them hard if those regulatory agencies don't at least acknowledge public opinion on this matter. That is unfortunately something these kind of regulatory bodies are not used to dealing with, so they may find themselves in early retirement as well.

rated s for somewhat funny

[KingBenny]

It's becoming kinda clear no one really has a problem with BTC except the space marines (once more) so when applied to something global ?
one exchange has been toppled by law so far that i know of : american ... no one actually needs the bitcoin foundation except for promotion since it's all out there and not directed by someone : consequence : american business gets hurt, rest of the world is not touched unless someone is gonna send in the marines or have people extradited for bitcoin mining. I'm a bit slow with words since summer is starting and the heat is melting whatever is left from my brain so i'll try and summarize : i see nothing but americans traditionals trying to criminalize something that hast a vast untapped potential (it could in fact come to equal the amount of money in the world right now if the last 'satoshi digit' became worth about $2 or $3k (unrealistic but it shows what's possible) and i can see them achieve nothing but hold their own geopolitical territory back from participating in it in a world that's no longer ruled by that alone.
so in fact in the long run they are hurting themselves. This is small scale but a fine example of how the old world is trying to grip with iron fist onto a world it no longer understands so hard that it's actually choking the future. From an evolutionary point of view i might (since we're into semantics and funky demagogein if its political lobbying) that a dying breed can prevent a new breed from making it, but that does not mean it will survive since by the time the new breed is necessary the old one is in fact already dead to the future so all it does is help itself into extinction by not making room for what's to come. Nostradamus signing off. Let he who has understanding etc ...