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US Government Embraces Bitcoin in Hearing on Virtual Currency
Daniel_Stuckey writes "Congress held its first-ever hearing on virtual currencies this afternoon, and it may have been the best PR boost bitcoin's had yet. The tone at the hearing held before the Senate Homeland Security and Government Affairs Committee was overwhelmingly positive as the panel weighed the risks of the technology that grew out of the criminal underbelly of the web, with the potential economic value of the now-booming futurist money. The prevailing sentiment over the two-hour deep dive into the pros and cons of the digital coins boils down to this: We need to uphold America's position as center of technical innovation by welcoming the new currency—but that that can't be done without government safeguards and regulations."
SonicSpike wrote in with a link to another report in Bloomberg. The Federal Reserve has no plans to regulate Bitcoin (lacking regulatory authority), but the SEC chair wrote "Regardless of whether an underlying virtual currency is itself a security, interests issued by entities owning virtual currencies or providing returns based on assets such as virtual currencies likely would be securities and therefore subject to our regulation."
Good grief.
The government embracing yet another shady economic plan!
See! If the US embraces a Ponzi scheme, it MUST be okay!
What complete and utter bullshit!
Chas - The one, the only.
THANK GOD!!!
...but that that can't be done without government safeguards and regulations
What they really mean: Congress is very excited at having found something new to tax.
IT'S A TARP!
This is how it is. Bitcoin has been rising in price massively over the last few weeks. People in the Gov knew this hearing was coming, which would spike the price. The recent increase is due to the corrupt rich and "public servants" buying in for the big explosion in coming days... and then the crash.
Think about it, governments are basically contrarian indicators to any truth or knowledge or insight. That's all I wanted to say about this: BTC can be 1,000,000 USD per coin tomorrow or it could be 10 cents. Nobody knows, there is no intrinsic value whatsoever, more currencies of this type are created all the time, that's how you have inflation in BTC (never mind that every single BTC is actually a stack of 10,000,000 coins in its own right, all of which have exactly the same intrinsic value as the 1BTC, which is to say 0).
BTC may as well be 1,000,000,000 dollars in 2 months, who knows, but without a mechanism to SHORT this coin (except by not owning it), what I mean is without a mechanism to borrow coins to sell them, there is no downward pressure at all, while so many people are enticed into this particular pyramid, feeling like they are missing out on something. The early holders of BTC may all be millionaires right now if they sell. They have everything to gain from higher prices, they won't sell and if you want to buy, you have to pay more and more.
What happens when large holders want to sell without any prior shorting in the market?
You can't handle the truth.
From watching a bit of the C-SPAN coverage, I found it interesting to note that several of the witnesses from law enforcement effectively stated that:
1.) Current regulations had not hampered their ability to pursue criminals
2.) They saw more danger from centralized currency systems based in fringe countries than from "decentralized currencies such as Bitcoin"
Then the dollar came out of the Criminal Underbelly of the real life. Please, don't give it the PR it doesn't need.
And slushfunds ?
It's the only motivator I can think of for congress to do this
So that's why BTC jumped up to $900 today, after opening around $500. I bet some speculators made a ton of cash that way.
Nothing to see here, move along.
Insider trading immunity and buzzword buzz combined with insatiably greedy wolves.
I guess I missed the happy, joyous part then. I watched the first hour and 20-some-odd minutes of this hearing, and if I had taken a drink every time they said "child pornography", I would be in the hospital now.
Ha. Now the libertarians are going to abandon it wholesale.
No fun when the big bad gubmint likes your freedomcoins.
Because everything else our glorious government tries to control turns to gold.
A reason to use it.
The problem with Bitcoin now is that it's being used mostly for speculation, not for trade. You can't price anything in Bitcoins when the price changes 30% in one day. If you accept Bitcoins for anything that doesn't have a huge markup, you can get clobbered by the price fluctuation before you get the payment converted.
Worse, the "exchanges" are very, very flaky. Over half of the Bitcoin exchanges have gone bust. Mt. Gox hasn't paid out US dollars since August, large euro payments seem to be randomly delayed, and some days customers can't get Bitcoins out. Coinbase, which is a dealer, not an exchange (you're buying and selling to and from them) will sometimes drop out of the market because they can't buy or sell Bitcoins (and actually get the funds delivered) on some other exchange. Not one Bitcoin exchange is publicly audited or insured, yet they hold customer funds.
Tradehill was going to be the "legitimate Bitcoin exchange". They went bust. Another exchange in China just disappeared last week, with the customer money. A solid exchange, registered as a broker/dealer in some reasonably legit country, would be a big step forward.
I suspect bitcoin will as valuable as Itchy and Scratchy Money soon enough. The novelty will wear off.
Bribes, prostitutes, extravagance ... all require anonymous, untraceable forms of money.
If politicians didn't require it, governments would have banned cash long ago.
If the government gives this at least a tacit pass, then I foresee a rise in electricity consumption. Those with non-electric heat should do well while they're crunching.
From a government perspective what is there really not to like about bitcoin? Circulation is self limiting and all transactions might as well be posted on the front page of the New York times.
Of course they loves virtual currency - They create $85 billions money out of thin air every month named QE,
and if they can buy $85 billions of that virtual currency named "bitcoin" and buy real stuff with it -
then that $85 billions QE is now no longer virtual !!!
its real
The hopes underlying Bitcoin rely on the belief that this currency has qualities which other currencies lack, namely anonymity and freedom from government manipulation. This hearing seems to be a bunch of government officials saying that they love Bitcoin, but the government is already getting good at figuring out who is participating in transactions and wants to figure out how to regulate it, which would be a trick to pull off without making it vulnerable to government manipulation. What is left if these are no longer credible advantages?
And that will eventually replace everything else.
Not only is it mostly speculation, but even the times when people claim it is being used for trade, like the Silk Road, it really isn't, it is being used to launder money. It wasn't actually being used because it is an amazing currency, but rather because people believed it was a way to anonymously buy illicit goods, ie launder money to pay for them.
They only legit trade uses I've seen quoted have been totally worthless: Sites that will exchange bitcoins for gift cards at places like Amazon, with a 10% or more markup (when those same sites sell gift cards with a 0% markup using standard currency).
As you say, the speculation has to go from the market if it is ever to be considered a currency. While currencies do fluctuate, they don't move as much in a year as bitcoin does in a day.
From the summary: US Government Embraces Bitcoin in Hearing on Virtual Currency
So glad that they are embracing Bitcoin. However, that reminds me of a quotation. From Wikipedia:
I felt bad for the man who had no signature, until I met a man who had no comment.
All we have is tech savvy early adopters and speculators talking up the completely imaginary and fabricated advantages of bitcoin ignoring the fact that currencies don't and can't exist in a vacuum outside the framework of rule of law with zero transparency and accountability, in the hope of inflating its value and cashing out, all in the name of 'libertarianism'.
For bitcoin to be useful as any freely exchangeable store of value it would have to exist in a legal framework and instantly lose all its delusions of anarchy and freedom at which point it has no reason to exist.
In the interim we have folks holding bitcoins but with no easy way to use it or cash out quickly spending their time astroturfing bitcoin discussions online, so this is a ponzi driven by human greed to get something out of nothing and sheer hope. Anyone with bitcoins has clouded judgement and cannot engage ion rational and reasoned discussion, a poor comment on human fallibility.
'Nuff said.
Does this collection of bits just become a collection of bits?
Am I the only one who read the headline and immediately thought this?
This isn't a work of art or something... it's designed, from the ground up, to be a currency. Trying to argue to the IRS that a mined BitCoin isn't a cash-equivalent is not going to end well.
"The Federal Reserve has no plans to regulate Bitcoin (lacking regulatory authority)." It lacks regulatory authority because it is private and has the same authority as Bank of America, CitiBank, or American Express to try to regulate BitCoin.
Lewis was injured by a Federal Reserve vehicle and tried to sue under the Federal Tort Claims Act. It was thrown out.
Search this in your favorite search engine:
Lewis v. United States, 680 F.2d 1239 (1982)
Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, J., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.
Federal reserve banks are not federal instrumentalities for purposes of a Federal Tort Claims Act, but are independent, privately owned and locally controlled corporations in light of fact that direct supervision and control of each bank is exercised by board of directors, federal reserve banks, though heavily regulated, are locally controlled by their member banks, banks are listed neither as "wholly owned" government corporations nor as "mixed ownership" corporations; federal reserve banks receive no appropriated funds from Congress and the banks are empowered to sue and be sued in their own names. . . .
Organization: alphabetical, sometimes numerical or messy
Just because the SEC think they can apply their rules to things they have no vested interest in, or ownership, does not mean the rest of us will allow it.
If they take action, they should expect a response.
I see the complaint about Bitcoin transaction history all the time in these stories. From what I can gather, there are two downsides: theoretical loss of anonymity and data storage.
So, is it impossible for Bitcoin to eventually support some form of transaction truncation, where a chunk of transactions are authenticated and then replaced with a detail-losing marker?
A) They didn't embrace it.
B) It was about the concept of electronic currency, not just bitcoin.
C) They talked about the problems with Bitcoin specifically.
The Kruger Dunning explains most post on
"...risks of the technology that grew out of the criminal underbelly of the web..." The "technology" wasn't created with a "criminal intent" but with a PRIVACY intent. It is unfortunate that that same characteristic made it very convenient for illegal trading. The same "quality" of anonymity that cash has. Valuing privacy doesn't make you a criminal. Also, I don't think the fleecing of their costumers by some e-paying services should go on unchallenged.