Ask Slashdot: How Does One Freely Use Bitcoin In the Land of the Free?

New submitter devrtm writes: It appears that Bitcoin, a currency designed with anonymity in mind, can be effectively used almost anywhere in the world, except in a few countries where it is regulated, and in one country where you can only use it if you give up your privacy. That country is the United States. I have accumulated quite a few BTC from the currency's early days where block rewards were still at $50. There was a period of time where one could get a nearly anonymous debit card, or use BTC online with merchants. Nowadays, non-U.S. payment providers no longer issue debit cards to the U.S. residents and the U.S.-based merchants accepting BTC are nearly extinct. The only way to use BTC in the U.S. is to convert it to USD. Unfortunately, that conversion requires giving up your personal information to a U.S.-based BTC payment processor, and there are rumors that signing up for those services raises red flags with certain three letter acronym organizations. I have nothing to hide, but I do value my privacy. Can one freely and anonymously live off of their Bitcoin wallet in the U.S.? I am afraid the answer is no. Does anyone have an experience that proves me wrong? Please share.

Comments

Was NEVER meant to be anonymous

[Anonymous Coward]

"It appears that Bitcoin, a currency designed with anonymity in mind..."

FALSE.

Bitcoin was NEVER meant to provide anonymity. Can we please stop with this misconception?

Re:Pay your taxes

[Enigma2175]

The IRS considers bitcoin an asset, if you are selling bitcoin or bartering it for goods you are subject to capital gains tax on it, just like any other appreciating asset. It's got nothing to do with the Federal Reserve. Bitcoin rising in value isn't inflation of a currency, it's the market attempting to price the future value of an asset, same as with a stock.

Privacy : cash is better than bitcoin

[DrYak]

And for the last time,
bitcoin IS NOT DESIGNED with anonymity in mind.

It is designed for being a distributed system with no central authority (in theory at least).
And this system works by replacing any central authority with a consensus among all the nodes of the network.
Which is achieved by all (full) nodes of the network having, by design, a local copy of the whole ledger (= the blockchain).

That mean each of them can see any single transaction you did at any point of time.
(Again, by design. That's how the bitcoin protocol can reach consensus and trust without needing any central authority to act as a reference).

That means that no, you're not anonymous, I can see all the transaction you ever did inside the blockchain on my own locally run node.

At best, bitcoin protocol provides pseudonymity.
It's not Facebook require real names.
Transaction aren't officially done in the name of your real identity, they are done in the name of some base64 encoded public key.
And normal client are constantly shuffling sums around so there might be hundred of transaction between the time you received some amount of BTC and the time you spent them at an online shop where you order something to be mailed to you (and thus where some phyical world coordinates can be linked to your bitcoin identity).

That mostly prevent casual/accidental snooping.
But that's not beyond the capability of data-mining any government-level agent.
If your neighbour want to spy on you, he can't do it easily.
If any three-letter agency wants to track you, they just need to spend some of their tremendous computational power.

Your are not anonymous on the bitcoin network (at least to to governments).
And that's part of the design (it also help you trust the network without needing there to be a "Bitcoin Global Inc." to be held accountable).

Also, because the lack of central authority, nobody can prevent you to spend or receive any BTC money.
Government can see you and track you in the global ledger, but they can't prevent you.
There's no PayPal, Visa, or any other company that can block transactions.
Transaction can happen between any end-points as long as they conform to the bitcoin protocol.

(And that is one of the big motivations behind the rise of bitcoin protocol : people getting fed up of their account getting frozen for any random reason.
e.g.: see donations to WikiLeaks)

If you want (Relative) lack of control AND total anonymity, as suggest above : USE CASH.