8 ms·

Bitcoin does not pose a threat to law and order

54 points by alyrik 15y ago

throwaway32 15y ago
However bitcoin does pose a threat to the banking elite and their congressional lapdogs. A crackdown is comming soon unfortunately.
- eof 15y ago
  >A crackdown is comming soon unfortunately. Is that just conjecture or do you have some evidence? I hold bitcoin and expect it to prosper in time; I also expect a crackdown if it does succeed, but I would be very surprised to see anything soon. It's hard for them to touch: the existing currency laws certainly don't apply. The more-likely scenario of them becoming stores of value and/or securities (legally speaking) gives them little room for enforcement as there is no central issuing party to go after. I think the most likely crackdown will happen at the exchange level; but the only major one is in Japan, with new ones popping up everywhere within 6 months. Honestly, the market is so small right now I would expect nefarious market manipulation as the main course of action for at least another order-of-magnitude growth in bitcoins market cap.
  - pemulis 15y ago
    Actually, bitcoins being classified as securities might make it easier for governments to crack down on them: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 Securities are more closely regulated than commodities in the US. I'm not sure what the laws are in Japan, where Mt. Gox is located, but I expect they could find some legal pretense to raid the exchange. There may be more exchanges popping up all the time, but almost everyone uses Mt. Gox. As a result, they're holding a huge amount of bitcoins and digital cash. That makes it a major target for a raid. I wonder if they will start keeping backup servers in multiple countries, like Wikileaks? I'm not sure if that would protect peoples' digital cash, but their bitcoins would be safe in the event of a raid on the main server.
    - maurice 15y ago
      Hm, what do you mean by 'main server'?
      - pemulis 15y ago
        Wherever Mt. Gox is storing people's bitcoins (the exchange's wallet.dat) and their deposits in USD and EUR, as well as wherever trades, deposits, and - especially - withdrawals are processed. Lots of people have large non-bitcoin deposits in the exchange, and if a raid on a small number of locations in Japan can prevent them from withdrawing or result in their money being seized, that's a serious issue for the bitcoin project as a whole. Edit: Also, it looks like Mutum Sigillum LLC, the company that processes Mt. Gox's deposits and withdrawals through Dwolla, is incorporated in Delaware. I wonder if they process those transactions in the US?
  - anamax 15y ago
    > It's hard for them to touch: the existing currency laws certainly don't apply. The more-likely scenario of them becoming stores of value and/or securities (legally speaking) gives them little room for enforcement as there is no central issuing party to go after. The lack of a central issuing party isn't a problem - they can go after any point that converts them to get "real money" or provides goods subject to control. Physical goods are a subset of the latter. If you can't buy food or pay rent with Bitcoin, how much can it catch on?
- tomjen3 15y ago
  Not likely - they simply don't understand it at all. P2P? Cryptocurrency?, hash collisions?, proof of work?, public private key encryption? By the time they have gotten around to see this as anything worth wasting time on, bitcoins have either court on or have completely disappeared (most likely the latter, sadly). To mutilate a phrase Congress is not webscale, threats cannot be discovered, assessed and lobbied about fast enough to out-compete technology. And technology isn't going to get any slower.
  - iwwr 15y ago
    They do employ masses of quants, though, who can chew through this sort thing quite easily.
Duff 15y ago
The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. Until the Bitcoin PR campaign graduates from hacker news, it's at best an academic discussion At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke around with it.
- pemulis 15y ago
  The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dramatically rose or dropped in value during the short time it took you to process the transaction. You could peg your price in bitcoins to the amount of USD they're worth at a particular time at the Mt. Gox exchange, but that is even more dangerous. The Mt. Gox exchange has shown itself to be incredibly vulnerable to market manipulation by anyone with more than ten thousand dollars (which is a miniscule amount of money, all things considered). Someone could cause the price of bitcoins to crash for just a few minutes and quickly buy thousands of dollars worth of goods from your store at firesale prices. (Edit: See two posts down for the inverse version of this scam, which I think would be even more effective.) What honest bitcoin speculators don't realize is that until the volatility problems in the exchange are worked out, no big merchants are going to want to accept bitcoins. When the speculative value of bitcoins goes up, the practical value of bitcoins goes down.
  - weavejester 15y ago
    The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Well, not necessarily. You set the cost of your products to a price in dollars multiplied by the current Mt. Gox exchange rate. You could then immediately exchange your Bitcoins for dollars upon receipt of payment. Mt. Gox has an API for getting the current buy rate, and for placing a sell order, so this wouldn't be hard to automate. The only problem with this is that getting dollars out of Mt. Gox involves messing about with Liberty Reserve.
Goronmon 15y ago
Though I have some bitcoins out of sheer curiosity, I'm not sure they have much of a chance catching on. Has anyone actually spent much time on the BitCoin forums? It seems like the majority of users are either speculators hoping for a big payday down the road, or some level of anarchist hoping bitcoins will overthrow the government. This doesn't seem like the type of community that will spearhead a mainstream currency alternative.
motters 15y ago
Presently I don't hold any Bitcoins, but I think that cryptocurrencies are an interesting development, and are quite likely to be the future of money - especially for micropayment transactions. It's entirely possible that Bitcoin may not succeed, or be subjected to various kinds of political nonsense. In general though I think cryptocurrencies are a phenomena which will persist, at least so long as their cryptographic basis remains valid.

54 points by alyrik 15y ago

However bitcoin does pose a threat to the banking elite and their congressional lapdogs. A crackdown is comming soon unfortunately.

eof 15y ago
>A crackdown is comming soon unfortunately. Is that just conjecture or do you have some evidence? I hold bitcoin and expect it to prosper in time; I also expect a crackdown if it does succeed, but I would be very surprised to see anything soon. It's hard for them to touch: the existing currency laws certainly don't apply. The more-likely scenario of them becoming stores of value and/or securities (legally speaking) gives them little room for enforcement as there is no central issuing party to go after. I think the most likely crackdown will happen at the exchange level; but the only major one is in Japan, with new ones popping up everywhere within 6 months. Honestly, the market is so small right now I would expect nefarious market manipulation as the main course of action for at least another order-of-magnitude growth in bitcoins market cap.
- pemulis 15y ago
  Actually, bitcoins being classified as securities might make it easier for governments to crack down on them: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 Securities are more closely regulated than commodities in the US. I'm not sure what the laws are in Japan, where Mt. Gox is located, but I expect they could find some legal pretense to raid the exchange. There may be more exchanges popping up all the time, but almost everyone uses Mt. Gox. As a result, they're holding a huge amount of bitcoins and digital cash. That makes it a major target for a raid. I wonder if they will start keeping backup servers in multiple countries, like Wikileaks? I'm not sure if that would protect peoples' digital cash, but their bitcoins would be safe in the event of a raid on the main server.
  - maurice 15y ago
    Hm, what do you mean by 'main server'?
    - pemulis 15y ago
      Wherever Mt. Gox is storing people's bitcoins (the exchange's wallet.dat) and their deposits in USD and EUR, as well as wherever trades, deposits, and - especially - withdrawals are processed. Lots of people have large non-bitcoin deposits in the exchange, and if a raid on a small number of locations in Japan can prevent them from withdrawing or result in their money being seized, that's a serious issue for the bitcoin project as a whole. Edit: Also, it looks like Mutum Sigillum LLC, the company that processes Mt. Gox's deposits and withdrawals through Dwolla, is incorporated in Delaware. I wonder if they process those transactions in the US?
- anamax 15y ago
  > It's hard for them to touch: the existing currency laws certainly don't apply. The more-likely scenario of them becoming stores of value and/or securities (legally speaking) gives them little room for enforcement as there is no central issuing party to go after. The lack of a central issuing party isn't a problem - they can go after any point that converts them to get "real money" or provides goods subject to control. Physical goods are a subset of the latter. If you can't buy food or pay rent with Bitcoin, how much can it catch on?
tomjen3 15y ago
Not likely - they simply don't understand it at all. P2P? Cryptocurrency?, hash collisions?, proof of work?, public private key encryption? By the time they have gotten around to see this as anything worth wasting time on, bitcoins have either court on or have completely disappeared (most likely the latter, sadly). To mutilate a phrase Congress is not webscale, threats cannot be discovered, assessed and lobbied about fast enough to out-compete technology. And technology isn't going to get any slower.
- iwwr 15y ago
  They do employ masses of quants, though, who can chew through this sort thing quite easily.

Duff 15y ago

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. Until the Bitcoin PR campaign graduates from hacker news, it's at best an academic discussion At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke around with it.

pemulis 15y ago
The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dramatically rose or dropped in value during the short time it took you to process the transaction. You could peg your price in bitcoins to the amount of USD they're worth at a particular time at the Mt. Gox exchange, but that is even more dangerous. The Mt. Gox exchange has shown itself to be incredibly vulnerable to market manipulation by anyone with more than ten thousand dollars (which is a miniscule amount of money, all things considered). Someone could cause the price of bitcoins to crash for just a few minutes and quickly buy thousands of dollars worth of goods from your store at firesale prices. (Edit: See two posts down for the inverse version of this scam, which I think would be even more effective.) What honest bitcoin speculators don't realize is that until the volatility problems in the exchange are worked out, no big merchants are going to want to accept bitcoins. When the speculative value of bitcoins goes up, the practical value of bitcoins goes down.
- weavejester 15y ago
  The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Well, not necessarily. You set the cost of your products to a price in dollars multiplied by the current Mt. Gox exchange rate. You could then immediately exchange your Bitcoins for dollars upon receipt of payment. Mt. Gox has an API for getting the current buy rate, and for placing a sell order, so this wouldn't be hard to automate. The only problem with this is that getting dollars out of Mt. Gox involves messing about with Liberty Reserve.

Goronmon 15y ago

Though I have some bitcoins out of sheer curiosity, I'm not sure they have much of a chance catching on. Has anyone actually spent much time on the BitCoin forums? It seems like the majority of users are either speculators hoping for a big payday down the road, or some level of anarchist hoping bitcoins will overthrow the government. This doesn't seem like the type of community that will spearhead a mainstream currency alternative.

motters 15y ago

Presently I don't hold any Bitcoins, but I think that cryptocurrencies are an interesting development, and are quite likely to be the future of money - especially for micropayment transactions. It's entirely possible that Bitcoin may not succeed, or be subjected to various kinds of political nonsense. In general though I think cryptocurrencies are a phenomena which will persist, at least so long as their cryptographic basis remains valid.