No it's not. A few senators are pressing the issue. The founder of BC is scheduled to give talks at the CIA, if they were going to bust him, they would have been more upfront then about the issue. I don't doubt that BC will be pressured by the government, but venturebeat is jumping the gun with this one.
Also, I wouldn't say he is the "founder". He is the maintainer of an open source project. The difference will hopefully keep him out of court, unlike the e-gold founder.
Gavin isn't the founder. He's the current maintainer of the open source software. The founder was Satoshi Nakamoto who is apparently no longer involved with the project.
Might be a topic of interest of a company that rivalled Paypal: 'Bullion and Bandits: The Improbable Rise and Fall of E-Gold' [0]. A guy had an ambition to have currency backed by gold rather than the Federal reserve. In his execution, he had also allowed anonymous accounts but soon had trouble with the FBI due to the anonymity.
The amount of use the US govt gets from the ability to create money out of thin air and exchange it for physical assets and services, means that any competing currency in whatever form will be attacked.
Yeah, that is actually a very relevant precedence. Anti-money laundering laws once created to control the mafia took on a whole new meaning with the war on drugs and then again with the war on terror.
Governments (rightly) understand that the flow of money is the best tracer bullet available to them.
I'm certainly no expert, but I suspect that anonymous transaction brokers (eg Bitcoin exchanges) probably do fall foul of some anti-money laundering law.
A lot of the U.S. power comes from our currency and its stability(relative to the rest of the world). To challenge this would mean an increased risk, both financially and militarily. That being said, I think instead of attacking this rising trend, maybe an open(more likely not-so-open) discussion is needed from many branches of the government and a lot of simulation to assess systemic risk.
Interesting, considering the #1 entity that's challenging the US Dollar is the government. You make it sound like Bitcoin is suddenly grounds to be concerned about the future of the dollar while the government has been pilfering its worth for decades.
A little bit off topic: I was curious if you can really do something with bitcoins aside from speculation. It turns out that there are some places that accept bitcoins. But it seems that actually _using_ bitcoins as a currency instead of a speculative asset doesn't seem like a good idea right now:
The sites seem to either try to adjust prices often, or don't. The sites that don't are hopelessly overpriced: Let's say I want the biggest vps for sale at http://lightfoot.dashjr.org/?page=vps . I can either go through the hassle of buying 49 bitcoins for ~1450$ at mtgox to pay for the vps, or I could pay 118$ directly. Even the sites that adjust the price have a huge problem: If I convert dollars to bitcoins, I would be tempted to wait a couple of days and sell on mtgox and then buy the service with dollars.
So, buying stuff with bitcoins is not the best idea right now. If you want to do something with bitcoins, buy them and sell them at a higher exchange rate later. The only problem is that we all know that this can't go on forever. Therefore, the exchange rate is bound to go down sooner or later. If that happens, we would be in a mirror inverted situation: Selling stuff for bitcoins would suck. Prices would have to reflect the overhead of continuously adjusting prices and converting bitcoins, putting them at a disadvantage against "real" currency.
Price instability is poisonous for a currency. Some aspects of bitcoins lead to excessive speculation, and therefore, prices will always be unstable, therefore, there is no incentive to use bitcoins as a way to buy or sell (legal) goods.
> If I convert dollars to bitcoins, I would be tempted to wait a couple of days and sell on mtgox and then buy the service with dollars.
Remove the "purchasing a service" element out of the equation and this still holds up -- the temptation to put money aside in bitcoins is still there.
As the service is a month-to-month thing, there's a limit on the amount of time you can wait if you did purchase by bitcoins. Also, if the price of bitcoins is going up, it's encouraging customers to pay earlier and earlier which is a good thing as most customers seem to wait until the last day (but server bills come up before then...).
No, it's encouraging the customer use an established, stable currency which doesn't force him to closely monitor the exchange rate. Usually, he doesn't want every transaction to be highly speculative.
It also depends, psychologically, on how early you got in. If you bought a bunch of bitcoins at $1 per BTC (or less), and a company is selling X for 1 BTC, you might think "Ooh, I'm getting X for just $1!" (Or if you do mining, calculate the electricity costs.) Sure, 1 BTC may be worth ~$30 right now, but you presumably want item X right now. Plus you get a physical asset worth ~$30 for what cost you in stable-money $1. (Though with the surge over the past week or so I'd agree with you on avoiding spending for that period if possible.)
No way. Say I bought 49 coins for 49$. I wouldn't use them to buy one month of vps. I would convert them to ~1400$ and use 118 of those good old dollars to buy the service, tell myself how clever I am and spend the rest on cocaine or something like that.
I believe the same Senators are trying to go after Tor as well, which is comical because Tor was originally sponsored by the US Naval Research Laboratory.
Remember when Congress tried to get encryption banned (or hobbled) too, once they realized that people other than the government could use it?
Anyway, I think they'll probably start focusing on issues the general public can understand as election season gets closer.
"I believe the same Senators are trying to go after Tor as well ... Remember when Congress tried to get encryption banned (or hobbled) too, once they realized that people other than the government could use it?"
The difference is that encryption is critically important for much of the internet's infrastructure, while Tor isn't.
So they couldn't eliminate the use of encryption without crippling the internet, while getting rid of Tor wouldn't have much of an effect on the internet at all.
Unlike other currencies, Bitcoin uses a peer-to-peer technology to manage transactions and validate payments. Since no bank is involved, purchases don’t leave a paper trail for law enforcement agencies to track criminal activity.
I'm not surprised regarding Italy (where I had to produce a passport and get myself registered in order to use an internet cafe), but Sweden does surprise me.
Actually as far as I know this is solved by using "exchanges" outside jurisdiction of feared country, where you can send some bitcoins and receive other.
Using proxies seems like the digital equivalent of using middlemen for cash transactions. If I use enough middlemen it will be really, really hard to identify me reliably. Any differences I've missed?
1. US dollars in cash has a serial number on it, the government can trace it easily because they could ask banks for the certain serial numbers to report it as a blacklist(easy, they are automatic OCR machines for it).
2.Cash is becoming less and less important, the gov prefer the credit card electronic version when people tell everything they buy(when,where and what) to the gov. Electronic currency is the future because of convenience so they do not want people to break free from the Gob(BTW as they were in the past).
3. There is no limit in the number of Bitcoins you could use before being controlled,as there are with cash.
4. There is no limit in the number of US dollars the gov can print to dilute them as they are with Bitcoins.
5. US dollars are losing value, Bitcoins are getting more appreciated.
I wonder if this is going to be Barbara Streisand moment of bitcoin. Up until now, it was largely techies who had interest in the currency. This and the ensuing media interest might take it to mainstream.
A few days after this German lobby group argued against Bitcoin the Bitcoin value (in EUR) nearly doubled. In addition, even my non-techie friends now know about Bitcoin.
There are some indications that at the moment the real limiting factor to Bitcoin's ascent is the ability to funnel USD into it: this is purely anecdotal, but I've noticed that every time a batch of Dwolla transactions clears through MtGox, BTC spikes substantially, and in between these times it does relatively little.
That's not necessarily a good thing for BTC, since it means that the theoretical unrestricted market is, in fact, heavily bottlenecked at the USD faucet. From what I've heard it's just as difficult, if not more, to get money out quickly, which means this market is effed up in all sorts of ways.
IMO, the best thing Bitcoin could do would be to enable an identity-connected sub-system that directly tied Bitcoins to individuals, so that transactions could be better tracked and regulated - the fact is, most people don't need anonymity in their transactions, and the legal shadiness of the current approach means that it's never going to be simple to move money in and out.
When BTC is as easy to get into and out of as euros or yen, that's when things will start to get seriously interesting...
I think the bitmarket.eu approach works quite fine:
The seller stores his Bitcoins at the bitmarket.eu (free) escrow service. The buyer wires the money via bank transfer directly to the seller. The seller releases the Bitcoins on bitmarket.
At least in Europe bank transfers are easily possible between foreign countries and even free (or at least very cheap) between European countries.
Saying that I wouldn't buy any Bitcoins right now. While there is a huge demand, I do not see any indication that those coins are used for any significant amount of real trading (i.e., buying services). Seems that most of those people just buy the Bitcoins due to speculation. When the hype is gone there is a very good chance that the market crashes again - if the real market does not grow with the current bubble.
I really don't see how they can regulate Bitcoin -- that's kind of the whole point. Unlike e-gold there's no central authority to take down. The exchanges could simply move to a friendly host country, much like The Pirate Bay.
The government can declare the use of bitcoin illegal. This won't stop regular users, like it doesn't stop them from using the pirate bay. But no business will be able to accept bitcoins anymore and as such bitcoin's potential will be severely limited.
My guess is that the only people left to use Bitcoins is precisely for those illegals activities... Precisely the people they're trying to stop. It's not because something isn't legal that it stops working.
When the government makes bitcoin illegal they will ofcourse claim it's to prevent child pornography, terrorism and drug selling. However the real reason will be tax evasion and the law would be successful in taking care of that real target.
The silly thing is that if they do make it illegal because some businesses won't report bitcoin profits to the IRS, that will just guarantee that all businesses (licensed or unlicensed) using bitcoin won't report profits.
Give the government a break. After all it is designed to benefit all! And without taxes -> no government. If you want anarchy, go to some country where they have civil war at the moment.
Why would a criminal want to use Bitcoin? I'm not convinced Silk Road is more than an elaborate troll. Even if it's not a hoax, Bitcoin is irrelevant and in fact less convenient than cash transactions, since they still have to get the drugs to you.
Most criminals are interested in changing dirty USD into legitimate bank balances. If Bitcoin is criminalized, it becomes conspicuous and thus less attractive to money launderers. Cash will always be preferable so long as there is a large legitimate cash economy to camouflage crime.
Another example of the intentional hype around Bitcoin, made by the holders of Bitcoins, designed to increase interest, and therefore the value of their existing Bitcoins. We are being conned, and spammed.
Bank transfer through Dwolla is easy. Of course, it takes so goddamn long that by the time you actually buy some bitcoin it's gone up 80% from when you initiated the transfer.
I know a little bit about all the rigmarole that banks and companies like paypal and amazon have to go through in order to comply with various money laundering and tax evasion laws. I'm not surprised that bitcoin hasn't done their due diligence on the subject and are now catching flack.
Whatever you call the organization behind creating bitcoin fundamentally it's still accountable, even if it's a loose, self-selecting group of open source developers.
