US Begins Regulating BitCoin, Will Apply "Money Laundering" Rules To Virtual Transactions

Tyler Durden's picture




 

Last November, in an act of sheer monetary desperation, the ECB issued an exhaustive, and quite ridiculous, pamphlet titled "Virtual Currency Schemes" in which it mocked and warned about the "ponziness" of such electronic currencies as BitCoin. Why a central bank would stoop so "low" to even acknowledge what no "self-respecting" (sic) PhD-clad economist would even discuss, drunk and slurring, at cocktail parties, remains a mystery to this day. However, that it did so over fears the official artificial currency of the insolvent continent, the EUR, may be becoming even more "ponzi" than the BitCoins the ECB was warning about, was clear to everyone involved who saw right through the cheap propaganda attempt. Feel free to ask any Cypriot if they would now rather have their money in locked up Euros, or in "ponzi" yet freely transferable, unregulated BitCoins.

For the answer, we present the chart showing the price of BitCoin in EUR terms since the issuance of the ECB's paper:

Therein, sadly, lies the rub.

As central banks have been able to manipulate the price of precious metals for decades, using a countless plethora of blatant and not so blatant trading techniques, whether involving "banging the close", abusing the London AM fix, rehypothecating and leasing out claims on gold to short and re-short the underlying, creating paper gold exposure out of thin air with which to suppress deliverable prices, or simply engaging in any other heretofore unknown illegal activity, the parabolic surge in gold and silver has, at least for the time being - and especially since the infamous, and demoralizing May 1, 2011 silver smackdown - lost its mojo.

But while precious metals have been subject to price manipulation by the legacy establishment, even if ultimately the actual physical currency equivalent asset, its "value" naively expressed in some paper currency, may be in the possession of the beholder, to date no price suppression or regulation schemes of virtual currencies existed.

It was thus only a matter of time before the same establishment was forced to make sure that money leaving the traditional M0/M1/M2/M3 would not go into alternative electronic currency venues, but would instead be used to accelerate the velocity of the money used by the legacy, and quite terminal, monetary system.

After all, what if not pushing savers to spend, spend, spend and thus boost the money in circulation, was the fundamental purpose of the recent collapse in faith in savings held with European banks?

So, as we had long expected, the time when the global Keynesian status quo refocused its attention from paper gold and silver prices, to such "virtual" currencies as BitCoin has finally arrived.

The WSJ reports that, "the U.S. is applying money-laundering rules to "virtual currencies," amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities. The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000. Moreover, firms that receive legal tender in exchange for online currencies or anyone conducting a transaction on someone else's behalf would be subject to new scrutiny, said proponents of Internet currencies.

And just like that, there goes a major part of the allure of all those virtual currencies such as BitCoin that consumers had turned to, and away from such rapidly devaluing units of exchange as the dollar and euro. Because if there was one medium of exchange that was untouched, unregulated, and unmediated by the US government and other authoritarian, despotic regimes around the insolvent "developed world", it was precisely transactions involving BitCoin.

That is no longer the case, as the bloodhound of the Federal Reserve has now turned its attention toward BitCoin, and will not stop until it crashes both its value to end-users, and its utility, in yet another attempt to force the USD, and other fiat, upon global consumers as the only forms of allowed legal tender.

More from the WSJ:

The rising popularity of virtual currencies, while no more than a drop in the bucket of global liquidity, is being fueled by Internet merchants, as well as users' concerns about privacy, jitters about traditional currencies in Europe and the age-old need to move money for illicit purposes.

 

The arm of the Treasury Department that fights money laundering said Monday that the standard federal banking rules aimed at suspicious dollar transfers also apply to firms that issue or exchange money that isn't linked to any government and exists only online.

Naturally, the actual object of US monetary persecution, is BitCoin:

"We are beyond the stage where this was just funny money and a fun online thing. This is used as a currency," said Nicolas Christin, associate director of Carnegie Mellon University's Information Networking Institute.

 

Bitcoins can be used in a host of legitimate transactions—for example, website Reddit allows users to upgrade services using bitcoins and blog service Wordpress.com's store accepts them as a form of payment. Pizzaforcoins.com also lets bitcoin savers pay for deliveries through Domino's and other pizzerias.

The problem with virtual currencies is that defining what is permitted in a narrow regulatory sense, is impossible, which is why any definition will be as broad as possible: after all what better way to spook users than to make virtually any transaction borderline illegal:

Creating clear-cut rules for virtual currencies is difficult. A FinCen official said that anti-money-laundering rules would apply depending on the "factors and circumstances" of each business. The rules don't apply to individuals who simply use virtual currencies to purchase real or virtual goods.

 

The new guidance "clarifies definitions and expectations to ensure that businesses…are aware of their regulatory responsibilities," said Jennifer Shasky Calvery, FinCen director.

 

The FBI report last year said Bitcoin attracts cybercriminals who want to move or steal funds. "Bitcoin might also logically attract money launderers and other criminals who avoid traditional financial systems by using the Internet to conduct global monetary transfers," the report said. An FBI spokeswoman declined to comment when asked about the agency's concerns regarding virtual currencies.

We were not the only ones to expect imminent intervention from Big Brother:

Some firms say they anticipated the rules. Charlie Sherm, chief executive of bitcoin payment processor BitInstant, said his company is already compliant.

 

Mr. Christin of Carnegie Mellon said that he believes Bitcoin's dominant use right now is speculation.

 

"When you have a commodity or currency whose value has grown as rapidly as Bitcoin it makes sense to hold on to it as a speculative instrument," he said. It also is commonly used for online black markets or gambling sites. "Whether used for money laundering…there is no smoking gun."

As to the question of timing - why now - the answer is simple. Europe. After all, it was only yesterday that we wrote that "In Spain, The Bitcoin Run Has Started." It is self-explanatory that if such an exodus away from legacy currencies and into BitCoin was left unchecked, more and more people would follow suit, which is why it had to be intercepted as early as possible.

The jump in the bitcoin exchange rate this week also coincides with concerns euros could be taken from retail bank accounts in Cyprus to fund a bailout. Internet blogs say speculators are looking toward currency alternatives.

Well, if internet blogs say... Of course, internet blogs also say that if and when the fascination with virtual currencies fizzles, all those who are disgusted with the abuse of fiat will not cease from seeking USD, EUR, JPY, GBP and CHF alternatives, but will merely go back to the safety of having hard assets as a currency, namely silver and gold, instead of electronic ones and zeroes, which the US government, in all its Orwellian benevolence may one day, for lack of a better word, hack right out of existence.

On the other hand, the regime's desperation is reaching such a level that a Executive Order 6102-type confiscation of all hard asset currencies may not be far behind.

Because forewarned, is forearmed.

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Thu, 03/21/2013 - 21:26 | 3360113 Bastiat
Bastiat's picture

 

Surprise, surprise.

Is there any doubt now how deep the fear goes with the fiat lords.

Thu, 03/21/2013 - 21:29 | 3360133 CMURRAYR
CMURRAYR's picture

Rothbard:

This process: the cumulative development of a medium of exchange on the free market--is the only way money can become established. Money cannot originate in any other way, neither by everyone suddenly deciding to create money out of useless material, nor by government calling bits of paper "money." For embedded in the demand for money is knowledge of the money-prices of the immediate past; in contrast to directly-used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium for exchange to the previous demand for direct us

....

A most important truth about money now emerges from our discussion: money is a commodity. Learning this simple lesson is one of the world's most important tasks. So often have people talked about money as something much more or less than this. Money is not an abstract unit of account, divorceable from a concrete good; it is NOT a useless token only good for exchanging; it is not a "claim on society"; it is not a guarantee of a fixed price level. It is simply a commodity. It differs from other commodities in being demanded mainly as a medium of exchange. But aside from this, it is a commodity--and, like all commodities, it has an existing stock, it faces demands by people to buy and hold it, etc.

http://www.mises.org/money/2s3.asp

I'm not stopping anybody from bying bitcoins however. Feel free to do what you want.

Thu, 03/21/2013 - 21:38 | 3360173 Supernova Born
Supernova Born's picture

That was quick.

Ben says "Bring it on, bitchez!"

Thu, 03/21/2013 - 21:39 | 3360181 Supernova Born
Supernova Born's picture

Putting "coin" in the name was not smart.

The Coinage Clause and all...

Thu, 03/21/2013 - 21:41 | 3360193 CH1
Thu, 03/21/2013 - 21:42 | 3360199 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

old news

Thu, 03/21/2013 - 21:44 | 3360214 The Shootist
The Shootist's picture

Bitcoins are for terrorists wth ak47s.

Thu, 03/21/2013 - 21:48 | 3360237 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

one of the Tylers is really off base, this is very old news.  Al fucking Gore said he was a fan of bitcoin since then.  

Thu, 03/21/2013 - 21:53 | 3360255 labestiol
labestiol's picture

Also worth the read, the opinion of a specialized lawyer, board member of the bitcoin foundation : https://bitcoinfoundation.org/blog/?p=152

Thu, 03/21/2013 - 22:48 | 3360489 redpill
redpill's picture

Old news or not, it shows the jackboot that could crush bitcoin at any time. These assholes are ruthless, and will go after every node.

Thu, 03/21/2013 - 23:02 | 3360524 labestiol
labestiol's picture

These assholes are ruthless, and will go after every node.

Even the ones in China or Russia ?

People still have troubles understanding what decentralized mean...If governments try to shutdown bitcoin, they'll make fools out of themselves

Thu, 03/21/2013 - 23:03 | 3360534 imaginalis
imaginalis's picture

When are money laundering laws going to apply to the cheating fucks calling themselves bankers?

Thu, 03/21/2013 - 23:08 | 3360560 MiguelitoRaton
MiguelitoRaton's picture

"The sheeple are assembled in the pens now it is time to slam the gates shut." - Said every politician everywhere

Fri, 03/22/2013 - 00:02 | 3360706 labestiol
labestiol's picture

Just thought I would leave that here. A few words written by bitcoin's creator, Satoshi Nakamoto

The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what.

It's time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

 

Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.

Fri, 03/22/2013 - 01:54 | 3360894 GeoffreyT
GeoffreyT's picture

Nakamoto O-Sensei knows his shit.

Eventually the iso-perspicacity of Jim Bell's "Assassination Politics" will be similarly recognised.

Fri, 03/22/2013 - 04:07 | 3361044 AldousHuxley
AldousHuxley's picture

Gold has 7000 year history

US Dollar has US military backing

BitCoin has what?

 

 

 

 

 

Fri, 03/22/2013 - 04:39 | 3361088 StychoKiller
StychoKiller's picture

Anonymity!

Fri, 03/22/2013 - 05:47 | 3361135 gold-is-not-dead
gold-is-not-dead's picture

Bitcoin's are backed by math, and that's a bitch for all the haters...

btw... for the true fans, current mania level is at 66/100

Fri, 03/22/2013 - 09:23 | 3361575 Vendetta
Vendetta's picture

Bitcoin is backed by the alternative dollar and all the monetary abuse, fraud and corruption that is tied to it, pretty solid backing I might add.

Fri, 03/22/2013 - 10:21 | 3361866 gold-is-not-dead
gold-is-not-dead's picture

Hahahah, true, this is one of the best definitions I have ever heard, kudos man… it's backed by the fact that every government currency in the world is getting inflated pro actively...

Fri, 03/22/2013 - 10:08 | 3361781 mraptor
mraptor's picture

It will be funny if some bussnesman with some free money comes by and declare he will buy any bitcoin no matter what at ratio 1b:1$ or whatever ... anytime ... or 1 gram of gld..

Not impossible for some rich guy... it is just 21 million they have to cover forever. (OR 8 mln currently)

Bitcoin users can do it themself too..f.e. 1c on transaction from the major exchanges goes towards a fund until it reaches the 21 mln..piece of cacke..

This way it will be certain that even if they crack down there will be some fiat-value to the currency :))

it will be super funny for the economists professors complaining it is not currency to say anything !!

I wonder why nobody has tought about it ?!

It will be even easier when the currencies devalue more.. and about a crackdown it does not have to be one person on one place... you could have escrowed money from 8000 oeople for 1000$ if the price on the exchange hits 1$ this clause kick's in :(

 

Fri, 03/22/2013 - 21:04 | 3364589 Zuke Kook
Zuke Kook's picture

 

Answer:

  • the most secure electronic transactions that exist, period
  • guaranteed trust
  • guaranteed asymptotic inflation, to a maximum of 21 million BTC created by approximately 2140 (nearly 11 million already exist)
  • guaranteed against debasement
  • guaranteed against transaction cancellation
  • hacking the protocol is almost impossible, i.e. computationally very difficult
  • as much anonymity as the counterparties want
  • as much untraceability as the counterparties want
  • 8 decimal point granularity, which can be expanded further if needed (the only negotiable part of the protocol)
  • completely decentralized and distributed architecture
  • no need for a bank; you can be your own bank!
  • caters to self interest: mining participants are rewarded for their work
  • impossible to destroy without first destroying every computer on earth and/or every piece of internet infrastructure on the planet
  • transactions around the world take only minutes to complete
  • fees are negligible compared to currency alternatives
  • personal responsibility is engrained in the protocol
  • bankers, government and the collective, out; individuals, in

The only con is that Bitcoin may not survive most types of apocalypses, be it a zombie apocalypse, a dinopocalypse, alien invasion/enslavement, a worldwide EMP, full scale thermonuclear holocaust, or an 1859-like solar activity event. So there's that.

Fri, 03/22/2013 - 04:37 | 3361083 Cadavre
Cadavre's picture

"the U.S. is applying money-laundering rules to "virtual currencies," amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities. 

What is more virtual than western fiats? Money laundering virtual money seems perfectly acceptable to Holder. Between he an Alberto, it's hard to tell which one has suffered more concussions from stallion flesh hammers slamming their tonsils and snaping their heads - Holder just gave pass to HSBC for admitted laundering of 1 billion in drug cartel (DEA/CIA) money - now Holder (tween sessions of slobber  bobbing for Marc Rich's tuna sauce  nut) is gonna gonna get all puffed estrogen fluffed and girly boy tuff? Really - his plate's pretty full just hacking up lumps from his lil bo peep buns up and kneeling full bore throat throttling the white shoe boys in their noon rut.

Is the FED converting the notional principal (100 Million) underlying swap contracts to real cash when they bail or QE the subsidiary crime families (?) - ain't nothing more notional than the [fake] principal underlying a rate or currency/rate swap.

Saw a Charlie Rose interview with board dumped Greenberg yesterday (Does a mortician do Rose's makeup). It almost looks like AIG was a Goldman hit like every other bank or state collapse. Recalling history - First Glass Steeg gets repealed, using the same unimaginative tedious strategy the WZO's sayan, Chief Justice William Brandies used to blackmail Wilson into entering the US in (an almost done) WWI. Wilson, also was instructed to approve IRS and FED RESERVE ACTS to avoid public discussion of the alleged tuna stains on Wilson's Monica. Then  AIG opens a quant desk and is fortunate to acquire some Quant jocks from Goldman. A 7 Billion Dollar collateral call results. AIG is denied access to the repo window. At least Libya had access to the repo teller's window when Goldman extorted a couple of billion from them. The board boots Greenberg and puts another Goldman alumni in the director's chair, and viola', a 7 Billion buck quick fix fireballs into a 182 Billion buck tsunami. Could not see any tell of turpitude in Greenberg's description - AIG look to be - though no one saying - one of earliest Goldman "hits" (ENRON?) since god's workers went public. Included in Rose's interview were vids of Elliot Spitzer - Spitzer, OTH, giggled and sqeamed with waving docs purported as proof pos Greenberg was up to some nassity stuff - AND THEN - IN MOMENT OF CLARITY - left urs true with sense was Spitzer was part of Goldman's hit team.

Now Cypriots get their deposits MF Globaled? (it worked in the US). Cypriot's central bankster, with Cypriot Politco approval. like Greece and Libya,  make "sure to lose - but sold as winners" side bets with Goldman. As the wagers are confirmed, Goldman follows it's usual practice then shorts a position it sold to a client - then lets the deal steep - waiting for the sure to fail investments to fatten an already bloated GS extortion kitty. Thank god we got ba watchful congress and sec and E Holder protecting us from these guys.

Iceland `em - fuck the EU - let Turkey's leadership (?) has put it's shorts on backwards to join the EU with regards to their sensitivities to the white eyes in the west appetite for a yet another slimey drooley blood rut in (Syria) - shit - just do a nation swap - let Turkey take Cypriots place on the EU roster and let turks get butt fucked by Goldman's and UK Shadow Banks - simple!

CNN HLN has been moon bleating cartoon juries voting their drummed up emotions related a murder trial against Haily Page (?)- I thought she died years ago - reruns(?)

Recommended reading - "The Heaven Makers" and "The Jesus Incident" by Frank Herbert

Fri, 03/22/2013 - 01:16 | 3360824 U4 eee aaa
U4 eee aaa's picture

They consider themselves money dry cleaners so, in their minds, the rules don't apply

Fri, 03/22/2013 - 07:16 | 3361231 SilverDOG
SilverDOG's picture

imaginalis,

 

When the drug, weapons, slave traders, etc. end their IMF, Central Bank, FED, etc. money laundering.

Such will expose the ematiated ponzi spine of currencies and zero balance available within the monetary

system. Then "Hang 'Em High"

Far to many "Blue Pill" swallowers currently.

A supposed end of dirty drug money deposits, began the financial bank collapse.

A distractionary WW3 coming to a country near you.

 

Fri, 03/22/2013 - 04:54 | 3361098 matrix2012
matrix2012's picture

"Even the ones in China or Russia ?"

 

I doubt it very much that bitcoins or any other virtual currency are popular among the Chinese and Russian netizens!!! Both the Chinese and Russian understand and appreciate the value of sound money very well ;)

Fri, 03/22/2013 - 07:55 | 3361333 awakening
awakening's picture

I guess I dreamed up the entire story about RuCoin and Novacoin =/

Fri, 03/22/2013 - 08:06 | 3361357 labestiol
labestiol's picture

Well, then you should look at bitcoin on google trends. Russia has been sitting on the top of countries list for a while.

As for Chinese, unfortunately google trends doesn't help, but they probably are the biggest coutry for hashing power (look for Avalon or Asicminer).

Fri, 03/22/2013 - 08:47 | 3361453 DaddyO
DaddyO's picture

 

matrix2012,

And what sound money are you refering to?

DaddyO

Fri, 03/22/2013 - 10:38 | 3361969 mraptor
mraptor's picture

Check google trends and you will be surprised :

http://www.google.com/trends/explore#q=bitcoin

Thu, 03/21/2013 - 23:02 | 3360529 francis_sawyer
francis_sawyer's picture

@redpill

~~~

The part about the operation that BITCOINERS don't understand is the following:

Most seem to be fully immersed in the concept of INDESTRUCTABILITY... When defending bitcoin, I hear the same argument over and over about how IMPOSSIBLE it is either hack the code, or take away everyones 'wallet' & what not...

That's NOT THE FUCKING POINT...

Conventional warfare tactics don't work anymore [in a world that's connected, in an instant, by media]... All you have to do to destroy something is to 'demonize' it [or ~ make people not TRUST it]... Now ~ that being said, that is a conceptual sword that cuts both ways...

Bitcoiners will argue that LOSS OF FAITH in fiat will be the thing that makes everyone rush to bitcoin...

OTOH ~ The very moment that a bunch of people LOSE MONEY with bitcoin [think NASDAQ BUBBLE or any other bubble], TRUST in it will disappear for more than a generation...

I'll lay odds that, even considering the shaky architecture of fiat at the moment... it would be a lot EASIER of a campaign to pull some levers to get people to 'bust out' on bitcoins...

What happened to all the NASDAQ billionaires?

Thu, 03/21/2013 - 23:06 | 3360552 labestiol
labestiol's picture

People will go away, and then come back. Don't forget bitcoin is recovering from a 93% crash.

 

Fri, 03/22/2013 - 01:08 | 3360804 fonestar
fonestar's picture

Major LULZ will come from the 31.7 year old libertarian males online when the Fed has to come out and explain why it is bad to use Bitcoin. Or when the sheople come to understand that this supposedly "fake", virtual money buys far more than their "real" money and is steadily gaining in value.  Eventually the 8-bit brain will begin to realise they can merely save in this virtual currency and trade out of it when they need to pay bills, debts, etc....

 

Thu, 03/21/2013 - 23:16 | 3360586 Matt
Matt's picture

Bitcoin already had a bubble burst in 2011, and will likely do so this year. I think the difference is that, whereas with stocks, fiat money, etc, people have an expectation that it is safe since it is government regulated.

Anyone using bitcoin should be aware that it is the wild west; there is no way to reverse a transaction, no law enforcement or regulators to go to when your money is vaporized.

Thu, 03/21/2013 - 23:34 | 3360634 Prisoners_dilemna
Prisoners_dilemna's picture

Good comment Matt, but I want to twist your words a bit. "the difference is that...with fiat...people have an expectation that it is safe since it is government regulated.... and then we wake up and realize the govt is the thing to fear most. Where as in the wild west... there are no goons in uniforms acting under colour of law to steal private property. And we deal with criminals in the wild way.  We do have enforcement,  just not the jack booted, tax feeding type of enforcers most people wrongly think are there to protect them.

I'm under no such delusion.

I feel safer in the "wild west".

 

But I feel safer because I follow my own instincts. I have to look out for myself. I trust myself to look out for me much more than I trust any terrocrat and his goons.

2 weeks ago I bought BTC from a guy I looked up on localbitcoins.com. $340 for 7 BTC.  If he cheated me then I learned a hard lesson. But he didnt so I got ahold of him today. Bought 7 more for $540.    I left the money with him and went home.   Again he came through and delivered.   I'm starting to trust the guy.   I might invite him to a BBQ.    I dont need a nanny holding my hand    I'm a big boy.

Fri, 03/22/2013 - 01:50 | 3360883 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is more feel safe in flooded culvert fighting against large rodent forces for scarcity of food.

Fri, 03/22/2013 - 01:20 | 3360826 fonestar
fonestar's picture

Nope, I bet everyone of those downloaders in Cyprus, Spain, Italy is showing that app or Bitcoin client to their disenfranchised, demoralized, unemployed and now... robbed buddies and saying "this is really cool!"

I only hope they find a sense of empowerment in it and realise we no longer need the parasitic vermin who have fed off our blood, sweat and tears for centuries!

Fri, 03/22/2013 - 01:17 | 3360829 fonestar
fonestar's picture

.

Fri, 03/22/2013 - 01:44 | 3360869 GeoffreyT
GeoffreyT's picture

That's technically correct, Matt, but it's operationally only relevant for 'intra-BitCoin' transfers (i.e., transfers of BTC between one user and another within the BitCoin engine): for merchant payments there is the option of escrow.

For example Silk Road escrows most transactions until it gets feedback from the buyer that the goods have been received. Obviously sellers are therefore the ones who are shouldering delivery risk (a non-trivial risk when some of the products are - ahem - frowned upon by the local overlords).

Fri, 03/22/2013 - 19:53 | 3364401 Matt
Matt's picture

So, if you use escrow on Silk Road, what government regulator or law enforcement do you go to if Silk Road fails to insure the correct good is delivered, or fails to reverse payment?

Thu, 03/21/2013 - 23:28 | 3360617 RebelDevil
RebelDevil's picture

We are very lucky that the developers made bitcoin to mimick PMs as a store of value. (even though it is not tangible). Bitcoin cannot die! At worst case scenario, a big sell-off would drop it's price way down, maybe even back to $1, but it could never go to zero. It will gain in value through inflation of the fiat, especially when the 21million limit is reached in mining and the very slow decline of bitcoin supply begins.

Fri, 03/22/2013 - 02:10 | 3360916 fockewulf190
fockewulf190's picture

"Bitcoin cannot die!"
Actually, I always wondered what happens to Bitcoin if the sun pulls a Mr.Murphy and triggers a Carrington Effect. Of course, not only Bitcoin, but all electronicly stored "cash" would be zapped. All that would be left is paper fiat remnants and phyzz. I'll stick with phyzz.

Fri, 03/22/2013 - 04:19 | 3361064 RebelDevil
RebelDevil's picture

damn, I knew someone would bring up those solar flares! hahaha XD

Bitcoin will survive anything but that.

Fri, 03/22/2013 - 06:00 | 3361143 gold-is-not-dead
gold-is-not-dead's picture

it'll survive that as well... just do your backup on optical medium... cd, dvd, what ever...

Fri, 03/22/2013 - 11:11 | 3362151 I did it by Occident
I did it by Occident's picture

If that were to happen, it might be better to store value in useful things like bullets, alcohol, medicines, whatever.  I'm anti-biotics would be quite valuable in such an event. 

 

 

Fri, 03/22/2013 - 21:32 | 3364664 Zuke Kook
Zuke Kook's picture

"What happened to all the NASDAQ billionaires?"

During the telecom/internet boom of the 90's, companies printed several trillion dollars' worth of shares. Yes, TRILLIONS (approximately $4.5 trillion was lost by the October, 2002 bottom). Then, unsurprisingly- though not when it was happening, as far as most people were concerned- those shares collapsed in value by over 90%.

Bitcoin's rate of inflation is asymptotic. It is guaranteed and predictable, all the way until approximately 2140 when the maximum 21 million BTC will be in circulation.

The integrity of the protocol has been tested again and again over the past couple of years. There was a Ponzi scheme (Bitcoin Savings and Trust) that netted its creator over $5 million; no transactions were cancelled and no new, additional coins were created in response. Several exchanges collapsed (Bitcoinica and BitFloor); no transactions were cancelled and no new, additional coins were created in response. And the way the protocol is structured, all of the miners would need to accept and facilitate a devaluation of BTC in order for a debasement to be allowed to occur.

THAT is why the currency is so valuable and has increased by nearly 15x over, year-over-year. Well, that and the fact that governments and bankers around the world have been working overtime to either debase, destroy or steal people's personal property due to any number of criminally concocted reasons.

So, what was your comparison between Bitcoin and NASDAQ billionaries about again? Because I still don't understand your point.

Sun, 03/24/2013 - 11:19 | 3368402 gold-is-not-dead
gold-is-not-dead's picture

hehe, true man... comparing 'nasdaq-web-based-dog-hair-shops-with-previews' with bitcoin protocol is like, ehm, retarded... watch out forthcoming week, several charts look mildly speaking freakish, difficulty raised to 611 petaflops (faster than all supercomputers combined - eat that for derived value!), dividends on rigs dropped by almost 30%, wonder who's gonna dump the btcs now, hehe? Mania level 72/100

Thu, 03/21/2013 - 23:23 | 3360612 macholatte
macholatte's picture

 

 

It is a paradox that every dictator has climbed to power on the ladder of free speech. Immediately on attaining power each dictator has suppressed all free speech except his own.

Herbert Hoover

 

If you want a vision of the future, imagine a boot stamping on a human face - forever.

George Orwell

 

It is not reasonable that those who gamble with men's lives should not pay with their own.

H. G. Wells

 

Political power grows out of the barrel of a gun.

Mao Zedong

 

Thu, 03/21/2013 - 23:30 | 3360637 Money Squid
Money Squid's picture

 "I'm the commander -- see, I don't need to explain -- I do not need to explain why I say things. That's the interesting thing about being president."

George W

Thu, 03/21/2013 - 23:26 | 3360614 macholatte
macholatte's picture

duplicate

 

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