Swiss Propose Treating Bitcoin Like Any Other Foreign Currency

Tyler Durden's picture

While the ECB (and the Fed) continues to warn (danger of theft), threaten (asset-ize and tax it!), or de-bunk the idea of virtual currencies (despite two of the world's largest banks apparently seeing value in the idea), the Swiss Parliament is proposing a different angle. A postulate signed by 45 (of 200) members of parliament asks for bitcoin to be treated as any other foreign currency - and examine the potential bitcoin-related opportunities for the Swiss financial sector.

Via Coindesk,

The Swiss Parliament is considering a postulate that asks for bitcoin to be treated as any other foreign currency. The goal of the postulate, introduced by representative Thomas Weibel, is to eliminate ambiguities and increase legal certainty related to bitcoin.

 

...

 

The postulate petitions the executive branch to reply to four basic questions: whether or not bitcoin represents an opportunity for the financial sector, should bitcoin be treated as a foreign currency, what regulatory instruments should be used to establish legal certainty for bitcoin and similar currencies, and what sort of regulatory changes are needed and when can they be implemented.

 

The postulate was co-signed by 45 members of parliament (out of a possible 200) after they came to the conclusion that bitcoin can create new opportunities for the Swiss financial sector and that measures should be taken to regulate the application of VAT and the execution of money laundering controls.

 

...

 

Luzius Meisser, president of Bitcoin Association Switzerland, told CoinDesk: “This would be quite revolutionary, as it provides bitcoin with additional legitimacy and could serve as a precedent for other countries. Also, it would pave the way for businesses to use bitcoins without legal uncertainty in Switzerland.”

The crucial point here, of course, is if Bitcoin is 'deemed' an asset (as EU regulators appear to want), it can (and will) be taxed; but it seems the Swiss beg to differ with that definition.

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Dear Infinity's picture

Maybe the Swiss feel threatened. Maybe the Swiss vaults of the future will be filled to the brim with QR codes and USB sticks. You never know..

Me, I'll be sticking to the shiny stuff.. currently forming a nice bottom. $20 on the horizon, before monkey hammer wednesday.

fonestar's picture

My prediction is that the first countries to officially adopt Bitcoin as their currency will thrive like no other.

Pladizow's picture

How do you say, "Co-Opted" in Swiss?

fonestar's picture

I don't think Bitcoin can be co-opted by governments, perhaps by the devs though in which case there could be a fork.

Pladizow's picture

Naive, delirious or both?

tmosley's picture

What kind of man takes pride in ignorance?

Is that the kind of man you want to be?

Bay of Pigs's picture

So you're saying it's impossible for BTC to be co opted?

malikai's picture

Yawn.

Another failed binary argument inbound.

backseatdriver's picture

It's not a tactic, it's a question, but good fucking try.

malikai's picture

Bullshit.

Anyway, I have actual real work to do, so I won't be wasting my day trying to educate you lot.

Also, I'm just tired of responding to the same bullshit inane questions by the Ignorance Army.

john39's picture

TPTB control the PM markets, the stock markets and the currency markets, but they can't for some reason control bitcoin?  ok, sure thing.

SoundMoney45's picture

Bitcoin is an asset, perhaps implicitly superior to fiat currencies, or a currency.  It is interesting that the BIS affiliated central banks believe that it is an asset.  

Bay of Pigs's picture

What? It's a simple enough question.

Nice dodge asshole.

 

malikai's picture

When the weak is losing an argument, they often resort to name calling.

Interestingly, I'm not even arguing with you.

Yep, you're credible.

Bay of Pigs's picture

I'm not arguing with anyone. I asked a question about the possibility of BTC being "co-opted"and you freaked calling everyone ignorant.

WTF, are you trolling on this topic now? Too funny.

TheCanadianAustrian's picture

Seriously guys, is it too much to ask for you to spend maybe an hour googling your questions and reading the Bitcoin FAQ?

You're throwing a hissy fit because people aren't giving you one-on-one tutoring. I find the term "Ignorance Army" to be quite fitting.

Bay of Pigs's picture

The fact that some of you guys think BTC is invincible is remarkable to some of us here. I wouldn't call that ignorance. More like a simple difference of opinion.

And yes, I understand how BTC works. I don't need tutoring. My question wasn't about that.

TheCanadianAustrian's picture

Maybe I'm just skimming the comments, but I don't remember anyone saying that it's invincible. Someone said they don't think it can be co-opted by governments. You took that as a declaration of impossibliity. I read it as a declaration of implausability.

"I don't think I can win a marathon" is not the same as "I don't think it's allowable by the laws of physics for me to win a marathon".

One World Mafia's picture

It's already been co-opted by NSA backdoors to the cryptography thru which the govt can steal new bitcoins and possibly other mischief, but when that is brought up I hear excuses why it doesn't matter that the NSA has backdoors.

TheCanadianAustrian's picture

No, when it's brought up, you hear excuses why you're just making stuff up on the spot.

It's not your fault that you don't have the time to verify things before repeating them. You're too busy holding down your three minimum wage jobs. <-- There's one of the excuses that you hear.

One World Mafia's picture

Glad you asked:

At least two NSA backdoors in bitcoin allow the govt to control Bitcoin mining.

1. Its use of elliptic curves systems for public-key cryptography. As a cryptographer said, "Prefer conventional discrete-log-based systems over elliptic-curve systems; the latter have constants that the NSA influences when they can."

http://www.theguardian.com/world/2013/sep/05/nsa-how-to-remain-secure-su...

2. NSA designed SHA-256, the Bitcoin cryptographic hash function and it can't be replaced in a backwards compatible way.

http://motherboard.vice.com/blog/what-do-the-latest-nsa-leaks-mean-for-b...

TwoCats's picture

BTC is controlled by the BTC miners.  You can't change the protocol without a majority of them agreeing.  In practice, I think it would be risky to try it (danger of a long-lived hard fork) with less than 75% intially agreeing.  The miners "vote" by deciding whether to implement the change or not.

So to co-opt BTC all a central bank needs is ... 10 PHash/sec worth of mining power.  Price tag: ~$80,000,000.  If they do it now, they don't even have to change the protocol other than to shut out the other miners.  Then there will be no other miners and they can do what they want with the protocol.

However, we would see the mining share of the current large pools get diminshed to 0, and everyone would know that BTC was centrally-controlled.  Then ...  Litecoin!

If however, the central banks don't get interested until they need several billion worth of hash power, it would take too long to build a suitable data center to house it and they would run a substantial risk of failure.

Sum total:  not impossible, but it's something we can keep tabs on.

Dewey Cheatum Howe's picture

However, we would see the mining share of the current large pools get diminshed to 0, and everyone would know that BTC was centrally-controlled.  Then ...  Litecoin!

That is exactly what will happen the minute someone smells a rat. Whether it be litecoin or someone else. People seem to forget the payment processors now accept multiple types of crypto-currency. You as a vendor don't even have to price or concern yourself with the politics of crypto-currency as long as payment processor settles the transaction in USD or whatever country currency you are using minus the transaction fee and insulating you the vendor from price fluctuations at the same time.

https://coinpayments.net/index.php?cmd=supported_coins

And you don't even have to accept all the coins they are willing to process if you don't want to.

 

It is a market out there of crypto-currencies bitcoin isn't the only game in town they just happen to be the biggest one right now. As long as there is a free market and competition so be it if bitcoin gets co-opted and corrupted it is not the coins that are the problem to undermine a whole system. There are plenty of emerging and better alternatives already out there from a technical standpoint.

tmosley's picture

Anything is possible.  The Earth could suddenly blink out of existance as all the atoms that comprise it just happen to vanish into the quantum foam all at once.  It's just that the probability is so low that you would have to wait through a googolplex of universe lifetimes for it to happen.

Is it probable?  No.  There is no single point of failure.  Or even a hundred points of failure.  Literally the worst thing that can happen is that the blockchain is attacked, which would require more computing power than exists on the non-corrupted bitcoin network.  The effect of such an attack would only be to prevent the processing of new transactions, and then only for the duration of the attack.  The cost benefit analysis really just doesn't work out, even if one entitiy or cabal controlled that kind of computing power.

Bay of Pigs's picture

Well, that's your opinion, and I can respect that point of view, if you believe that to be true. I've read lots comments here to convince me that is simply not the case with BTC.

The fact that close to 20% of BTC is locked up in 100 hands or less raises huge red flags to some here.

 

tmosley's picture

Dat double standard.

At the end of 2004, central banks and investment funds held 19% of all above-ground gold as bank reserve assets.

http://en.wikipedia.org/wiki/Gold_reserve

Bay of Pigs's picture

Huh? You are actually comparing BTC to worldwide gold reserves held by CB's? You've lost your mind.

And I don't hear anything out of you on silver anymore. Why?

TwoCats's picture

The divide here between Pladizow and fonestar is really a teachable moment here.  On the one hand you have a Bitcoin true believer who has discounted any threats to the dream of Bitcoin dominating the world (making him rich).  On the other you have a critic who doesn't understand the basic design of the thing he is criticizing, but simply takes as an axoim that anything other than Gold is a scam.  (Edit: I don't mean to imply that Pladizow is right or wrong about that, I think both points of view are partly reasonable and partly unreasonable.)

I posit that there is no way for either to enlighten the other.  However, the nature of forum threads is such that these types of confrontations are inevitable.

Long asbestos trousers.

fonestar's picture

I haven't discounted the threats to Bitcoin, it's just that I don't think there's a lot they can do about it without totally destroying the public internet.

TwoCats's picture

1) 51% attack currently costs $80,000,000 worth of mining equipment.

2) Direct multi-exchange manipulation to destroy confidence in BTC

3) Ban all banks from doing business with any BTC-handling business/individual.

4) Deep packet inspection to filter out all BTC traffic at the ISPs

(3 and 4 require global cooperation, which seems less likely than 1 or 2, depending on your view of the international banking cabal)

fonestar's picture

1) I think the 51% attack and "selfish miner" theory has been discussed to death already.  It's not feasible and even if it were it would likely lead to inflation and not destruction in the Bitcoin economy. 

2) This is a possibility but again, it would destroy confidence in Bitcoin from the dollar holder's perspective.  It would not end people trading in Bitcoin.

3) This is already happening.  My own EMT has been blocked five times in the last month.

4) This would be a monumental restructuring of the global internet from the top down.  It would require all countries and all ISPs to be onboard and would likely lead to problems with breaking other protocols as well.  I don't see this as a very likely or plausible threat.

TwoCats's picture

1) I'm not talking about a "selfish miner" attack.  The 51% attack has indeed been discussed to death and it remains feasible as long as someone can acquire 51% of the mining power.  My estimate of the cost is $80 milion, with a lead time of about 6 months to put it all together in some basement.

2) I concede only that the outcome of direct manipulation would be uncertain in the long term.  I believe it would be a devastating setback for Bitcoin in the near term (few years).

3) Yeah, I refuse to involve my bank account in BTC since they shut down Dwolla/MtGox transactions.  If just BitPay lost they banking access it would be a significant setback.  I believe if the banks were serious about stopping bitcoin, this (shutting down bank accounts) would be their primary avenue.

4) Ok, I'll concede that the filtering option is impractical.

I'm not saying that any of these are a sure-fire 100% chance of success option for TPTB.  Only that at the moment, we seem to be relying on TPTB to be too slow on the pickup, rather than the resiliance of the BTC economy.

My original comment that you "discounted the threats" was based on an earlier exchange we had, where you said that they weren't going to stop you from going "all-in".

TwoCats's picture

Hah!  They calculated the present value of future Bitcoin block rewards.  I calculated the cost of creating 10PHash/sec of compute power.  IF their assumptions are correct, then they have only proven that mining is still profitable.  However, their assumptions are not correct, and IMO mining is a marginal activity.

mmanvil74's picture

Interesting points about the potential weaknesses of Bitcoin - all of which are valid but unlikely.  I think the larger picture is that under any sort of major threat to Bitcoin, money could and would flow into other crypto currencies until one (or more) ultimately succeeds.  The invention itself is too powerful to simply go away. Crypto geeks would create another Internet if necessary, and indeed I think the concept of an encrypted Internet is already on the table.  At the heart of it, I doubt world governments could agree to impose coordinated restrictions, which is the primary weakness of Bitcoin in my view.  You'd have to get Russia, China and other big players on board, none of which are likely to mind a little thorn in the US Dollar's side.

Dewey Cheatum Howe's picture

My estimate of the cost is $80 milion, with a lead time of about 6 months to put it all together in some basement.

Sounds like something Chinese government could and might just attempt. I would imagine if that happened you'd be able to out which government is behind it if not the specific agency. To pull something of that size off would most likely require a major actor. Follow the money in ASIC miner sales........ Though I imagine someone pulls a stunt like that the blow back in bad publicity may not be worth it and the victory becomes pyrrhic at best since not all coins out there are vunerable to that attack.

ElvisDog's picture

Latest bitcoin daily chart:

http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv

Looks like it dropped about $100. But I'm sure it's on its way to 6 figures real soon.

tmosley's picture

1) Remember that $80,000,000 worth of mining equipment quickly becomes $Infinite worth.  There isn't that much AISC manufacturing capability in the world.  The Feds would have to build their own manufacturing infrastructure first.  To say it will cost $80,000,000 is just inaccurate.

2) is impossible without first buying up a lot of bitcoins, which would be extremely counterproductive.  Leverage in that market is hard to come by.  You can make a "paper" bitcoin market, but I don't think anyone would trust it, and they certainly wouldn't allow the price to be set there.

3) Bank participation isn't really neccessary.  People settling the frontier didn't need mortgages, neither do bitcoiners.  They can be bought locally, or you can offer something to trade for them to get into the system.  That would only limit speculation, which would probably be a good thing.  We want to replace the current financial system, not chase hot money (well, most of us).

4) >Not encrypting your traffic 

Thanks for the actual valid criticisms, though.

The only thing that I really have any fear of with regard to bitcoin is the potential for quantum computing to render individual wallets vulnerable to theft.  That is sci-fi, for now at least.  Anti-quantum methods would probably be written into the protocol pretty quickly if that became a problem.

TwoCats's picture

1) There isn't $80M worth of ASIC capability in the world?  We are only talking about <100K dies, in an immersion cooling bath of course.  FoxConn makes more chips than that while Tim Cook eats lunch.  I will point out my own flaw though.  It would require having spent the $80,000,000 six months ago, and today would be more than that, because you need to equal the power of the mining community 6 months from now.

2) The FBI already has Dread Pirate Roberts' stash to work with.  The point of manipulation without a paper market is you concentrate existing selling into narrow time windows that overcome the bid stack.

3) I would love as much as you for a monetary system to be free of banks, but for now, every merchant I have heard of is using a bank account, even my local traders do.  Perhaps post-apocalypse we can resettle and not be in debt up to our eyeballs.

4) You are correct that encryption would defeat any filtering attempt (short of actually breaking the whole Internet).

 

StackAttack's picture

5) Everyone seems to forget that BTC could also be targeted, manipulated, and possibly destroyed in the same manner that is being used to manipulate the gold and silver markets.  *They* could setup exchanges to buy/sell futures contracts for BTC, but allow settlement in cash without requiring the seller to actually deliver the BTC.  Then, they can do the same shenanigans they currently do with gold and silver.  No special crypto knowledge and hardware required and they already understand how to do that.

On another note, I am also tired of the binary approach that some of the pro-gold/anti-BTC folks here take that you are stupid to buy BTC.  I only spent some of my spare funny money on some BTC way back and now it has appreciated by about 900% (in dollar terms).  I know that my BTC could be worthless tomorrow, and I would accept that as a loss.  But, when trying to keep ones eggs out of a single basket, it is stupid to ignore a basket with the potential of BTC.  If you have a couple thousand eggs, why not put one of them in the BTC basket.  Just makes sense to me.  As a hedge against currency collapse, I believe that BTC has value just as gold and silver do.  If BTC does grow into even a fraction of the potential that I see in it, then it will appreciate alot more.  That is why I am holding it.  I know it is a bit speculative, but I am not banking on it, by any means, I am hedging with it.  I am hedging against currency collapse with it, just as I do by holding gold, silver, copper, BTC, real estate, and even some stocks.  Of course, I also have USD to be able to do day-to-day business.  (The one thing I am totally avoiding is government debt, as that is the bubble of all bubbles and serves no purpose for me.)

Dewey Cheatum Howe's picture

I say if nothing else currency or not argument things like crypto-currencies are at least from a collateral and transactional standpoint for commercie that they are fungible to digital cash aka EUR/USD/CNY when they reside in the same digital realm. I think the free market has been pretty clear on that considering the demand.

With that said if it walks like a duck and quacks like a duck.......

As far as the basic design goes the real prize is the idea of the blockchain and underlying mathematics that allow for it be distributed and processed in a parallelized way. For a payment processing system it can be scaled up to be searched and sorted and keep track of transactions for extremely large m x n matrics since it is a variation on a markow chain and it is sequential nature. Bitcoin's blockchain implentation is far from perfect but it is a 1st gen attempt at it in the real world. Bitcoin fanbois need to realize you are only the first step in the evolution here not the whole game. It is more than the coin aspect. That whole idea of a block chain and distributed ledger has plenty of applications. There is anonymity issues to work out plus scalability and distribution a large scale ledger. It can be done though, google has already proved that with markhov chains, that is basic underlying math of their search engine taking links, putting them into a directed graph then in turn into an M X N Markhov Chain Matrix and searching and sorting that by breaking the matrix into smaller chunks for machines to work on and store each chunk in parallel.

The biggest issue with bitcoin's blockchain besides the scalability issue is the that companies like coinvalidation are working to undermine the fungibility of bitcoin because the blockchain is not truely anonymous.

Some of the alt coins are working on this very problem with blockchain implementations they are rolling out.

Stablecoin is a good one for people who want to read more how they are implementing something called coin mixing.

http://54.242.128.134/stablecoin.net/#mixing

 

Don't put too much into bitcoin as brand because that can be lost over time as things evolve at it loses market share especially if it doesn't keep up with progress being made competition in this arena. The underlying technologies and math though are here to stay regardless and there will be growth taking and tailoring it for new services and such and not just in the financial services industry.

Some more reading on this from a technical standpoint.

https://en.bitcoin.it/wiki/Block_chain

And some non-financial applications.

https://en.bitcoin.it/wiki/Alternative_chain

And some hardcore mathematics about block-structured markhov chains. This for discrete chains.

http://people.math.carleton.ca/~zhao/research/pstexfiles/mam3/mam3.pdf

 

Dewey Cheatum Howe's picture

And a simplier reason follow the fucking money.

http://coinmarketcap.com/ripple.html

bitcoin alone right now based on the current exchange rate to USD is valued at just a hair under ~10B right now.

That is not small potatoes and any big player would want a piece of that market selling transaction services.

That is only bitcoin the whole market cap for the 51 coins and services like protoshares right now is at $13,409,015,335.

That is big enough numbers to get the big boys interested.

ParkAveFlasher's picture

All I can say is, God Bless the Swiss, if only for throwing a monkey wrench in to the current machinations geared against peer-to-peer accounting. 

i-dog's picture

Here is Rupert Murdoch's latest propaganda on Bitcoin:

http://www.news.com.au/finance/business/the-seedy-bit-why-people-are-getting-naked-for-bitcoins/story-fn5lic6c-1226784071411

"BITCOIN is the currency for the seedy side of the internet.

 

Bitcoin is the world's first decentralised currency which uses no banks and leaves no paper trail, making it a favourite among trolls, internet gangsters, and users of porn. [Fonestar?]

 

It recently hit a high of $US1000 in value - and some are attributing this sudden boom purely to the online sex industry."

That should get the moms and pops on board!!

Pseudonymous's picture

making it a favourite among trolls

So they are speaking about themselves, after all?

malikai's picture

I'd give it a 3/10.

It's basically on the same bar as recent MDB crap. (+pics of kinda gross chix)

You'd think they would find better looking pictures and stories..

outamyeffinway's picture

And I say, "Hey Murdoch, you seedy FUCKER! Tap any phones lately? STFU!"

ParkAveFlasher's picture

Here I was thinking that internet porn peddlers, smugglers, et al. used dollars.

Pseudonymous's picture

There must be at least three different ways to say it. Still, saying is one thing and doing is entirely another thing.