Bitcoins/Litecoins/Virtual Currencies

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Luthair

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Tuco_sl said:
One element of 'regulation' they're talking about it is some kind of open-network of black and red listing of stolen BTC. As in those BTC 'lost' by mtgox are marked as stolen and exchanges/stores that subscribe to this black/red network will be made aware of a marked BTC.

This, of course, goes against one of the core principles of anonymous crypto-currency transactions and would likely be a nightmare to implement. Having to deal with selling a chair for 50mBTC and having two of those mBTC be blacklisted would be a huge hassle. Everytime someone found a new way to launder their dirty coins into the system people would spend a ton of their time telling the black list network they're legit users.

One of the first BTC purchases was for a pizza for 10k BTC. And I guess virtually anyone who has a BTC or more has a small part of those 10kBTC..
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Well, they are technically stolen property so law enforcement could watch the network and seize them from the first known recipient. So any exchange or transaction processor would be wise to follow a blacklist and even knowingly dealing in stolen property itself is a crime.

Arguably its in their own self interest as well to avoid becoming targets.
 
Tuco

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Numbers_sl said:
What happens now that Mt. Gox is no more after secretly incurring massive losses? Bitcoin dead?
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We'll see. mtgox being fucked has been more or less accepted by the market for a few months now. Anytime an exchange/bank stops letting you withdraw for more than a day it's a hugely bad sign.

I think if BTC fails it's because people have accepted its inherent flaws rather than mtgox ruining what would have otherwise been a good thing. From a pro-BTC perspective it'd be nice if everything just went well, but when there's money involved people will poke at every crevice they can find, especially since the risk of failing and getting caught isn't legal problems.

Perhaps the big question is whether the BTC community is learning lessons on how to make BTC work, or learning lessons on why BTC doesn't make any sense.
 
Tuco

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Luthair_sl said:
Well, they are technically stolen property so law enforcement could watch the network and seize them from the first known recipient. So any exchange or transaction processor would be wise to follow a blacklist and even knowingly dealing in stolen property itself is a crime.

Arguably its in their own self interest as well to avoid becoming targets.
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Are any law enforcement doing that though? The federal government has the FBI, IRS and Secret Service to ensure that people are doing what they're supposed to with money, but are they even paying attention to BTC? It seems counter-productive for the federal government to spend any effort to guarantee free and honest transaction of a currency that seeks to weaken federal currency. I'd be more surprised by the FBI investigating theft of BTC than I would be of finding out that the CIA was responsible for stealing the BTC...
 
L

Luthair

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Tuco_sl said:
Are any law enforcement doing that though? The federal government has the FBI, IRS and Secret Service to ensure that people are doing what they're supposed to with money, but are they even paying attention to BTC? It seems counter-productive for the federal government to spend any effort to guarantee free and honest transaction of a currency that seeks to weaken federal currency. I'd be more surprised by the FBI investigating theft of BTC than I would be of finding out that the CIA was responsible for stealing the BTC...
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I imagine it would be treated as property (as opposed to financial transactions), it would really depend on whether MtGox reported it or not. Even if the authorities don't consider the theftvaluable, its also hacking which has its own charges. Of course it would ultimately come down to jurisdiction, if their servers and company is based in a third rate country getting global help is unlikely (though perhaps MtGox clients could get involved?)
 
wormie

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rinthe_sl said:
regulation is NOT the answer

smarter market participants are

Hopefully after this, bitcoin market participants will be smart enough to realize that they need to fix their code so shit like this malleability-related theft is doesn't happen.

The next lessons they learn the hard way afterwards, in order are:

1. Give the cryptocurrency intrinsic value.
2. Don't fuck with governments monopoly on currencies.
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Smarter market participants will never happen. First, there will always be someone smarter. Second, Joe and Jane Regular Persons do not have the time, mental capacity and desire to learn, in depth, how markets work. You are economically inclined, you understand that people specialize. And people will never specialize in markets unless they work with them directly. Since most people do not, and will not, there will always be a subset of the population which has a superior understanding of all the various markets and that subset will forever exploit the ignorant. This is where regulation is necessary. Because Joe and Jane can pay taxes which should subsidize some form of regulatory agency that will protect Joe and Jane from those looking to exploit them.

Is regulation perfect? Only as perfect as the people who write it and vote for it. So no, FUCK NO, it is not perfect. Is it superior to what the fuck just happened to people with BitCoin? Hell fucking yes it is.
 
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rinthe_sl

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I've been involved with markets since 1998 and haveneverseen market participants dumber than those dealing with bitcoin. In real world finance, what took bitcoin a month to do with MTgox, would have happened in a day.

I didn't post here yesterday, but yesterday was a nice buy the fact, sell the rumor type trade. No reason not to take another shot at all time highs from here after all the weak holders have been liquidated and will no doubt still tunnel back in on any upside.
 
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Zolek_sl said:
If that were the case things wouldn't be devaluing so badly.
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There's no point in the last few months where increasingly dour news about mtgox has severely devalued the market.

Now that mtgox is gone I think you'll see the same kind of shit pulled on other exchanges, but it'll probably be less severe and harder to do.
 
Arative

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Gox was the cause of quite a few problems with bitcoin over the past several years. I'm glad it is gone but it does suck for those that lost a lot of coins and money. Its too soon to tell if it will have a major impact on bitcoin overall. It probably will shake out those that were just looking to make a quick buck though.
 
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China and Russia banned it. Bitinstant blew up. Silk road blew up. Gox blew up. Feds trying to regulate. Yet my coins are still worth 6 times what I paid for them less than a year ago.

If Bitcoin is dying, it's taking its sweet time about it.
 
Eidal

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I have a few questions for the people skeptical of cryptocurrencies (CC). Full disclosure, I hold some CC but they're a minute part of my portfolio and its classified as 'irrational speculation' in my head.

A) I see a lot of talk about how regulation is mandatory, then people cite sources from history. What I struggle with here is that I don't think it a fair parallel. Technology and the overall "world getting smaller" movement had led to something like Bitcoin being possible. As the first event in history, is it fair to unilaterally apply what we learned about wealth and currency in the last 100 years to something this new? I apologize if I'm not making much sense, its hard for me to elucidate why I'm intrigued by this topic and I'm doing my best.

Follow-on: my thoughts regarding regulation with nothing substantial to support it are essentially: government gives free reign to the private sector and lets just see what happens. Wouldn't the demand for security lead to the creation of corporations interested in providing said security at a cost?

B) The skeptical people in the first world who look at CC and say ("Why would I want that?") are entirely correct right now. There is no benefit that outweighs the cost. But this isn't necessarily true for the rest of the world. Isn't there a substantial portion of the world that does not have access to a secure and regulated banking environment that we take for granted? I ask that as a question because my research is limited; I've read things about African countries doing a lot of business on their smart phones, and if thats true, I would assume the same paradigm exists in other developing nations.

Follow-on: Without the banking infrastructure that the first world takes for granted, could CC becoming prevalent be a boon to these nations? A method in which they can transact and store wealth without reliance upon financial institutions.

C) Remittance is large industry, and as I recall, transacting using Western Union is wildly expensive compared to CC. I'm only stating this because it might be something that those of us living in comfortable 1st world countries aren't accustomed to thinking about.

In short, I think that the demand for this technology/infrastructure/industry is real. It takes some imagination to recognize -- I've had these discussions with friends and I think that they're short-sighted because they only think about how Bitcoin applies to THEM at this moment in time. They don't think how CC (all of them, present and future) could apply to the world.

Last thought;Havelock Investments-- what do you think rinthe?
 
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Sen. Joe Manchin wants to ban bitcoins.
Dear Secretary Lew, Chairwoman Yellen, Commissioner Curry, Acting Chairman Wetjen, Chairman Gruenberg, Chairwoman White:

I write today to express my concerns about Bitcoin. This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy. For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.

By way of background, Bitcoin is a crypto-currency that has gained notoriety in recent months due to its rising exchange value and relation to illegal transactions. Each Bitcoin is defined by a public address and a private key, thus Bitcoin is not only a token of value but also a method for transferring that value. It also means that Bitcoin provides a unique digital fingerprint, which allows for anonymous and irreversible transactions.

The very features that make Bitcoin attractive to some also attract criminals who are able to disguise their actions from law enforcement. Due to Bitcoin's anonymity, the virtual market has been extremely susceptible to hackers and scam artists stealing millions from Bitcoins users. Anonymity combined with Bitcoin's ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.

Bitcoin has also become a haven for individuals to buy black market items. Individuals are able to anonymously purchase items such as drugs and weapons illegally. I have already written to regulators once on the now-closed Silkroad, which operated for years in supplying drugs and other black market items to criminals, thanks in large part to the creation of Bitcoin.

That is why more than a handful of countries, and their banking systems, have cautioned against the use of Bitcoin. Indeed, it has been banned in two different countries-Thailand and China-and South Korea stated that it will not recognize Bitcoin as a legitimate currency. Several other countries, including the European Union, have issued warnings to Bitcoin users as their respective governments consider options for regulating or banning its use entirely. While it is disappointing that the world leader and epicenter of the banking industry will only follow suit instead of making policy, it is high time that the United States heed our allies' warnings. I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.

Our foreign counterparts have already understood the wide range of problems even with Bitcoin's legitimate uses - from its significant price fluctuations to its deflationary nature. Just last week, Bitcoin prices plunged after the currency's major exchange, Mt. Gox, experienced technical issues. Two days ago, this exchange took its website down and is no longer even accessible. This was not a unique event; news of plummeting or skyrocketing Bitcoin prices is almost a weekly occurrence. In addition, its deflationary trends ensure that only speculators, such as so-called "Bitcoin miners," will benefit from possessing the virtual currency. There is no doubt average American consumers stand to lose by transacting in Bitcoin. As of December 2013, the Consumer Price Index (CPI) shows 1.3% inflation, while a recent media report indicated Bitcoin CPI has 98% deflation. In other words, spending Bitcoin now will cost you many orders of wealth in the future. This flaw makes Bitcoin's value to the U.S. economy suspect, if not outright detrimental.

The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use. The Senate Homeland Security and Governmental Affairs Committee issued a report just this month stating, "There is widespread concern about the Bitcoin system's possible impact on national currencies, its potential for criminal misuse, and the implications of its use for taxation." Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.

Sincerely,

U.S. Joe Manchin III

United States Senator



Read more:SENATOR CALLS FOR BITCOIN BAN - Business Insider
 
Big Phoenix

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Whats funny is you can edit bitcoin to words like interest rates or dollar or any other financial mumbojumbo and that letter would be just as valid.
 
Tuco

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The deflation bit was the best. "Bitcoins are too good of an investment, too many people are losing money because they aren't buying bitcoin, we must therefore ban them!"
 
Eidal

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Tuco_sl said:
The deflation bit was the best. "Bitcoins are too good of an investment, too many people are losing money because they aren't buying bitcoin, we must therefore ban them!"
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People who are smarter about this than me have convinced me how deflation is bad... that being said, holy shit that was a terrible way to try to communicate that. I can't believe none of the proofreaders didn't write a (?) next to that phrase.
 
Tuco

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Yeah a deflationary currency has all kinds of problems. That's actually one big reason I'm a little bearish on current cryptocurrency implementations. I'm so used to a currency that targets a 1-3% inflation rate that I don't understand how a widely adopted currency with a high deflation rate won't lead to non-consumption.
 
Eidal

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Tuco_sl said:
Yeah a deflationary currency has all kinds of problems. That's actually one big reason I'm a little bearish on current cryptocurrency implementations. I'm so used to a currency that targets a 1-3% inflation rate that I don't understand how a widely adopted currency with a high deflation rate won't lead to non-consumption.
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What would be the problem with some people holding it as an investment vehicle akin to gold or any other commodity and some people buying it in batches whenever they need to transact in it. People who use W.U don't usually keep a balance with them, they buy/send what they need when they need to.
 
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