Bitcoin Forum

http://www.chicagotribune.com/news/politics/sns-rt-us-financial-bitcoitre7573t3-20110608,0,6328122.story

So what lets say they outlaw MtGox on a knee jerk. What do you folks think will happen to the Bitcoin economy as it adapts?

Man, if they do, that's idiotic.  That's like outlawing ATM's because I can take my cash out and go do something illegal with it

so they outlaw mt.gox where in the us only or world wide?
peeps transfer into bitcions, put it in their wallets and move to the next exchange.
Mt. Gox reforms in Iceland we split our BTC's between Mt.Gox and BitCoinMarket and carry on as normal

The US government won't like it, but it the same way they shut down napster but can't shut down bittorrent I don't think they can really put a cap on this.  it's too decentralized, there is no Bitcoin HQ.

I doubt they could just "outlaw" it, but i bet they could certainly tie it up in a lot of regulation similarly to what they did with e-gold (http://en.wikipedia.org/wiki/E-gold (http://en.wikipedia.org/wiki/E-gold)). However I think Mt.Gox is run from japan? So i don't know if the same laws apply.

With Mt.Gox handling nearly 95% of bitcoin exchanges I think in the short term the market would react badly (perhaps a 50%+ drop, maybe more). The #bitcoin-otc irc channel would become a mass brawl. None other the other exchanges look ready for prime time at the moment, but i'm sure a new exchange would pop up fairly quickly and the price would slowly recover (more cautious than before). Maybe instead of a new centralised exchange some clever nut will develop a p2p one.

My 0.2cent

+1

I think the closure of MtGox will depress the price to $0 for a while and then it will skyrocket up again.

If anything they could potentially slow the growth, but not shut things down.  They could make it very difficult to convert between currencies, demonize it, legislate against it, etc.

Things of that nature would really slow bitcoin down by making it less accessible to the average person.  I could see something like this happening, as the demonizing campaign has already been started.

Without an operational exchange, how could the price go to $0?  There's only a US currency equivalent as long as there is a mechanism for converting to US currency...

Resale value to anyone except hardcore bitcoiners will be near $0 on a practical level.

They won't outlaw Mt gox. That makesn o sense. They woll outlaw trade and possession of bitcoin because of money laundry and being an alternative currency. US citizens are required to use the USD. It is illegal right now.

Could you cite your sources please?

Really don't need a USD to bitcoin exchange.  Hopefully if mtgox gets shut down, then people would be more likely to offer goods and services in order to get a hand on some precious bitcoins, thus improving bitcoin economy.

The US government, and likely other world governments as well will certainly attempt to outlaw Mt Gox and Bitcoins in general.  They will likely succeed in completely shutting down or at least drastically changing the way Mt Gox operates.  I think this is why most Bitcoin transfers will ultimately be OTC or via distributed markets.  We all know that Paypal has refused to do any more transactions with Mt Gox, but you can easily transfer Paypal as either 'Payment Owed' or 'Gift' options with no Paypal protections, but also no way of them knowing what the transactions are ultimately for.  I think it's safe to say there are few big fans of big government here, and we need to work on developing alternative marketplaces/exchanges to keep the enforcement officers jumping through so many hoops that ultimately Bitcoins can stand on their own.

Regarding required use, I could not find it quickly but I am pretty sure no second currency is allowed.
Regarding laundry, look at http://bitcoinlaundry.com/. I steal money from a bank, buy bitcoins, launder them and cash out to USD. Easy.

My guess is that, in their zeal to sell fraudulent securities to foreigners, US banks and media have perpetrated the myth that they are all backed by ignorant, hard-working Americans who are forced by law to use the Dollar for everything.

Interesting, by point that alternative currencies are illegal in the US seems to be wrong. I believe it to be true in euro countries though where I live. The point about money laundering is correct though.

Oh I agreed with the money laundering part, and I know that businesses and especially exchanges have to adhere to strict laws in order to be in compliance in that regard.

I was taking issue with the bit about being mandated by law that we use the USD as our currency. I don't believe such a law exists.

I head of it a few times and it sounded plausible because an alternative currency destabilizes the primary one. If nobody uses the USD anymore the US could use their printed money anymore to pay anybody. Everyone knows that the US cannot live without increasing dept or printing money. That potentially threatens the live of a nation.

It sounds plausible sure, but until I see it in writing attached to a recognized body of our government, it is nothing more than a rumor.

TradeHill.com is probably lobbying congress right now for mt gox to get shut down.

You can save on commissions by joining TradeHill.com and using promo code: TH-R1170
https://www.tradehill.com/User/Register (https://www.tradehill.com/User/Register)

US dollars are legal currency.    What this means is that if someone wants to repay a debt and they offer you US dollars to do it, you are legally required to accept them.  However, if it is not a debt, but just an actual transaction (buying groceries for example), they are not legally required to accept USD.

Second currencies are allowed, but no one uses them for many reasons, Greshams law being one of them, but also because it is just impractical as so few people are generally willing to accept them.

As for laundering money, you are misunderstanding how money laundering works.

Using your example of a bank robber who wanted to launder his funds, what he would have to do is funnel them into a cash business as extra revenue.  They would then come out on the income statement as ordinary income, which he could then pay taxes on, and viola, laundered money.

If someone robs a bank, then buys bitcoins and launders then, then turns them back into USD, he has accomplished nothing except wasting transaction fees, as he still has a pile of cash.

Interesting points brought up in this thread.  

As far as alternative currencies in the USA, in may of this year the state of Utah passed a bill in their legislature allowing gold and silver to be used as currency.  Utah also abolished state capital gains taxes on sales of gold and silver, though the Federal tax still applies.  This is an interesting development, the question is whether Utah will be marginalized or become the trendsetter for the rest of the nation.  Greshem's law does apply, and few people will end up paying their taxes with gold and silver, but this does open up interesting options.

What I find interesting is that Bitcoin and Gold/Silver based money are both beginning to come online at the same time as hedges against the dollar.  I believe that a mix of both is a good way to survive inflation of fiat currency.  It is a classic mix of the old and the new.  Of course governments could and may ban the possession of both, as they banned Gold in 1933.  

A p2p decentralized system appears to be the only way for bitcoin to survive a crackdown on current exchanges.  Mainstream media is specifically mentioning Mt. Gox.  This could get ugly.  We live in interesting times.

Skysurfer808

Let the battle begin.  And yes, they (The US govt's stooge Schulmer) fired the first shot, whether that matters or not.

jaimedimon, that was helpful. Especially your statements about money laundering. If you pay half the price of a house in bitcoin, _that_ would be money laundering, right?

skysurfer808, I strongly believe bitcoin will become illegal for various reasons, but it still might be an alternative to gold because of its anonymity and uninterruptability features. I intend to hold any bitcoins I have when that happens for 5-10 years until an opportunity comes along that allows me to put them to use.

In the current issue of Digital Gold Currency Magazine (http://www.dgcmagazine.com/), on page 40, there is the South Carolina senate bill to allow gold/silver as legal tender. I read before that it's in the works in other states also...
 

To launder money, you take cash, and convert it somehow into regular money in the banking system, called "settled funds".  Usually to do this, you have to pay a fee to someone to launder it (someone who owns a cash business for example, like a laundromat), and also you have to pay taxes on the money.  Essentially enough of the people running the world need to get their cut, before illegal money can become legal.  ;D

When you try to buy a house, you better already have your downpayment in the bank, because if it is under your mattress, the bank doesn't know whether you earned that money legally, or from selling drugs, or whatever.  They sort of freak out about that.  It's a pretty recent change because of 9/11 and the PATRIOT act.  The banks have to do a lot of stuff now that they never had to do regarding verifying source of funds, identities, etc.

You don't need to worry about governments destroying bitcoins. You need to worry about the users of bitcoins. The users of bitcoins will destroy the bitcoin system.

To all US citizens that support Bitcoins. Although Senator Schumer and Friends are helping the publicity of Bitcoins we still need to take action. Some of you just say "Whatever I doesn't matter they can't hurt Bitcoin exchanges will always be replaced" but the core issue is that it SHOULDN'T have to be replaced. MtGox is a perfectly legal institution, Schumer is just fear mongering people and blowing things out of proportion by trying associate "Bitcoins directly with Drugs" even though Bitcoin is used for a lot more things. Although some of you don't agree with the illegality of drugs at least bare with me. Bitcoin =/= Illegal Drugs. Don't let them push some baloney bill to ban/limit the use of Bitcoins in the US. It is just a regrettable side effect of money; if PayPal just happened to be used to buy drugs and the government didn't bother to work with them to stop it, but instead just decided to stomp PayPal out we would think that is ridiculous. I don't know what lobbyist pay Schumer and Friends but this is obviously just some strong arming against Bitcoin.

Send emails to your local Senators and Representatives to Schumer and to the Attorney General explaining to them the ridiculousness of what they are doing right now. It violates the fundamental values of capitalism and democracy.

A nice preliminary step, but again I'd be very surprised if any sort of anti-bitcoin bill gets drafted, let alone gets out of committee. You can bet Ron Paul will be yammering about it forever.

Lol. I guess the proof is left to the reader.  :D


No.  Bitcoin is different from paypal and other currencies in that it is untraceable (if done right), thus it facilitates illegal activities such as money laundering, drug trade, tax evasion, assassination markets, etc.  The politicians are right now trying to get rid of cash transactions as it is, so you can bet that they will not be welcoming to bitcoin.  They are broke, and they need their tax revenue from any way possible, from any transaction between two humans.  And MtGox is not a perfectly legal institution, if you look at all the relevant laws and regulations regarding currency transactions.  PayPal is different, since it is centralized and, after being taken over by ebay, has had to succumb to all the tax reporting and other nonsense of the US govt.  PayPal has been captured.  But the great thing about bitcoin, is that it can't be captured.


Facepalm.  Yeah, sure...


I doubt that Ron Paul will have the intellectual capacity to understand bitcoin (no insult to his political career), and when his aids discovers that it is not back by silver or gold, he will ignore it.

If Mt. Gox are shutdown, there's the new TradeHill (http://j.mp/THR1222) exchange, and others are on their way…

Cheers,

Sorry, but a few hundred people writing to their representatives will do nothing. The US is run by people with money and if the big banks fear that they are being challenged, then they will use their deep pockets to lobby against Bitcoins. Unless you are someone with deep pockets or political power, you can do nothing. The only way to protect Bitcoins in the US is to bring more positive attention to it and get more people on board. Sadly, Bitcoins are not for the average user and probably never will be and that is one of the biggest downsides to it.

Furthermore, the US holds a lot of power across the globe. All it will take is for the US to tell the UK/Canada 'Shutdown "Joe's Bitcoin Exchange" or we will not export/import to/from you.' The majority of people in power are not technologically savvy and therefore have no real grasp of Bitcoins or their potential. People in power fear losing their power. People with money fear losing their money. The government doesn't give a crap about the constitution or your personal property. They've already shat all over us with the TSA and unconstitutional searches.

I'm in the US and I'll continue to mine Bitcoins because while they may not have value outside of the net, they can still be used to buy goods privately. The public exchanges will get shut down, it's only a matter of time. People that think the prices will skyrocket to >$100 are dreaming. We'll be lucky if the price hits $50 before the shit hits the fan.

Here's an article I saw today about the upcoming government crackdown:

http://economicsandliberty.wordpress.com/2011/06/07/the-coming-attack-on-bitcoin-and-how-to-survive-it/

His logic seems sound to me.

A. Freeman is spot on here:

How are you, as a company, going to pay the bills with BTC if you cannot convert them to a national currency? I don't think utility companies will be accepting BTC anytime soon. His logic is flawed.

So let's say the US gov't successfully outlaws bitcoin. What are they outlawing? An idea.
A thought and a believe that this 'coin' represents value.
Well hell, they might as well outlaw Jesus because to some he is real others just an idea.

so let them outlaw bitcoins. It will be just like the laws agains holding gold, or production of alcohol. Not going to work.

So what says i have to use it here in the states? If as I suspect, BitCoin is going to grow in acceptance, would this make a nice way for me to fund a European Vacation for the family?  I just have to use dollars or what ever fiat they declare as legal to buy tickets out of the states and use my bitcoins stored out of the US for the rest of the vacation.

just my .00066BTC

Awesome FTW association of bitcoin with Jesus!

If the government outlaws Bitcoins, how are you going to buy goods? You can't go grocery shopping with them. You can't buy a house or car. You can't pay the bills as utility companies won't accept them. The only thing you can buy is whatever is sold on a personal/private level. If Bitcoins are outlawed then their only use would be for the black market of the Internet. It's true that you can't stop people from trading them or accepting them on a private level, but you can stop/prevent companies from accepting them or turning them into a national currency.

You guys need to remember that Bitcoins haven't replaced the dollar, pound, dinar, yen, etc yet. Just because there's a market value for them today does not mean there will be a value tomorrow if the exchanges are shut down. If I had thousands of coins, I'd be selling the majority of them as fast as possible, but I only have 2, so I'm just bidding my time and keeping my eyes on the news. I'm not trying to cause a panic, I just want to enlighten people on what can, and possibly will, happen.

The comparison to Jesus is absurd at best. People aren't buying/selling goods for religion. The difference between outlawing Bitcoins and outlawing gold, alcohol or another good is that those goods are tangible and are already accepted as goods. They have value in the real world. You want to use your Bitcoins for a vacation? Sure, go ahead. What travel company is going to accept Bitcoins if they can't turn around and sell them for a national currency or gold. All they are left with is a bunch of virtual data that they can't use. It's like trying to buy a car with money from your World of Warcraft account after the government has made WoW illegal.

Good luck with that.

Funny you should say that, I've been working on one for about a month: https://github.com/macourtney/Dark-Exchange

I'm pretty close to a beta.

It's fully open source and no fees. It uses the I2P network to connect p2p, which means all connections are encrypted end to end.

Awesome!!!  I can't wait for it to be ready.  I'll donate then.

Banks are not only challenged.

They could store bitcoins saftly, give interest on bitcoins and bitcoin loans.
So they could operate as they have allways done.

Do you want in on the beta?

I think that some of what i said is being lost in the paradigm of others minds (TheVirus).
Let me eloborate to help you adjust your thinking.

IN THE FUTURE <-- Please note

Bitcoin outlawed in the US.
Bitcoin Not outlawed in the rest of the world.  <-- Please note
rest of world accepts bitcoin as payment. <-- Please note
I would spend my bit coins where it were not illegal. <-- Please note


I leave the states paying for flight in FRN's or what ever is legal in the US at that time.
I have a great time in Europe spending bitcoins, Hell i might just have to stay in europe. Got relations in Germany and Finland.

Is BitCoin a tangible? I guess it could be argued either way. Basically a bunch of 1 and 0's arranged in a fashion that create ascii readable strings that when printed out via a chain printer may look like art. So I'm going with tangible.

so i'm going with the outlawing of gold/alcohol analogy here.

If  it's an intangible or an idea or belief, It's like outlawing, Jesus , the Falun Dafa , the Dali Lama or String theory, Dilbert, gravity or the notion that the earth revolves around the sun.  Good luck outlawing that. It gonna be as hard to stop as a the Mississippi river during flood season.

This is just an opportunity for the government to make it look like it's doing something when it's really not.
maybe 200 million USD worth of Bitcoins at present.
Maybe a few thousand spent at silk road total (if it really happened, does anyone know the actual players or is this just someone boasting or a folk lore in the making) allegedly on illicit drugs.

How much is siezed each year in US FRN in drug raids? 10's of millions, How much is assumed just between US and Mexico in the cartels that are not siezed? Billions.
I think it's time we outlaw FRN's because they are a much larger problem.  

This pareto chart is outta whack.  I thought when solving a problem you tackled the largest issue first and worked you way down.  

You really think other countries are not going to follow suit with the US? Look at drug laws and copyright laws. The banks are worth far, far more money than the RIAA/MPAA/DEA. To think that the US is going to be the only country outlawing Bitcoins is further proof you have no idea about politics.

Not every jurisdiction will follow suite.
The banking system as it stands now will inflict great suffering on the people and eventually collapse in on itself.
Whether we need to wait for that moment, prepare so long, or facilitate it, I don't know yet.

Ok I am in agreement.
The US should pass laws outlawing the following so American will stop doing them.

Dealing in Illicit Drugs
Distributing Copyrighted material
Committing Murder
Embezzlment
Exceeding Speed Limits

That should solve the problem.

They could also pass laws against

taking bribes
taking pictures of Weiners
having relations with interns / pages / hotel staff against their will or under threat of dismissal

Falseness.

Groceries = http://www.bitmunchies.com/
House = http://www.builditbb.com
Car = I'll sell you my 2010 Impreza for 550 Btc right this instant. PM me if interested.

And the government can never stop people from buying pre-paid visa debit cards with btc. Thus, with a bit of effort, one can buy all of one's groceries with Bitcoins already. Regarding rent, give it some time.

Remember also that creating a business is hard, and takes a while. It's to be expected that Bitcoins will skyrocket before the vendors have the time to create the businesses. There is a lag. But, you can bet there are hundreds of new businesses being created right this moment. I'm making one myself ;)

A competitive business will never accept bitcoins unless the value of bitcoins becomes stable. Margins are too small to accept something that's value changes by 30% + in a minute.

Businesses could use BTC if they are able to hedge risk with an options exchange.

Hint.

The Bitoption Exchange has an API for value-added providers to give businesses a part-of-their-workflow method to hedge out their currency risk. You can even charge a little bit extra.



Morpheus, I want in on your beta, if you're able!

Instead of making Bitcoin illegal, governments should set up their own digital crypto currencies and compete with Bitcoin. Wouldn't that be unfair competition since the government versions would be protected by law while Bitcoin would or at least could remain legally shaky? Maybe, but then again governments serve the people (or at least that's the idea).

You guys have lost your mind
As a business accepting bitcoins requires too many steps
Step 1 wait 10 minutes to several hours for a confirmation of payment
Step 2 worry that while you're waiting for confirmations the price of bitcoins doesn't fall
Step 3 trade your bitcoins on an exchange for cash
Step 4 wait several days for money to arrive in your bank account

Please

CBD,
You are forgetting, we are in our toddler stage.
in the future what says that confirmations won't be faster? More reliable
What says you can't have a FRN,BTC,CAD or Credit Card price. They don't all have to be the same. Think gasoline in the states, Cash or Credit have different prices.
BTC prices could be based on the lower of the 30 day moving average and the current bid price. or any other algorithm you cared to create.
As more exchanges pop up, new methods to sweep cash into your accounts will become available.

Taking a long term view and the innovation of the community, we will create some spectacular new opportunities.

This goes back to my original post on here that the governments are really the last worry.
The worry should be the new user who is treating this as a gamble on the future price of BTC.
It's just like the housing bubble in the US where people had access to easy credit bought all the inventory and prices rose too fast.
Once bitcoins have a serious correction in price all the buyers will be gone.
All the get rich quick people will stampede out.

The bitcoin system is flawed
It need's to decrease difficulty as prices go up which will stabilize price because of the increase in bitcoins.
Of course you would still limit the total coins but until you hit 21 mil coins you could maintain a stable currency which would make businesses accepting it a easier proposition.
I would think the developers know this and why it doesn't work like this points to only one thing.
They don't want a stable currency they want it to run it up as high as they can and cash out. 


 

Right. If you can't trade in those BTC, are you still willing to sell your car for 550? I doubt it. As soon as Bitcoins are outlawed, those sites will close. The reason they are open now is because you can exchange BTC for a national currency. That will change if/when Bitcoins are illegal. You missed my point.

Sweet! you can buy a house too.
http://forum.bitcoin.org/index.php?topic=14284.0

So much for not being able to buy stuff in the real world for BTC.

Just Say'in

Yeah, because Bitcoins are illegal. Oh, wait, they're not, which was the entire point of this thread. Please practice your reading comprehension.

True.  Still, hasn't it been said that 1 block in 10 minutes is the optimal?  Thus it would ‘always’ take ~1 hour to get 5 or 6 confirmations for a transaction.

We could hope for a more stable exchange rate, though.

Cheers,

Exchange rates will stabilize (stop doubling every few weeks, to doubling every few months) when bitcoin reaches fair value amongst the population that is adopting it. That will probably be when they all have at least some bitcoin and can do some transactions in bitcoin. This is also the point we should see the massive growth in online offers (which will still be deflationary, but hopefully less so). But I speculate

As for never spending it:
Imagine you were one of the first people to use bitcoin in early 2010 and you mined 10000 BTC. You now have $300000 in BTC. Are you honestly telling me you folks won't buy yourself or your significant other something nice with at least some of that money ?

Regarding which countries will outlaw it I think it depends on (among others) two things 1: How successful the US gov't, which seem to be the first one out, will be, and 2: to what degree the people accepts it

This is brilliant;

http://www.businessinsider.com/the-war-on-digital-currency-2011-6

On second thought, I'll open the beta up to the whole forum. Keep an eye out for an announcement soon (hopefully in the next week or so.)

Senators Charles Schumer and Joe Manchin are trying the drug trade angle to get bitcoin banned or the major exchanges closed down.  I hate to give them any ideas, but if they really wanted to smear bitcoin and give it a bad reputation they would use the magic keywords that make most sane adults instantly lose rational thought and grab the pitch forks and torches: child exploitation material (putting it nicely).  The day the popular media reports that these low lifes are using bitcoin to trade/pay while hiding their identities, is the day bitcoin suffers a major blow.  I fear it is going to happen.  

It's obviously not the currency's fault, but that won't really matter to the general public.

I'm sure an incident is being manufactured even now....

Bitcoin might not survive but as forever-d but it, the genie is out of the bottle.

Bitcoin is LESS anonymous than the banking system. In fact I might be setting up a South African escrow clearing house to facilitate person to person bitcoin sales and one of the coolest features is that I don't need much to prove I am trustworthy except the block explorer.

Not only will the government be able to see what we do, but we'll be able to see what it does!

Eventually bitcoin or something like it will succeed in a big way.