Bitcoin Forum

I cannot believe this has not had a significant upward effect on the Bitcoin price. The entire online payment systems network that isn't bitcoin or paypal-ish has been utterly destroyed with the shut down of Liberty Reserve.

Its not just Liberty Reserve. Its all the exchangers that went with it.

If I have money in one of the centralized e-currencies like Perfect Money. How am I going to get it out, exactly? There is no easy way. Aurumxchange is there, thats pretty much it. And it only exchanges, it doesn't allow redemption for a Bank Wire. I have to take multiple steps to get from something like Payza (paypal-ish) to Bitcoin. Egopay has gone derp and won't let anybody log in. Perfect Money won't allow US Residents to use it.

Online payments as of now are basically dead unless you are using an e-currency like Paypal with built-in consumer 'protection'. Other than Bitcoin, that is. How are people not making the switch? Is it because all the exchangers are dead? When the wires suddenly start clearing, will the Bitcoin price go on some crazy jump upwards? Or are people just freaked out of online payments entirely and are leaving?

Times are changing ...and changing fast.

With change comes a roller coaster. Hang on.

Its downright insane. I never thought I'd see anything quite so insane as this. They literally shut down every single exchanger that was remotely trustworthy that allowed you to buy Liberty Reserve. Thats insane.

While this can be good for Bitcoin, I weep for humanity.

This is very very bad for bitcoin because it means bitcoin is next.


Well not bitcoin directly but any bank or service that deals with bitcoin could be shut down at any moment.


How much do you thnk bitcoin would be worth if you can't exchange fiat for it?

If no one can put money in to buy bitcoin then the price won't be going up anytime soon.

A lot more. Artificially repressed supply means price will go up, and I fail to see how repressed supply AUTOMATICALLY leads to lower demand. People didn't stop buying drugs because the government made it harder to buy them; people didn't stop downloading torrents because a few torrent download sites were shut down. And bitcoin is a heck of a lot more intrinsically useful than drugs; I'm sure even the silk road cocaine addicts among us would agree.
Just because supply is repressed doesn't mean people will automatically go "oh darn, they're harder to get; all of a sudden I don't want them anymore."



PLEASE FOLKS, follow your logic through. If the goobermint shut off legacy banking access to bitcoin (closed down exchanges, bank wires, funding options, etc) this means that people can't easily get fiat into exchanges - but it also means people can't easily get fiat out of exchanges. There wouldn't be a significant imbalance, and certainly not on the sell side since the last thing large holders want to do is pay 20% of their fiat profits in capital gains tax.

Not only will you have to resort to localbitcoins or IRC-OTC/escrow to buy bitcoins, you would have to do the same to sell them. Not a significant imbalance.

Plus, bitcoin has anti-fragile properties. This means that the more it is attacked by goobermints, the more appealing it becomes to those trying to escape tyranny.
Some people think that Bitcoin will only succeed long-term if Grandma can go to the gas station and buy cigarettes and petrol with bitcoins on her iPhone. I say phooey!

This, again, still, RLY??   :o ::) ;D
+1 Ashley

I feel like we've had this discussion before. Yes, you won't be able to get fiat in or out of exchanges. That means volume would fall drastically. People would no longer be able to spend their bitcoins on anything and so they would look to change it into fiat as quickly as possibly (perhaps they'd use localbitcoins). But few people would be buying bitcoins because they know they are going to be hard to sell. Bitcoins would cease to be useful as a currency. And it would cease to be useful as a store of value. Therefore, the price would crash.

Yes, it would continue to be appealing to those trying to escape tyranny but that is not what has been driving the price the past 6+ months. If the govt attacked bitcoin, we'd lose the general public, we'd lose the startups, we'd lose the institutional investors. BItcoin would go back to the sub-10$ range.

Recall that bitcoin has gone up with governments attack fiat (like in cyprus). If governments attack bitcoin, fiat (and gold) are likely to go up in response.

Here is a little thought experiment for you:

Let's say the government shut down all the methods to get fiat in and out of the bitcoin exchanges but the exchanges themselves weren't touched.

Let's say that there was only one method you could move cash in and out but you were limited to $10 a day. It was still free, instant, and unlimited to move bitcoins in and out of the exchange.

What do you think would happen to the price?

Even if bitcoins were very desirable, eventually the price would plateau because there wouldn't be enough fiat in the system to boost the price up. When the last dollar that could be sent to the exchange that day was spent, there would be no one to buy your bitcoin that you had for sale and the market would stagnate and price would crash.

Also remember that there are 3,600 bitcoins mined each day. There needs to be enough fiat added to the system to balance out these bitcoins. Otherwise there will be an excess of bitcoins and a shortage of fiat causing bitcoins to crash relative to fiat.

In other words, it is essential that we be able to move fiat into the exchanges to keep the bitcoin market working and keep the prices stable and high. If the US govt were to attack bitcoin, they'd focus on the how the banks send and receive money from the exchanges and they'd block that. And we'd be in the hypothetical situation I described above.

Sorry to bump into this thread but this is all from Americas point of view.
In Europe there are still no problems getting funds in or out, even instantly.
And when Europe starts a more aggressive approach, btc will just move on.

This assumes a fixed userbase, and doesn't address OTC sales.

At a glance I can see people selling their $10 a day exchange quota for a profit.

previous LR users are looking for a better payment system. PM and WM are possible alternatives, except they may both share LR's fate one day. HD Money is another site that I recently learned about, some people say exchanges will accept it soon. looks like a scam to me. Bitcoin is a possible alternative, but many people don't like BTC due to the volatility.

I don't see Bitcoin becoming a real alternative to LR any time soon.

bitpay.com and mtgox.com are NEXT

imagine how much money is being laundered through them... must be hundreds of millions

As steamboat so aptly pointed out - mgio - your bitcoin crashing doomsday scenario assumes a lot. First, you are totally obviously extremely AMERICAN. There are many countries that have not attacked their exchanges, many countries whose funding options have not been affected, and many countries that did not have any fancy funding options in the first place.

And yes, you assume centralized exchanges are the be-all end-all of Bitcoin price. There is a thriving market on Bitcoin-OTC. I can find someone, verify through WoT, and buy bitcoins through any one of dozens of payment methods. It's not hard to learn how this works. If people were willing to install a client, wait a week for the blockchain to download, learn how bitcoin works enough to trust it - they're willing to sign up with WoT and transact with individuals with good community reputation (in the same way that now, you interact with incorporated exchanges that have good community reputation.) In fact, I would imagine that the float rate is much higher for individuals, so that you have less of a chance of losing your money in an exchange shutdown using that method.

Should exchanges fail, there is no doubt you'd see a divergence from the "official" MtGox price and the ask price on IRC-OTC and similar exchanges. Feel free to bash OTC as an unrealistic risky alternative that no one will ever use... we'll see about that  ;)

http://i42.tinypic.com/5zird0.jpg
EDIT: Oh yeah, Technocash (australian payment provider) is disabling payments to MtGox as of June 15. Another one bites the dust (or, rather, gets out of the game before being forced to bite the dust by goobermint regulators.)

In fact, 'the next one' here is WM-Center (http://www.coindesk.com/wm-center-bitcoin-exchange-seized-by-u-s-government/).

Well, as they did in the past for a few sites they can't seize because they are off-shore, they seize the domain name (so people can't go to that site anymore).

Another reason why no-one should use a .com, .net, .org or other TLD that are under U.S. control.

The real risk to price is if we can't decide on a benchmark exchange rate. It's effectively MtGox now, but if the volume decreases for whatever reason and a mix of other exchanges (large, small, local, etc) start taking over, what will sellers decide to use as the benchmark? What will Bitpay use? Will it be a volume-weighted average price? If the community can't decide on a consistent way to track exchange rates, the price will plummet because sellers won't have a lot of faith that they can exchange BTC for local fiat.

On the plus side, all it takes is one major or semi-major economy to allow their currency to be exchanged to BTC, without crazy fees for fiat-fiat transactions. Even if it's impossible everywhere else to do BTC-fiat, one passthrough will be enough to establish a price.

I don't where conspiracy theory starts in what I am about to say.

AFAIK it seems to work a bit like this. I'd like to know a more accurate view of how it works.

The USA tends to lead the world in everything. It's still very dominant. AFAIK laws tend to be formed in the US usually under pressure from a cartel and very powerful interests and companies. This then gets exported off to the UK, pushed into the UK and then to the commonwealth and former commonwealth (like Australia), somewhere along the lines countries which have less obvious ties, less historical ties then may follow suit; countries like Chile.

Meanwhile you still have countries which don't follow suit. Argentina, Iran, China and so on. These countries could carry on using Bitcoin... but would they and would they be enough? - would they be enough to support and at what price?
Looking at where the trade is Bitcoin is still very much in the influence of the USA.

https://en.bitcoin.it/wiki/Bitcoin_Map
http://www.thegenesisblock.com/mapping-bitcoin-adoption-a-global-perspective/

The significant ones look like China & Russia. If it wasn't for this I would be more bearish. Seems amazing there's not more Bitcoin in South America.

Has anyone got a better view of how politics tend to fan out around the globe? I'm no expert, just the impression I get from the news and propaganda.

I guess countries not aligned with the USA could attack Bitcoin independently of course but my point is that the USA is a big question for Bitcoin - we are expecting the USA to attack it and when that happens we can expect many but not all countries to follow suit.

I think the large dumps we are seeing lately are from people (large investors) fearing that they won't be able to exchange for fiat in the near future.

So, imagine if this intensify.  Basically I think the U.S. has every reason to destroy Bitcoins taking the least actions possible, just by letting FUD do it's work...

For sure, if you can't exchange BTC for fiat, then BTC is worthless (monetarily speaking).

This.

If the US attacks Bitcoin it will be a historic buying opportunity for people in Non-US-aligned countries. It will also be an opportunity of geopolitical magnitude for developing countries to break the US hegemony.

Just imagine if China and Russia were backing a currency outlawed in the US. By shutting down US-based services, the services would just move to other countries and the US government would lose what little influence they have over Bitcoin atm. One could easily and anonymously connect to a Chinese-hosted e-wallet through a VPN on a mobile and use it to transfer funds without government being able to step in. It would be the perfect currency for anti-government people in the US to use as a means of exchange and also a new way for the Chinese to make money from subverting the US government. If the US tries to criticise China for this, China could simply claim it's a matter of freedom of speech as Bitcoin is simply code...the US would look fascist whereas China would look increasingly liberal.

As for Europe, one thing is influencing the individual national governments of NATO member states, but another is to convince the European parliament of a blanket ban of Bitcoin. My prediction is that most of Europe would stall any decisions. That would be a perfect opportunity for China to meddle in European politics. Already they are investing in Greece, and as we know Greek politicians can easily be bought. If Europe would go against the US and not ban Bitcoin, that would create a deep chasm between Europe and the US, further decimating US power.

My whole point is that if the US moves to ban Bitcoin, then Bitcoin will become the kind of crowbar that Non-US-aligned countries have long had wet dreams about using to apply soft power to break the US hegemony (which is based on hard power).

I'm not saying that this will influence US policymakers, as it seems like the US has shot itself in the foot many times before. But it does make it likely that US would think twice before they would try to shut down Bitcoin.

I think you are vastly overestimating the political importance of bitcoin. Presently it has the market cap of a medium sized company. A single company. It is like a single stock on the NYSE. The US isn't going to give a damn if they ban bitcoins and Europe doesn't.

Yes, I have only been talking about the US govt, because I think stopping the flow of dollars to bitcoin is enough to crash bitcoins price. Yes, bitcoins will survive if they can only be traded in Europe, South America, and Asia but they will suffer without the US dollar. People are going to still want US dollars. Whether or not you can trade them for bitcoins is not going to effect the US economy one bit. Maybe if bitcoin had taken over as one of the world's major currencies, the story would be different. But right now bitcoin is small potatoes.

Simply looking at the dollar trade volume of Bitcoin is misleading. Mt. Gox and BTC-E are not based in the US and are not dependent on US banks to trade Bitcoin. It is fair to assume that a big part of the dollar trade over at BTC-E is from non-americans as US dollars are big in Russia as an alternative to Rubles. About the MtGoxUSD trade it's hard to know.

Let's do a back of the envelope calculation. By adding up the 30-day volume of btc-eUSD and all non-USD exchanges we see that it already accounts for about 27% of all the transactions. So, if a third of the volume disappears overnight, then of course it will affect the price but the infrastructure can quickly be moved when all you need to do is the copy the code over to a server in another country.

Sure Bitcoin is small potatoes in terms of market cap right now. But that is just the pricing in markets - the real value of Bitcoin is much higher and I think more and more people, especially in the Chinese government are starting to realize that.

Looks like AurumXChange's VouchX (a redeemable code) could be gone too now, as is claimed by a merchant:

AurumXchange suspends all VouchX codes?
 - http://bitcointalk.org/index.php?topic=225327.0

Heavy users are probably still reeling from the loss of their assets. It will take time for the uncertainty to clear, but I think people will eventually migrate to Bitcoin, especially if we continue to experience lower volatility.

I don't believe the USG has any intention of banning the use of Bitcoin, but they obviously intend to impose KYC and AML rules at the points of exchange. Exchanges have always been the weak links, but many are getting their houses in order, and new, compliant, exchanges will come online. In addition, there will always be ways to get money in and out of Bitcoin outside of the professional exchanges (OTC, LocalBitcoins, etc.) for people requiring some semblance of anonymity.

People will get creative to move the bitcoins. Remember when there was a guy with a bunch of bitcoins, wanted to use them to buy an airplane? A group of investors who wanted to own bitcoins used their dollars to buy the plane, then traded the plane for the bitcoins. Large amount of bitcoins changed hands, no exchange involved.


Maybe the price of bitcoins did not move upon the Liberty Reserve news because stuff like that is already priced into the market?

Very much agreed - despite that, it's incredible to have seen how all of these takedowns over the last month have only helped consolidation of BTC price. 

http://www.paymentssource.com/news/why-there-is-a-demand-for-liberty-reserves-services-3014312-1.html

I know Matonis is extremely pro-bitcoin but he clearly explains why Liberty Reserve has left a void that can't stay empty.
This is bullish for BTC. Give it time. New exchangers will pop up in every country.

Calm down, the exchangers that are going down are only the domain names that were listed on the official LR exchangers list. And thats only because the Preet guy in NY is pretentious and prone to hyperbole and melodrama.

Not a good comparison.

wm-center is up and running right now.  The only thing seized was the domain wm-center.com.  If you visit wm-center.ru you will see that the exchange is up and running normally -- with the caveat that they are no longer servicing US residents.

If the US jackboots can somehow convince the Russian authorities to arrest those behind wm-center.ru and allow them to be extradited to the US, then it will be a fair comparison.  I think it would be safe to bet that this won't happen anytime soon.

The US government is not the omnipotent force many here seem to believe.

It's not a question of omnipotence, it's a question of boundaries, the US's lack of respect for them and the lack of accountability for their actions.

I agree with you that the US doesn't respect boundaries (and sadly, too few people object to this), but it will be a cold day in hell when the Russians allow the US to start extraditing Russian residents for money laundering.

They wouldn't bother. Why do publicly what you can do privately with bribes?

That's exactly what I said...  US seize the domain name.  The site is still up, but for 90% of the users used to type '.com' the site is inaccessible.  It happened a lot with torrent sites.  U.S. can't shut down the trackers, but since they used a '.com', the U.S. revert to seizing the domain name.  That's how The Pirate Bay switched from .com to .se (and now .sx for similar reasons).

A lot of sites like Liberty Reserve went along pretty undisturbed until Bitcoin got more attention.  Then the U.S. just got an opportunity and invented a new law that they seem to use liberally to shut down anything they can.  They are not stopping the 'problem', just making it harder to evade it's fiat control.  And they are pretty much doing show-up to the world.  Why has the U.S. stayed low profile and then, a day, suddenly jumped in with all it's guns, that's a mystery.  But all of the 'bad' news on Bitcoins and drug buying, money laundering, etc. probably precipitated the things.  In other word, a sleeping monkey in a U.S. agency just woke up or got bored of playing solitaire all day long :D

I only intended to draw attention to the fact that a domain seizure is not quite the same thing as arresting six people, seizing numerous bank accounts and other financial assets, and arranging to extradite them so that they can be put on a kangaroo trial and then added to the prison population of the developed nation with the highest percentage of incarcerated people in the world.

I can only surmise that the value of .com, .org, and .net domains is going to decrease as the rest of the world realizes the arbitrary and capricious manner the US government is willing to act in pretending that its laws apply all over the globe and not just within the boundaries of its "hallowed" lands.

The only way the US government can avoid significant blowback to the actions they took with LR and may be taking against other online payment systems is if they manage to stay in firm control of the narrative as they have apparently managed to do so far.  When stories come out about the innocent people who's lives have been ruined by the careless actions of the government, perhaps the tides will turn.  I won't hold my breath, but I will hope.