Bitcoin Forum

Hi Fellow Bitcoin Users,

I'm writing a legal essay on Bitcoin for my Banking Law class at a top U.S. law school. It will explain how bitcoin works, describe the current ecosystem, compare bitcoin to other payment systems and digital currencies, explore arguments for and against bitcoin specifically, and analyze salient legal issues. After I am done, I am hoping to publish the article in some way, perhaps bringing some attention to bitcoin.

It would be useful to get a sense of who the current bitcoin users are. I'm assuming that the votes are completely confidential so individuals can answer freely (but I'm not sure -- if you think differently, please post a reply).

I know that some of these overlap, but please answer whichever is the best for you.

Thanks,
reubgr

I voted other. The reason is quite simple, it's the best payment processor that exist at this time. I can run any kind of business without the risk of being shut down by my payment processor (or government), this is very important. Secondly there is privacy and anonymity. But it's still early to run any significant business with bitcoin in it's entirety, so at the current time I'm in as speculator and early adopter.

to promote a good idea, thats all

I voted early adopter. I haven't done much with Bitcoin yet, but I believe that it could open up entire markets that never existed before, especially for free and open source software projects. You can see my post on that here: http://bitcointalk.org/index.php?topic=4435.0.

One question I have is: What does Bitcoin have to do with banking law? Bitcoin runs outside of banks and really has nothing to do with banking. If you want to talk about 'money transmitters', that would be more accurate in my opinion.

you forgot buy drugs

http://th857.photobucket.com/albums/ab131/iNerdyPanda/th_You-must-be-new-here.jpg

Bitcoins are very much supported by people who are disgusted with the banking system as it exists now. They are by design decentralized and limited. Under our current banking system, currency is both centralized and (theoretically) unlimited. By taking the power to essentially create currency away from the central banking authorities, away from the Fed, we take away their power to rob us via inflation. It has everything to do with banking.

I voted early adopter too, though I am also a speculator and distrust central banks. I voted early adopter because I tend to like new things in general. They intrigue me. That's what drew me to bitcoins in the first place. The meteoric rise of bitcoins in the last year combined with my enthusiasm for being part of the creation of a new electronic currency (and the knowledge that our current fiat banking system is fatally and congenitally flawed) has kept me around.

Thanks for participating, dissipate, and for your question regarding banking law.

Banking law is a broad topic that includes issues involving "money transmitters," among others. Some issues involve the services that have grown up around bitcoin, like the exchanges (e.g., do they need to register with U.S. regulatory authorities?) and some of the eWallet providers (could they be considered depository institutions subject to a wide range of regulation?). Others deal with bitcoin more specifically: whether bitcoin, as an institution defined in some way, may fall within some federal or state definition of a bank; tax issues; state escheat statutes (i.e., what happens to property when nobody claims it); and so on.

Hopefully I will be able to make some headway on these difficult legal questions.

@genjix: I intended the "Criminal" category to cover drugs and other generally illegal things, like child porn (but not gambling, which is in a legal grey area due to lots of conflict between state and federal laws).

I chose the central bank option. Bitcoins fits in perfectly with what good money should be. It's decentralized, anonymous, and even better, fixed in production. I don't have a lot of the technology background that many users do, so I'm still trying to understand that part. But it's all about having a money I can trust.

I am fully aware that Bitcoin is designed to help people avoid using banks. When I said that Bitcoin has nothing to do with banking I meant legally speaking. Before accusing people of being newbies, try to understand the context of their statements.

I'm sorry. I thought your statement was in the context of the poll answer titled "Distrust Central Banks." My mistake.

I voted for "Privacy / Cryptography Enthusiast" because I am passionate about cryptography and distributed systems. Many of the other options could also apply to me, though.


Central banks manipulate the economy. Avoiding this is one of the main benefits of Bitcoin. It's even mentioned in the Bitcoin genesis block:

Other: I want to be able to conduct business without bothering about legal permits, statements, registrations, accounting, certificates, identity cards, work permits, etc. I could vote "criminal" but that's not the intention at all. If I could be taxed without any hassle on my part, that would be welcome. It's more about the discreteness (deniability?) of the transfers for me I guess.

Thanks for your great comments, everyone.

@theymos: yep, I realized that there would be a lot of overlap, but I think the "primary" selection makes sense. With the central banking option, I was hoping to pick up individuals who are sometimes called "gold bugs" and may have some of their wealth in digital gold currencies.

@Gokhan: that's an interesting reason that I hadn't thought of. Is there some way you could tell me what kind of business you're talking about? If that's too private, I understand.

Multiselect would be nice, and no offence op, but these options suck.

@comboy: I think multiselect would make the poll less useful for my purposes, which is figuring out what groups are using Bitcoin. Although many people may have multiple reasons for using Bitcoin, presumably one reason is more important than the others for most individuals. Regarding the options: is there an option you think is missing?

Many of the above. I'm interested in Bitcoin because I'm a strong believer in decentralisation, and avoiding government and corporate control. Bitcoin exists outside of government and corporate control (PayPal and credit cards, the two main ways to pay online, have massive problems). I'm also interested in cryptography, and digital cash. I see Bitcoin as a first step towards a possible truly anonymous digital currency. (BitLaundry and similar services are good to help make Bitcoin a bit more anonymous than it is.)

Other reasons exist, as well, but those are the main ones.

edit: I didn't vote in the poll.

I hate bitching.. I just find myself doing it so often..  So:

• multiselect still let you see groups, people belong to many groups
• answers seem to mix "why" and "what for", and that's my main complaint
• there is ~4 criminal options too choose for (like you want no limit yourself to just one if you are doing it), while there are no drugs, and they seem to have gained some popularity so far

Other than that, title question is very nice and welcome to bitoin.

PS. About title question: I use it mostly because it's fun. And I like fun and profit. And the best thing is, that because of it's nature, bitcoin gathered really nice community (tech people, also not just dumb-tech because it's not trivial to understand how it all works, and ... I could go for hours, about finance, govs, cryptography, rationality, lesswrong, sysadmins, playing with hardware. and so on - I like this mixture)

What I currently work on is financial in nature and I don't think it's a good example since it's an obvious ease that bitcoin provides. However, what I hope to do in the future is to move my current software development business to Bitcoin (maybe in the far future only accept bitcoin payments) and solely work with freelancers who accept bitcoins.

I guess another good example of hassle-free would be the proposed Bitcoin stock exchange.

@comboy: You make some good points and perhaps I could have worded some of the options better. At this point, however, I think changing the poll would do more harm than good. In any case, thanks for your feedback, both on why you use bitcoin and also on the poll itself.

@Gokhan: Very interesting. I remember seeing the post about the proposed stock exchange. Thanks for sharing!

I selected other because my primary motivation is smashing the state.  The hope is that if enough people use Bitcoin and/or other untraceable currencies, then the state will be unable to collect sufficient tax revenue and will implode in bankruptcy.  This is a just outcome for political entities that use force or the threat of force on peaceful citizens.

Interesting.  Maybe when you are done, you can cut and paste how you see US Banking laws applying to Bitcoin in the US.  I would think that much of the law may turn on whether Bitcoins are considered an actual commodity or if they have value only as currency.  Also, a comparison with PayPal and how PayPal manages to skirt numerous banking laws.  I think a legal analysis would be interesting in contemplating the future of Bitcoin.  If Bitcoin is successful, the US will absolutely try and shut it down.  But that's when the unique aspects of Bitcoin, like no central authority, kick in.  They'll have about as much luck shutting it down as file sharing.  When people see that the goverment tried to shut it down like e-gold, but was unsucessful, that's when I think Bitcoin will really take off.  So hopefully you cover lack of ability to enforce the law as much as you cover applicable law itself.  Good luck.

I started mining this week simply to try get some spare cash to pay for rent. My system has dual 5970's and I was thinking to sell them in order to pay rent (And it would only be a month or two worth of rent). Then I stumbled on Bitcoin which has now given me a way to make money from the 5970's without loosing them, granted though it only covers half my rent each week when group mining but I can make up for the rest in other ways (Cough suck sucky 5 dollar).

Other than that though, my view of Bitcoin is similar to others on here in that it provides a very stable economy in which to invest. It isn't at risk of inflation at the whim of a government and because it isn't central it's almost impossible to crash.

It would be interesting to see what your conclusions are on Solo vs Group mining in your report. Would you consider posting your conclusions once the work is written?*

*Do not directly quote your work unless it has been viewed, verified and signed by an official of your university as been YOUR work. If not there is a good chance someone will steal your work and without it been verified your assignment will become void.

The main reason I am attracted to bitcoin isn't listed so I chose other.
Personal secession from the government and agorism creating an economy so that when the state inevitably fails an alternative will exist.

@ronaldmaustin: You've made three excellent points. Whether one might consider a bitcoin a commodity would influence whether bitcoin falls under the jurisdiction of the Commodities Futures Trading Commission, which has rules that mirror but also differ significantly from the way that the SEC regulates securities. I am also planning to touch upon the PayPal bank vs. money transmitter issue. Finally, as you mention there are definitely parallels with, say, bittorrent and other file sharing systems that the law has had some difficulty in shutting down. I will definitely post a link to my essay once I am done.

@snedie: Thanks - that's a very interesting reason. Do you think you'll be able to profitably mine for the foreseeable future? It seems like the difficulty keeps increasing, reducing the profits available significantly. Regarding solo vs. group mining, I am planning on mentioning the group mining collectives, but I probably won't be making any real analysis on that point. The only legal question that comes to mind is whether there is a possibility that a share of of collective profits would fall under the definition of a security, but that seems unlikely although I haven't examined the issue in any detail (remember - this isn't legal advice to you or anyone and I am not a lawyer, yet). What exactly are you wondering about regarding Solo v. Group mining?

@Cryptoman, @noagendamarket: Thanks for sharing, folks. Would you mind letting me know if either of you hold other alternative currencies, besides Bitcoin?

Currently the difficulty is expected to decrease in the next update (e.g. http://bitcoincharts.com/charts/ (http://bitcoincharts.com/charts/)). It has been suggested that difficulty lags about a month after the BTC/USD exchange rate. It looks like for now the exchange rate has stabilized and so did the difficulty. I don't expect the profitability of mining to significantly change for the time being.

I also hold Pecunix as well as gold, silver and other hard, tradeable assets.

@Holy-Fire: Thanks for your thoughts. Why is the difficulty expected to decrease? I see that the bitcoin has lost value since its Feb 13th or so peak, but the difficulty has apparently still been increasing since then. For example, look at : http://bitcointalk.org/index.php?topic=3586.msg50681#msg50681 (http://bitcointalk.org/index.php?topic=3586.msg50681#msg50681) and also http://bitcoin.atspace.com/income.html (http://bitcoin.atspace.com/income.html). Could you point me to the discussion that talks about difficulty lagging a month behind the exchange rate?

@Cryptoman: thanks for your response! Did you have e-gold in the past?

No, never held e-gold or other digital, gold-backed currencies before Pecunix.  Never had sufficient trust/confidence in any of the others.

The average rate of block generation should be 1 per 10 minutes. The last 725 blocks were generated in 8600 instead of 7250 minutes. If this rate continues the difficulty will be adjusted to 64200, and this figure is the estimate given by bitcoincharts. (Well, I think those numbers are correct, I'm extrapolating a bit).

This is the discussion about the lag : http://bitcointalk.org/index.php?topic=4339.0 (http://bitcointalk.org/index.php?topic=4339.0)

@Holy-Fire: very interesting -- thanks!

I'd love that too, but governments could just move to land value/property taxation if they are unable to tax income and commerce. I think they'd be a lot weaker in that scenario though, so still better than nothing.

I voted 'other' because my primary reason for using bitcoin is the unique technological, market, and social applications it enables.  I'm excited about people in countries with unstable currencies using bitcoin on their cell phones, the emergence of microtipping as a business model, and the potential for bitcoin-based disruptive technologies due to programmatic currency operations.  Then, because of my excitement about these possibilities, I am participating in bitcoin as an early adopter, speculator, etc.

p.s. and for the record I'm no anarchist, anti-state, ultra-libertarian, grey-market advocate or any of those.  Just a normal white-market person looking to use bitcoin under the same laws, taxes, etc. as any other technological tool.

I sell legally questionable goods and services. It's the only way until I achieve encryption of physical matter.

It's great to know I'm not the only one!

I don't care much for ideology. I just go with what works.

Having said that, some aspects of Bitcoin induce cognitive dissonance in me because even on a very practical level they challenge societal norms that I have taken for granted my whole life.

Frankly, I think that the "salient legal issues" are academic, because they are not relevant to the reality of the Bitcoin ecosystem.

Bitcoin will go the way of filesharing networks, and operate in a universe almost completely outside the jurisdiction of any particular country.

Not that the Bicoin ecosystem will be a lawless place.  It will have its own laws that will emerge organically. Whatever US banking lawyers dream up in the meantime, will affect only a small tangential part of the Bitcoin economy.

@chickenado: Thanks for your comment. You're probably right that Bitcoin could practically survive legal attack the way that filesharing networks have survived. However, the question is far from academic. Whether and how it is legal or illegal will significantly affect how many people use Bitcoin and whether mainstream consumers and merchants will ever use it. Additionally, if Bitcoin and its ecosystem is generally legal, there is a much greater possibility that service providers could attract significant capital investment, enriching the Bitcoin system.

@forever-d: Thanks for your input!

@tryptamine: thanks for being honest.

@emansipater: Thanks for explaining your 'other' vote. I hadn't thought about individuals using Bitcoin in countries with unstable currencies. Although I wonder whether in those particular countries the infrastructure is not good enough to allow efficient bitcoin usage since bitcoin doesn't work particularly well offline. Consider Zimbabwe, with its astronomical inflation rate, for example. I'm sure most individuals there don't have smart phones capable of internet access. They may have dumb phones, though, and I guess it's possible that someone could build some sort of SMS-Bitcoin bridge.

Proportionately people in the developing world spend a higher portion of their income on technology (mostly cell phones) than anyone else in the world, so this is only a matter of time.  It is estimated already that 1/3rd of the Kenyan economy occurs through mobile-phone transactions, which are used in >90% of households there (most people using mobile phone payments have never possessed bank accounts).  Also, international money transfer services like western union move billions internationally but charge very high fees.  So bitcoin has the potential to be extremely disruptive for these situations as soon as there is a practical solution for them.  Most mobile phone networks worldwide will offer internet service within the next 5-10 years, by which time the $30 netbook may well be a reality.  Personally I think it's going to break like a dam when it does.