Bitcoin Forum

This is from wikipedia. It may be the author's opinion, but it looks to me as if there is no obligation, in the US, to conduct business in dollars. Unless you are offering credit of some sort.

Yeah bartering is legal in the US.
I was wondering at what point a thing switches from being considered a commodity to being a currency. There is an exchange that sells pork bellies for example and that is totally legal. I feel like bitcoins can just be considered a commodity and thus be legal to trade/exchange in the US.

Heh, my mom works at Whole Foods, and they have a sign that says "We Accept ALL forms of payment."... I wonder how well it'd go over to try paying in bitcoins.  ;D

I think that's a politically correct way of saying "we accept food stamps."   Try going in with a fistful of Euros and see what happens.

=P Still, kind of humorous.

Also, it occurs to me, Whole Foods seems like the kind of company which would get really excited about the whole concept of Bitcoins.  I wonder what they would say if someone approached them about being the first major retailer to support bitcoins? ;)

If bitcoins are backed by electricity(sort of) what effect will carbon taxes have?
Does It mean bitcoin will be supporting the government by paying it massive carbon taxes?

The government is proposing $40 a tonne carbon taxes which will pretty much double my electricity bill.

Carbon taxes are something that is not only a scam but something that will never happen.  You can debate with me on this point on another thread (preferably on the off-topic area) as to the merits or lack thereof for carbon taxes, but the political support for the idea simply isn't there in Congress, and too many people in the U.S. Congress want to get re-elected to vote for the idea before November.  It would also be nearly the first thing proposed for repeal by the subsequent congress if it ever were enacted during a lame duck session.  The votes simply aren't there for it to be passed.

As for the role of bitcoins, I think it is a wrong notion to make that bitcoins represent electricity in the first place.  They don't.  What they represent is a method of distribution more akin to a lottery where people have to submit millions or even billions of "tickets" with the off chance that one of them might be a winner.  That it may consume a whole bunch of electricity to produce the bitcoins and those who squander electricity strictly for the purpose of creating bitcoins may have to pay some extra taxes for that privilege, it isn't and should never be something tied directly to the value of bitcoins in the first place.

Also, bitcoins represent that effort that has already been expended in that manner, not the future effort that will happen.  The rationale of a carbon tax is to discourage the future generation of energy that would supposedly produce CO2 into the atmosphere, which would imply that it would be the generation of bitcoins that is the issue and not the use of already generated bitcoins.  The amount of energy needed (including CPU processor time and network bandwidth) for processing bitcoins is relatively trivial and in fact quite comparable to other currency transactions.

To reiterate, bitcoins don't represent electricity or CPU cycles or any such nonsense, but represent a mathematical difficulty to prevent a widespread devaluation of the currency.  That is a huge difference.

It also includes things like people who pick up things off your store shelves and go to you at the cash register for payment. It's important to remember that it really does mean all debts.

Not true.  $100 are legal tender.  the store on the corner will not accept them.  The fact they will not accept them does not mean that I can then walk out the door with the bag of chips I picked up off the shelf.

I should have pointed out it is the Australian government I am talking about.They have the green fever very badly and will bring it in for the votes.In my opinion it is a con-job on us all.Thanks for the explanation on bitcoin being viewed as a representation of electricity,it seems to be a widespread misconceptioin.I guess once all the coins have been generated the energy usage will drop significantly,unless the amount of coins ever changes....

The funny (and sad) thing here is that carbon is a fundamental element of life. Sure, too much of it in the atmosphere in the form of CO2 isn't good, and sure, humans are adding to atmospheric concentrations, but compared to all the other problems on this earth, I think this one is pretty far down on the list. A small boost could even be beneficial.

I'm all for clean, green technologies, but it seems that whenever CO2 taxes are implemented, some people get rich and a lot more people get screwed.

Sad thing is that there isn't an "end" to coin generation..... the new coin blocks simply become worth less and less over time.  If deflation of Bitcoins outstrips the drop in coin value, however, the new coin blocks in terms of relative worth may actually continue to increase over time even with this drop in direct value.  That is why I've been using the lottery example, as with a very large network it would become like a major lottery for whoever actually got the next block.  Perhaps eventually there will be people who aren't interested in the coin generation feature, but they still will be interested in the trades.  That will only cause the "value" of generated coins to be all that more valuable.

I do wonder what the taxes on a Bitcoin block worth more than $1 million on the exchanges would be like in terms of a government demanding "their share" of either those bitcoins or the conversion of those coins into "real world" money to pay those taxes.  Considering a new Bitcoin block is currently worth €3.5 (via https://www.bitcoinexchange.com/), even now it isn't a trivial matter.

Of course this is very off-topic on a thread about legal tender.

Due to the 8 places of divisibility, there will actually be a last "coin generating" block (someone else figured it out).  However, there WILL be transaction fees to further incentivize block generation.

Huh, I guess I am wrong:
http://www.ustreas.gov/education/faq/currency/legal-tender.shtml

Wonder where I got that from.

In 100 years, a new coin block generated will be worth 0.000001490116119384765625 bitcoins (give or take a few on the last digits of accuracy).  That is still within the 8 places of divisibility.  It will take quite some time before the value of a newly generated bitcoin completely drops off the face of the universe, and with some of the ideas for bitcoins that have been suggested for extended precision values, that could take even longer.  It may not be worth the processing effort to create new coin blocks, but there will be new coin blocks for quite some time in the future as long as somebody cares to make them.

At least in theory, there isn't an end in sight for when the last coin block will be created, and certainly not on a practical level.  If Bitcoins is still active and in use in 100 years, I would be very much surprised.

the blocks will continue to be generated to generate transaction fees as well.

Something that I'm curious about actually; is the process of processing transactions / generating new coins the same? I can see the rationale for compensating for transactions at some point, because the cost to generate a new bitcoin will at some point exceed the additional value gained from said bitcoin.

Yes, generating a block right now includes a "proxy transaction", which pulls bitcoins out of thin air.  In time, this will pull coins out of the other transactions instead to incentivize continued block generation.

Yes, the current difficulty/generation system being used for creating "new" bitcoins is going to be the same for those future bitcoin blocks, and the attempt to "normalize" the generation of those coins to about one every 10 minutes is at least still going to be attempted to be maintained.

I could imagine a time when most people would be willing to "turn off" the bitcoin generation option simply because of the trivial nature of any new coins that are generated.  If running the generator continuously for an entire year would only earn you $1 in equivalent currency, would it be worth the effort to you?  Even if that was on a 10k server farm attempting to generate coins?  It seems to me that most people and certainly most server farms would simply give up at that point.

legal tender is a term strictly used in reference to payment of a debt, absolutely anything can be accepted as payment.

If there is no "debt" and you are simply offering something as payment for something you desire, the seller is entitled to refuse whatever you are offering even if it is legal tender.

on the other hand, if you are indebted to someone, if they refuse to accept legal tender then the court will not enforce the debt.

You'd make more than one dollar because of the transaction fees.  That's the whole point.  If it got to that point, then everyone would stop generating blocks, as it would be unprofitable, and the system would collapse.

That's not how it works. If fewer people generate, then generating will be more profitable because the difficulty will relax.

Not to mention the people who generate because they like to have anonymous easy money, or have substantial Bitcoin savings and want the system to keep working.

Yea, I was oversimplifying and taking it to the extremes.  Here's how it would REALLY work:

Low value of bitcoins + Difficult target = Pressure to leave the generation business
Low value of bitcoins + easy target = Pressure to enter the generation business

So, this will equalize at some point.  However, the lower the value of bitcoins, the lower the "equalization point".  The lower the equalization point, the lower investment needed to override the system. (If it settles around 100 computers, you only need 100 cores to start duping legitimate people, potentially in the thousands, of your trades.  Obviously numbers will vary, this was just an example).

Thus, transactions fees are introduced to keep this number high enough to make the system reliable.

I hope this helps clarify my point. =)

I think we're on the same page. Similarly, the fewer people using the lower the value and therefore the lower incentive to invest resources to cheat.

Well, I wasn't talking about people using the system.  That's a whole 'nother variable.  You can use the system without generating blocks.

Legal Tender means they only accept them for payment of taxes.They dont care if a merchant accepts gold and silver or wampum beads but if you try and pay taxes with these alternatives you will get a knock on your door!

This ensures there is demand for worthless money.If they accepted whale teeth for taxes there would be a demand for whale teeth.If they made bitcoins legal tender their value would skyrocket because of the limited supply.This is also the reason they don't make gold and silver legal tender.They cant be easily taxed.

The corner store can refuse to accept $100 bills because the shopper has not incurred a debt, as no deal has been made.  However, if a formal arrangement of a 'running tab' were agreed to by both parties that did not explicitly exclude payment in $100 bills; then $100 bills would have to be acceptable or the debt is void.

However, if an offer exists to trade in a 'dollar equivalent' method, such as by credit card denominated in US$, then the offer of cash in hand cannot be refused.  I don't carry credit cards, and I had this fight once with an attendent at a tool rental counter at Home Depot.  He simply refused to accept cash for the rental, and called the manager.  Once explained, the manager immediately showed the 'cash option' screen to the attendant; who had never even heard of it in his 10+ years there.  I used the tool and had no issues getting my deposit back in cash upon my return.

Creighto please correct me if I'm wrong, but "all debts" is slightly overstated above. It is my understand that it means all agreed debts denominated in dollars.

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

If I have a debt to you of 10 chickens, and If I were to offer to pay you $50 to settle my chicken debt. (Say the market rate for chickens is $5 each)
If you didn't want to take the $50 and instead continued to demand the chickens, the judge would tell you to take the $50 or give up on the debt..

These chickens, they had lots of sentimental value to me.

It's a sad thing, this society we live in that so easily puts a price tag on our chicken. How can we do that and sleep at night?

Could you fix an interest rate in chickens as well? I lend you 10 chickens today, you give me 11 chickens (or their equivalent in dollars) next year.

Is such contract legal?

It all depends if the chickens cross the road  ::)

Well, not exactly.  Legal tender laws make the national currency a default 'fallback'.  Unless a contractual agreement explictly excludes repayment in a market value of said chickens, then the offer of repayment in $ of a market value must be acceptable.  Futures markets do depend on this principle *not* being enforced, but that is the standard practice within those fields.  It is for this very reason that many of the LETS don't imply 'dollar equivalency' as that brings the option of paying in actual cash.

As always, IANAL

Legal?  Probably.  It may, or may not, be enforceble.  That would depend on the details.

Legal tender is just like good that you will pay for a services or for another goods with a monetary value. Same also with bank note and checks all bank note circulated in country has corresponding value of gold deposited in central bank or national treasury. Once bit coin is recognized in a country it could be possible to become legal tender because you can invest your asset in bitcoin currency system.