Hello Dargo,

I have Tiers 1-3 stuck in verficiation. Could you please have guys push it through?

Case# 309082.

Appreciate it very much!

Metals are not optimal, electronic transactions are optimal and that's why they are used. We don't disagree on that electronic transactions are a way to go in the world trade.

However, government will continue to insist on keeping electronic transactions monitored. There are things why: taxes, terrorism, drug trade, money laundering, illegal gambling. Do you seriously expect that a government, in financial collapse or not, would just let go all those things to flourish?

I would, first, note that there are many laws that we may laugh at now that were very serious at a time when they were approved.
It would probably be funny for contemporaries living 100 years ago to imagine that there will be a law that prohibits the posession of marijuana, that grows natuarally in abundance. Well, let's not even go to 100 years ago. How funny is it that there is a prison sentence in some Arab countries for sex outside of marriage and, possibly, capital punishment for a homosexual intercourse? Crazy laws are very real and are with us to stay, how do you disregard them?

Second, I don't see a very big difficulty in creating a law that targets specifically Bitcoin as the latter posesses certain unique attributes. Let me outline the scope of hypothetical law terms. Then I will ask you to try and find what else besides Bitcoin this hypothetical law would ban.

Terms:
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It is illegal to:

a) receive as a gift, inheritance, a payment for goods or services;
b) send as a gift, inheritance, a payments for goods or services;

a currency electronically unless a sending or receiving party is acting through a registered money transmitter.
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Besides, laws that makes it illegal to anonymously (and anonymously is the key word) exchange bitcoins for other forms of currency already exist and applied. This is why Dwolla, for one, is shut down and exchange operator is being prosecuted in Europe. After a bunch of people who were bitcoin pioneers are slapped with fines or sentenced and are no longer interested in running exchanges, where will the exchanges go? My guess, to some lawless jurisdiction, like Nigeria.

How do you feel doing business with exchange based in Nigeria?

In the case of fiat currency collapse there are many alternative ways to trade, barter and precious metals come to mind easily. The only disadvantage in comparison with cryptocurrency that either may not be transferred over internet. But, put yourself in the position of after-collapse individual, who was just hurt by evaporation of buying power of his balance in fiat currency account he/she used to see online, who doesn't believe in "online assets" anymore. Would he/she keep home a CD-ROM with cryptocurrency wallet, i.e. something digital, or, rather, prefer a very material bar of a yellow metal?

It is arguable, therefore, why cryptocurrency would be "last way for humanity to save global world trading". There are historically proven alternatives.

Hello All,

I was hoping to start a conversation on a possibility of fitting Bitcoin into a [legacy] legal system that the world, as we know it, happens to have.

As we all now, regulators in multiple countries (USA, Germany, Poland come to mind) shut down multiple Bitcoin operating businesses mainly based on the premise of operating illicit money transmitting businesses.

The existence of regulators and/or of their opinion whether one likes it or not, cannot be ignored: after all, regulator represents the government and government has a lot of enforcement power, such as fines, seizing one’s assets and/or putting one in prison.

The main premise, under what regulators prosecute and shut down Bitcoin businesses, in particular, exchanges, is that if a business transmits currency, even to buy Bitcoins, it must be registered as a “money transmitter”. The main reasons governments require a registration as a “money transmitter” are as follows: a) government wants to make sure that people pay taxes on what they make; b) government wants to limit illegal trade, such as illegal drugs and prostitution; c) government wants have to block the financing of terrorism.

Those reasons mentioned above are very legitimate and justify very well for its electors why a government may want to control the flow of money; and those reasons may not be overlooked.

The current Bitcoin protocol allows one to send and receive the money anonymously. This feature of cryptocurrency is just destined to be very aggravating for the law enforcement agencies in so many countries that it is hard for me to find an exception, where currency regulators don’t exist. Governments just tend to keep monetary flows on a tight leash. It’s either you do it on your own, or a big brother (USA, UK, EU, whatnot) forces you to do.

Anonymous transactions make it possible to engage into all those things mentioned above law enforcement agencies don’t want you to engage in. So, as long as this possibility exists, I must predict, a cryptocurrency with such a feature will be outlawed at a certain point in time, earlier or later, in a very clear and definitive way.

On another hand, governments have not shown a tendency to oppose the existence of alternative currencies: a lot of different currencies did and do exist. It is the anonymity of assets transfers that will bother governments tremendously.

So, the main problem and a flaw of Bitcoin is its anonymous transactions, not the currency itself as an asset class. It is my belief that Bitcoin will suffer a lot of damage from this flaw in its design.

So, let me draw two scenarios for the future of Bitcoin.

Option 1. Bitcoin will stay as it is allowing anonymous transfers.

Every country in the world that has regulators; or is affected by regulators in other powerful countries, such as the USA, will be shutting down Bitcoin operating businesses. Owning or transferring Bitcoin will be made illegal. Transaction with Bitcoin will end up to be similar to ones with a bag of heroin: handing a flash drive when no one is looking. Every Bitcoin will might have a lot of value, but owning one will be punishable by a prison sentence for promoting illegal trade.

Option 2. Bitcoin adopts a money transmitter participant role.

These guys will need to get a registration with a government regulator to operate money transmitting business, on one hand. Their role will be to make sure that every virtual currency transmitting transaction is recorded and the parties are identified, verified and recorded for the purpose of reporting to government, under whatever jurisdiction they are operating.

All currency transfer/issue transactions in the network will have to be recorded with one of those money transmitter participants to make sure all the parties can be identified and cleared.

PS I understand that you put a lot of effort into Bitcoin. But, the existing scheme of affairs seems fundamentally very risky from the political and legal framework standpoint.