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1  Bitcoin / Bitcoin Discussion / Re: BREAKING: SEC Charges pirateat40 With Running Bitcoin-Denominated Ponzi Scheme on: July 24, 2013, 04:17:08 AM
we should all go visit him in prison and get our last laugh!

IANAL, but it looks like a civil complaint - a lawsuit seeking an injunction, disgorgement of ill-gotten gains, and penalties.

It also seeks a finding that the defendant violated securities law, but I don't know if that means this case could result in jail time.

Does anyone know if there will be a separate criminal action?
2  Bitcoin / Legal / Re: Filed a request for an administrative to FinCEN this morning. on: June 03, 2013, 10:38:42 PM
The guidance doesn't make "anyone" an exchanger because there is an explicit exemption for "users" purchasing goods and services who are not in the business of buying and selling currency, so I disagree on that point as well.

You miss the point.  Anyone who exchanges virtual currency for real currency is an exchanger is one way to interpret the guidance.   So say MtGox becomes a MSB.  Great now every on of MtGox clients would need to also.  They all are "exchanging virtual currency for real currency".  The guidance provides no exclusion that those exchanging with regulated exchangers are themselves exempt.  This would make anyone who ever has or ever will exchange real currency need to register as an MSB.  It seems implausible that is FinCEN intent however by the letter of the guidance it is what is stated.

The guidance is unclear, it is just my opinion but only clarity from FinCEN will resolve that lack of clarity for me.  That is the point of an administrative ruling. It certainly is possible that the AR will result in more clear guidance one that advises that the example in section c is not binding any such trade of BTC for USD constitutes an "exchanger".  The good news is it would remove ambiguity from the definition and force FinCEN to clean up their guidance.  Is it FinCEN intent that anyone who ever buys or sells Bitcoins for real currency needs to register as a MSB?  I really doubt it but if so the AR will require them to state so in black and white.

OK, I did miss that point on virtual -> real currency exchanges (as opposed to real->virtual) as that would not be entitled to the "Users" exemption as written, but I also think the regulation is clear enough on that activity, as I shall explain.

Even if you sell bitcoins for dollars, whether on an exchange or in a park in NYC, I disagree that "Anyone" is a money transmitter for that reason. The wording is: "An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person.10"

You still have to be an "administrator" or "exchanger" to fit that definition. Those terms are defined near the top of the guidance and both definitions state the person is "engaged as a business". That is the core issue from a legal point of view.

If I sell some bitcoins for dollars occasionally on mt gox, I consider that a personal activity. I'm not engaged as a business when I perform these actions. This is also why selling some Euros to a friend after a vacation is not a felony. However, if I advertised and held an auction for my bitcoins to a group of exchanges every week, then I'd be a business and would be covered by regulation.

It comes down to the definition of "business" and FinCen seems pretty confident that these terms have sufficient legal precedent (see the following link). I tend to agree. I know I am not engaged as a business with respect to my bitcoin activities and am confident a judge or jury would agree.

As I stated earlier, it is not clear how miners escape these regulations and that is where further clarification might help. One could argue that they are engaged as a business.

http://www.americanbanker.com/issues/178_104/fincen-chief-q-and-a-what-we-expect-from-digital-currency-firms-1059485-1.html?zkPrintable=1&nopagination=1
3  Bitcoin / Legal / Re: Filed a request for an administrative to FinCEN this morning. on: June 03, 2013, 09:38:38 PM
I actually called the IRS and asked about having to be registered as a money transmitter.

There response was that ANYONE who buys, then re-sells, etc IS A MONEY TRANSMITTER AND MUST FILE IF EXCHANGE OVER $1,000.

If you report your BitCoin income, then audited, and not registered you will be in trouble.

You're talking about something different. The IRS is not FinCEN.

Registering as a money transmitter is necessary to comply with anti-money laundering and other regulations.

Income and capital gains taxes is another matter.

I believe the point was that if you report your income, then you get audited, that audit includes seeing if you were acting as a transmitter.

aka - you can't only be "partially legal" in a worst case scenario.



A lot of this hinges on the semantics of things, but one thing is clear: fincen has considered it a "convertible virtual currency" which means anyone on either end of the cash <-> bitcoin exchange was acting as a transmitter via:

"An administrator or exchanger that  ... (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person."

They're using the terms administrator, exchanger and person interchangeably here. Are they? Everyone in the US that bought or sold bitcoins at all, directly or indirectly, is being considered? BUT the semantic issue is what are those "limitations to or exemptions from?" in that case?


TC states "If FinCEN wants to define regulation then they are obligated to provide clear and exact lines.  Regulation which is vague, arbitrary, capricious, and overbroad is generally overtuned. "

That's what's bizarre about the current wording. Last I checked someone going to a bank or currency exchange to exchange currency isn't considered a "money transmitter." Why would bitcoiners be now?

In a recent speech, Fincen Director Jennifer Shasky Calvery said the new guidance aims "to protect [digitial currency] systems from abuse and to aid law enforcement in ensuring that they are getting the leads and information they need to prosecute the criminal actors." She reiterated that the guidance does not apply to everyday users who pay or accept bitcoin for goods and services.



But what about paying bitcoin to buy a good, then selling the good for some other currency? And so on...



It's right there in the guidance, near the beginning, in clear language:

"A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations.8 Such activity, in and of itself, does not fit within the definition of "money transmission services" and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs.9"

Perhaps folks are only aware of parts of the guidance for some reason, so here it the link to the entire document:

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

Some definitions have exemptions. It is easy to get the wrong impression if you only read parts of the guidance. The guidance should be read and understood in it's totality.

4  Bitcoin / Legal / Re: Filed a request for an administrative to FinCEN this morning. on: June 03, 2013, 09:22:42 PM
You seem fixated on the definitions within the Decentralized Virtual Currency section. What about the definitions that are present elsewhere, like this one:

"An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person."

Well that is the entire point.  This "guidance" on virtual currencies is incompatible with the specific guidance given for decentralized virtual currencies (which of the three subclasses is the only one even remotely applicable to Bitcoin).

It is possible since this is just a guidance letter than the phrasing used in the "section c" is an error however it warrants clarification from FinCEN rather than an assumption.  However the general definition is overly broad.  It would by the letter of the guidance make anyone an "exchanger" even if they use a licensed "exchanger" maybe that is FinCEN intent but once again it seems excessive and vague. 

If FinCEN wants to define regulation then they are obligated to provide clear and exact lines.  Regulation which is vague, arbitrary, capricious, and overbroad is generally overtuned.  Now FinCEN may lack sufficient understanding of the mechanics of Bitcoin to properly define those lines and hence provide conflicting and confusing guidance but if they intend to regulate it they damn better understand it in order to answer very exact questions on which activities fall inside or outside of their scope.

I disagree that the different sections of guidance are incompatible. If ANY of the definitions apply to you and there is no exception defined, then you are covered. You can't cherry pick parts of the guidance.

The guidance doesn't make "anyone" an exchanger because there is an explicit exemption for "users" purchasing goods and services who are not in the business of buying and selling currency, so I disagree on that point as well.

Also I disagree with your last point. The guidance is not that bad from my point of view. They are capturing the activity they want to regulate with language that is about as precise as I would expect from a regulation of this sort.

The only vague definiton in my view is whether a miner or mining pool who confirms transactions is a money transmitter. The question is whether a miner "accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency." It is hard to see how miners who confirm transactions avoid this definition. And they can't use the purchasing exemption that regular "Users" could to avoid regulation. You can ask for further clarification on this but you may not like the answer.

5  Bitcoin / Legal / Re: Filed a request for an administrative to FinCEN this morning. on: June 03, 2013, 08:27:52 PM
#1: Answer: Who creates the bitcoins is irrelevant to the transmission and exchange functions. The special case of "creating and selling" is really a subcase of exchanging and probably was unnecessary to call out as it is already covered by other guidance. Regardless, it does not seem to apply to bitcoin miners unless they are in the business of selling their bitcoins for currency.

Miners who create currency and keep it or buy things are not covered in the guidance, as far as I can tell. A lot of your post seems confused by that issue and seems to be fishing for different definitions in order to understand how the act of creating the currency, by itself, is regulated. But it isn't. That is not the money transmission or exchange function that FinCen is interested in.

#2: Answer: If you don't sell the units to another person, then you are NOT covered by this clause: "a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter." BUT YOUR MAY BE COVERED BY OTHER CLAUSES.

Based on the following it does not seem like you are reading the entire guidance:


The "accepted" interpretation of FinCEN guidance is that anyone who exchanges virtual currency for real currency is an "exchanger" (unless an exception applies as defined by existing MSB & MT regulations).  

However the actual text of the guidance does NOT say that:
Quote
In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.


You seem fixated on the definitions within the Decentralized Virtual Currency section. What about the definitions that are present elsewhere, like this one:

"An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person."

6  Bitcoin / Bitcoin Discussion / Re: Should Bitcoin Win Nobel Prize? on: May 23, 2013, 12:38:46 AM
My first impression after reading the source code was that Bitcoin was that was an amazing invention of historic proportions. I've thought the same thing about Satoshi being deserving of some prize or award. It is a multi-disciplinary invention however so I'm not sure there is an award that would do it justice.
7  Other / Off-topic / Re: What programming languages do you know? on: April 30, 2013, 11:06:14 PM
How about you guys?

After I learn c++ what other languages are worth learning and which arnt?

Assembler. Sometimes u have to be more close to bare metal.

only people from the 1980's code in assembler. You have to be certified mental to do so today

Also:
1) Perl - over-complex syntax and spaghetti package system: retards only
2) Python - gibberish syntax, also for retards
3) Java - OO nonsense and over-complex shyte
4) LISP - Archaic twaddle for aging hippies

https://wiki.theory.org/YourLanguageSucks
8  Bitcoin / Bitcoin Discussion / Re: Breaking News: Satoshi sited as member of "the Foundation" on: April 27, 2013, 05:17:42 PM
I agree with Dunster, this "foundation" is just a private thing, it is not bitcoin. Satoshi a founder? Did he sign? Or the "foundation" members happily added him? So now i can make the GABI FOUNDATION and have as founder satoshi as well?  Roll Eyes

Yes. And you can have Donald Duck as your "spiritual leader" if you like.
Now imagine if they add me as a founder member. Without my consent. This clearly would not be acceptable because i am not a founder and i never signed to be one.

Darn, the tubes lost my longer post, so this will have to do:

Agreed. The Foundation should simply add the word "honorary" to the text regarding Satoshi's membership and I'll be satisfied.

Until they clarify this, I will assume they have inappropriately claimed Satoshi's support in a bid to attain some exclusive authority that Satoshi's endorsement would imply.

The Foundation should speak for it's members and other foundations can speak for their members. That is the decentralized philosophy of Bitcoin and the Foundation should strictly adhere to that philosophy. Gavin, for example, has always claimed he supports the development of other bitcoin clients.

Since this could be addressed with a trivial fix of adding one word to the text, I will assume this is an ongoing deception on the part of the Foundation and I suspect it will remain a sticking point in the Foundation's relationship with the broader Bitcoin community until it is addressed.





9  Bitcoin / Legal / Re: Bitcoin taxes in USA on: April 26, 2013, 03:22:30 AM
Hello,
The new taxes on bitcoins are confusing me.
I live in the US and I mine bitcoins.
I am 13 years old. (If that helps)
Do the taxes follow normal US tax rates?
EDIT: Is there anyway to bypass taxes? Tongue

If you are talking about gains (you bought at $20, now its $135 - your gain is $115), then not legally. For my own taxes, I consider Bitcoins to be property. If you sell or exchange that property, whether for other goods or currencies, you have to pay a capital gains tax if you have gains. This is the case for nearly all property in the U.S, except for a few exceptions that are defined in the law, like Collectibles, which have special tax rates. I have not seen any evidence (like a law or tax regulation) that Bitcoins are anything other than regular property.

There are some who believe that if your intent was to use Bitcoin as a currency, then any gains you made should not be taxed. I have not seen any evidence to support these claims.

By the way, you said "new" taxes. There are no new taxes as far as I know.

That said, I am not a tax expert so you should do your own research and draw your own conclusions.

EDIT:
I'm sorry. You said you are a miner and I didn't notice that. That is a different story.
My best understanding would be that if you have no expenses to deduct, then you consider it property acquired for $0 and report gains accordingly.
If you want to deduct expenses, report the bitcoins as income using market value when you mine them minus expenses.
Later, report capital gains when you exchange or sell them with the cost basis being the market value when you mined them.

Again, I am not a tax expert so you should do your own research and draw your own conclusions.

10  Economy / Economics / Re: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation = on: April 19, 2013, 02:55:10 AM
bitrick:  Obviously loans that are only spent to consume are unsustainable and I never said otherwise.  The question to you is WHY THEY STILL EARN INTEREST when they create nothing? 

I explained that.  I don't agree with the current system that, for example, forces savers in Cypruss to fund loans to Greece for consumption that will eventually default. The current system is corrupt. Since you appear to disagree with the current system as well, what do you propose as an alternative?

Further more the whole basis of your argument that 'savings' represent a reduction in consumption and at the same time are 'invested' to create future productivity is trying to have it both ways.  

I didn't say that. You made that up.

No one can make a rational argument that simply stuffing money under a mattress has a positive effect on the economy or increases future wealth in any way ...

I never said that, but matress stuffing is surely better than malinvestment. Keynesians always avoid addressing the issue of malinvesment. They think every investment is positive and hand wave furiously about money multipliers and such. Malinvestment wastes resources, period. Mattress stuffing allows deployment of resources at a more appropriate time.
11  Economy / Economics / Re: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation = on: April 18, 2013, 04:04:37 AM

Here is a question, why dose the saver get interest for a loan when it is loaned just to another consumer.  The borrower simply performs the consumption of goods that the lender has deferred, their is no overall reduction of consumption, yet the lender still takes interest.


Continuing to take on debt for non-investment consumption is not sustainable and probably not a smart loan to have made in the first place. This is what happens when you have unethical short-term bonus-seeking behavior on the part of bankers with unlimited printed money to play with.

The capital ideally goes towards productive investments. Unfortunately, since the banking system can print money to buy any "investment" (like no-Doc home loans in Detroit) they can find, that leads to loss of investment discipline, malinvestment, and economic contraction as the bad investments are written off. This is exactly what we are going through right now and it is going to get much worse in my opinion. The responses of the Keynesians to their obvious failure is basically, "Well, it's because we aren't making enough bad investments".

I think what you are missing is that savings that would otherwise go to pointless consumption does not bid away the goods and services that productive investments could use. That's a good thing.
12  Economy / Economics / Re: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation = on: April 13, 2013, 06:29:50 PM
Hoarding is not a problem. The word merely means saving. Saving is virtuous, not a problem to be "solved". I'm not interested in what "mainstream" economists take, give or do. If you want what they are selling, then please just stick with dollars or the local currency of your choosing, and leave us bitcoiners alone.

this. A thousand times this.

First, OP presumes hoarding is the cause of volatility and that the proposed solution is a clean fix for that, both of which are dubious assumptions. I'll counter that it is the buyers and sellers rushing in and out of poorly operated exchanges, not the hoarders that are causing volatility. Hoarders are generally waiting for the market to stabilize after long term price discovery has become much more efficient.

Volatility, in my opinion, will NOT subside until virtually everyone knows about Bitcoin and has made their decision about whether to participate or not.   Also, it probably needs to survive in some practical form after a government assault. We'll have waves of volatitily, probably for years, until that process is complete. Then we will have true price discovery. The measures OP describes cannot counter those factors; they are fundamental.

Also, it is totally unrealistic to suggest that the Bitcoin community would just collectively adopt these kind of changes. The entire Bitcoin community, by defintion, is voting for the current rules. If the rules are changed it would not be a magical transformation of Bitcoin into Bitcoin 2.0. It would be a fork, and I will stick with the block chain using the original rules and will not participate in the new coin. If they had value I'd sell those Radioactive Bitcoins immediately and buy more Original Bitcoins.
13  Economy / Speculation / Re: Bitcoin needs to do a "stock split" and add new (sub)names on: April 09, 2013, 02:00:39 AM
But now when they hear that the price is ~$150+ their response is, "Oh it's too high. It's risen too fast, too quickly." If however, the price was $1.50 or even $15+ they would probably jump in and spend just as much money. It's a psychological thing, like buying a thousand penny stocks vs spending $600 on a single share of Google. ...

I think the key is how you describe it from the beginning. Try this:
"A bitcoin is like a one ounce gold coin, although it actually works better. There aren't that many bitcoins. There are 500 ounces of gold in the world for every bitcoin. An ounce of gold is currently valued at about $1600. A bitcoin is less than $200. The millibitcoin, which is one thousandth of a bitcoin, is more akin to the U.S. dollar and currently costs 19 cents."
Of course, you'll want to balance that with a realistic discussion of the risks.
14  Economy / Speculation / Re: Price down to 13.7 - How low will it go? on: March 21, 2013, 07:53:11 PM
Oh I see. There was fine print. Real funny.

Tired of the scare posts. You are ignored.
15  Bitcoin / Bitcoin Discussion / Re: Bitcoin and me (Hal Finney) on: March 19, 2013, 09:30:39 PM
Thanks for taking the time to share your story. I'm impressed and inspired by your attitude in the face of adversity. I've been programming for 30 years and I hope I can continue as long as I am able. I have wondered before to what extreme efforts I would take to continue programming under conditions such as yours. I'm glad you are able to continue your love for programming. It makes me realize how much I take for granted.

In tribute to your dedication and contribution to bitcoin, I have decided that I will refresh and improve my articles on Satoshi Client Operation (currently pinned in the technical forum). (Although it may not be until summer when I have some time off). If you can continue to contribute in your circumstances, then I have no excuse for not doing the same.
16  Bitcoin / Development & Technical Discussion / Re: Accessing the network through a "lite" node on: September 24, 2011, 03:37:12 PM
I'm talking about my personal client development.  I can set NODE_NETWORK to whatever I want... though it sounds like 0 or 1 are the only options that are meaningful.

NODE_NETWORK is a constant flag that is applied to nServices, a bitfield. Not applying it leaves nServices at 0, but NODE_NETWORK remains at 1.

Without NODE_NETWORK, you are not a "network node".

In the Satoshi client, there is a global variable in net.cpp called "fClient" that controls whether the local node is a full node or just a "client".
This variable is currently hardcoded to false.

If the variable is changed to true, then NODE_NETWORK will not be applied to the nLocalServices variable and the local client will not advertise itself as a full node when it sends the initial "version" message.

Other nodes will see this and not ask that node for blocks.

Note, you may want check with Gavin on the status of using fClient mode. Most of the flag variables are hooked up to command line parameters, but this one is not, probably because it is not ready and well tested. Quoting Gavin from the following thread last month:

http://sourceforge.net/mailarchive/forum.php?thread_name=CAJ1JLtu7UXz2X25iWLKUUmK%3Doapj8OzGRH964JY%3DPpzd8rOfTg%40mail.gmail.com&forum_name=bitcoin-development

"Stuff I'd like to see in the release-after-next:
fClient mode (download headers only, for faster initial startup; I've started the work, talk to me if you want to take over)"
17  Bitcoin / Development & Technical Discussion / Re: Problem Compiling Bitcoin on: September 21, 2011, 05:33:24 AM
Thanks for your help.  Could this mean I am missing a dependency?  Or have an OpenSSL build without EC support?  Not sure where to go from here.  I do not get the "ECDSA is disabled" message that the #error directive would apparently show if I didn't have ECDSA support.

Are you saying you do not have /usr/include/openssl/ec.h  or /usr/include/openssl/ecdsa.h ?
18  Bitcoin / Development & Technical Discussion / Re: Problem Compiling Bitcoin on: September 21, 2011, 05:09:30 AM
That should come from /usr/include/openssl/ec.h

$ grep EC_KEY\; /usr/include/openssl/ec.h
typedef struct ec_key_st EC_KEY;

and ecdsa.h includes it:

#ifndef HEADER_ECDSA_H
#define HEADER_ECDSA_H

#include <openssl/opensslconf.h>

#ifdef OPENSSL_NO_ECDSA
#error ECDSA is disabled.
#endif

#include <openssl/ec.h>

<snip>
19  Bitcoin / Development & Technical Discussion / Re: Bit-error in Block 108009, Tx 23 ? on: September 21, 2011, 04:40:34 AM
I seriously doubt that anyone would lose money as a result of this kind of problem but investing in a light background continuous valdation process and some sort of reporting to the end user like a message box that provides instructions for reporting the presence of corrupted blocks...

.. might be a good idea.  (sorry forgot to finish that sentence)
20  Bitcoin / Development & Technical Discussion / Re: Bit-error in Block 108009, Tx 23 ? on: September 21, 2011, 04:34:57 AM
I've seen enough errors to believe that hardware is a perfectly reasonable possible source of error in this case.

I am fully in agreement that hardware could possibly be the cause.  Perhaps what I'm really trying to say could be summarized like this.

  • Because this software is in beta, it too could be the cause, in fact this is very likely for that reason alone.  I have had it crash for no reason at all (usually it complaining about its own database files after an improper shutdown).  This could be happening to everybody and we may just not know it.
  • RAID is not a solution to the specific conjecture offered.  If this were a hardware error under identical circumstances, RAID would have given no benefit, just because of what RAID is and isn't.
  • Software issues that could contribute to this include the following: misuse of stray pointers, accessing freed memory, threading-related issues, buffer overruns.  Or, it could be hardware.
  • A potential tool to help rule out software issues might be to distribute this blockchain verification code and have others run it.  I'd run it.  Who knows.  Maybe my copy of the block chain will have a similar kind of corruption in a different block.  If it did, then there's likely a software gremlin lurking.




The key is the nature of the corruption, which was described as a bit error. Honestly, I did not read the initial post closely enough, and thought it was a bit flipped in a hash value, but rereading I see the error is a single bit value that should be a zero across four bytes.  That could have be an _overwrite_ of a 32 bit memory location, since zero is an extremely common value and single bit values are fairly common. There is no clear connection between the two.

A hash bit error, in contrast, would increase my suspicion of hardware. Otherwise software must have read the value, flipped a specific bit (or ORd it against a mask), and wrote it back. The crypto stuff might do that but other type of software errors are unlikely to produce that effect. But that debate can be tabled until hash bit errors or other obvious bit errors are reported.

I seriously doubt that anyone would lose money as a result of this kind of problem but investing in a light background continuous validation process and some sort of reporting to the end user like a message box that provides instructions for reporting the presence of corrupted blocks. If that reveals a significant problem (beta testing would probably be enough if that is the case) then the remedy would be an error correction method to replace corrupted blocks from the network (and more instrumentation to try to isolate any software causes).
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