Hello all,
I have been doing my own research on bitcoin and other crypto currencies for quite some time. I joined bitcointalk to be able to submit my writings on the subject and hopefully improve my writing skills. I would like to eventually become a credible crypto journalist, since I am currently restricted to the Newbie form, I will post my first article here. We all have to start somewhere! I will happily answer questions and welcome criticism. Thank you!
ian
Legal Analysis of Crypto Currency (or Why Crypto Currency Will Never be Illegal)
With Crypto Currency being such a new and abstract concept, there are many who avoid it simply because of its confusing nature. This phenomena is nothing new; when it comes to abstract terms, there are many who ignore it, even get angry. One needs to look no further than Galileo to find a demonstration of how abstract thinking can baffle, even anger the powerful, ignorant majority. Those who refuse to understand or participate will simply benefit the early adopters, who will receive a larger share of gains to be extracted in the form of crypto coins. Additionally, those who will not put much thought into understanding a new currency concept likely will not contribute much, either, so their avoidance of use of crypto coins to make payments and transfers will have minimal impact on the development and extension of currencies such as Bitcoin.
There are still those who have the capacity and the will to understand this abstract concept, however they are less inclined to fully immerse themselves due to its possible legal ramifications. This notion is not entirely absurd, as the Bitcoin community is rife with illegal activities. Few people in the community have not heard of illegal tor-based sites such as the Silk Road, and to lesser extent, the Armory. There are alleged botnet operators who profess that they have the capability to use their victim’s computers to mine bitcoins, though claim it is not worth it compared to the other activities they have available. Many have lost small fortunes to scammers such as Pirateat40 and other HYIPs (high-yield investment programs), or have had their currency hacked from an unsecure exchange. There is also the generally poor legal reputation of peer-to-peer systems to consider.
In the summer of 2011, New York State Senator Charles Schumer discovered and publicly denounced the Silk Road and the Armory, and went on a crusade against Bitcoin. In this context, Bitcoin was described as "an online form of money laundering used to disguise the source of money, and to disguise who's both selling and buying the drug," This is likely the most negative legal opinion against Crypto Currencies, scaring away many would-be Bitcoin users due to their fear of being made into an example by the DEA. Schumer describes the Silk Road as “a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. It's more brazen than anything else by lightyears."
However, Schumer fails to mention that there are many such portals through which drugs are bought and sold. From my understanding the Mexican and Columbian Drug Cartels are still using US Dollars (and have not yet started accepting bitcoins), and the homemade Cannon which was found shooting marijuana parcels at Southern California was not dispatching Silk Road shipments.
Botnets have existed well before Bitcoin, and will continue to exist for a long time despite it. Botnet operators prey on their victims by offering them malware infested downloads, usually in the form of an illegal movie, software, or music file. By downloading and opening an unknown file without the proper precaution, it is rather easy for a botnet operator to grow their army. While mainly the fault of the ignorant computer user, many believe it can also be attributed to the software, movie, and record industries which restrict access to their content, in turn creating a criminal botnets due to downloading torrents infested with malware, all due to the fact that the end user cannot afford and in some cases cannot access the legal version of the content.
Scammers have existed long before money has even existed, while their actions are deplorable and shake trust within the community and ultimately the currency’s value, this is due to human nature and does not give any arguments against Crypto Currency. Laws will need to be made to protect people from false claims, but until then people will have to be vigilant for themselves and only send important sums of money to people that they truly trust.
While most people will agree that a world without such cartels would be a better place, a ban on Bitcoin would be trivial for these organizations, and would have little to no effect on the ability of a person to spend it. Many people see Bitcoin as a completely anonymous, untraceable, unstoppable force of money. This is Bitcoin’s greatest misconception, as it is merely a general ledger with pseudonymous properties. Bitcoin is far more accountable than banking, stock trading, gold bugging, or any other culturally accepted system of stored value. Unlike cash, Bitcoin comes with full accountability; every single transaction links back all the way to its creation, or ‘minting,’ allowing for unprecedented openness examination of people and organizations. While it is possible to conceal the ownership of one’s crypto currency, it can be done much more successfully with cash, as knowing a dollar bill’s serial number does not reveal where or when it had been spent.
There are no new crimes which have been invented with the advent of the internet and Bitcoin, they have merely facilitated the ability to communicate and spend money globally without consent of an authority to enforce their local laws. There are still many places where people are persecuted because of their race, religion, gender, sexuality or their ideas. The Arab Spring would have been much more difficult, if not impossible, without the internet and social media. Bitcoin falls along that line, since it is not political or geographically based, it can be used by anyone. With its pseudonymous properties, can be used inside of oppressive regimes, helping to support those who undermine and will ultimately overthrow their oppressors.
Lastly, a government which would choose to ban Bitcoin would be the equivalent of a nation in the 20th century banning the use of credit cards. Any country choosing to go against a system of open payments such as Bitcoin would be seen as increasingly technologically backwards the development of decentralized crypto currencies continues. This seems doubtful given that Fincen has recently made a report claiming it will not regulate crypto currency for users. Bitcoin is a long needed update to our currency system, and I for one am ecstatic about the future!
Bibliography:
Schumer
http://www.nbcnewyork.com/news/local/Schumer-Calls-on-Feds-to-Shut-Down-Online-Drug-Marketplace-123187958.htmlMarijuana Cannon
http://www.guardian.co.uk/world/2013/feb/27/marijuana-cannon-us-border-seized-mexico?CMP=SOCNETTXT6965Fincen report
http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf
