2013-03-20 RIP, Bitcoin, I think

[jgarzik]

This was linked in today's Financial Times Alphaville:

URL: http://unqualified-reservations.blogspot.com.au/2013/03/rip-bitcoin-i-think.html

RIP Bitcoin, I think

As predicted here last month, USG is killing Bitcoin - I'm pretty sure.  FINCEN has just issued its guidance on virtual currencies.

TL;DR: every currently operating Bitcoin exchange is operating in violation of the law - or, if you prefer, "law."  (Obviously "laws" made in this way are a profound and utter mockery of the good old English word "law," but there you go.)  Here is the complete Bitcoin guidance:
[...]

[1714598994]

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[chmod755]

Operating a BTC exchange anywhere in the world, however, is now "illegal" (as I read it).

US: <4% of the world....

[Gab1159]

And how is this killing bitcoins? They are trying to regulate the exchances and not the system itself which is good. With bitcoins going more and more mainstream, we ALL knew these kinds of things were bound to happen.

Once again this isn't much of a big deal if you ask me. Sure, 100% unregulated is better, but this doesn't come as a surprise.

+

They could have taken a much more aggressive stance against virtual currencies, which they did not. I personally like the fact that they aren't very hostile towards it.

EDIT: And add to the fact that the author of the blog post you posted has a very poor understanding of the situation and it looks like pessimistic misinformation. The comment section is good.

[conspirosphere.tk]

Sure, 100% unregulated is better

Sure, like the GLBSE (R.I.P.) 
I think that is better to not trust anyone with your coins.

[chmod755]

Once again this isn't much of a big deal if you ask me. Sure, 100% unregulated is better, but this doesn't come as a surprise.

IANAL, but I think that's a good thing. They're only regulating USD/BTC… if you don't cash out the money transmission part doesn't apply.

TL;DR: mine --> spend!

[RodeoX]

The government insisting on taxation and anti-money laundering measures is not the end of bitcoin. It is in fact the beginning of mainstream adoption. I consider this some of the best news bitcoin has ever seen. A statement of support from the government really. Proof that they recognize the coming age of digital money.

Look at the URL, you will see the important words. "Blog" and "unqualified".

[TraderTimm]

Bitcoin troll is obvious.

He thinks it is the end because he reads their guidance as law -- "As he sees it". Ah yes, how convenient for him. He got trounced in his last little screed, so I don't expect any different this time around.

[Gab1159]

Once again this isn't much of a big deal if you ask me. Sure, 100% unregulated is better, but this doesn't come as a surprise.

IANAL, but I think that's a good thing. They're only regulating USD/BTC… if you don't cash out the money transmission part doesn't apply.

TL;DR: mine --> spend!

Ehe

And if you want to avoid these regulations use non-US bitcoin exchanges.

[Gab1159]

Here's the Bitcoin Fundation's take on the matter: https://bitcoinfoundation.org/blog/?p=152

They make it clear that the "guidance" itself isn't very clear, and that it needs more details because right now it would be hard to put into action.

[jgarzik]

Bitcoin troll is obvious.

He thinks it is the end because he reads their guidance as law -- "As he sees it". Ah yes, how convenient for him. He got trounced in his last little screed, so I don't expect any different this time around.

+1

It is clearly a troll-blog; but it was mentioned in Financial Times, sadly...

[bowen151]

Could someone give me the clifnotes? My proxy at work is killing the OP's link and i dont have time to look around for alternatives

Muchas gracias!

[RodeoX]

Here we go again.  Yet another thread started by someone who didn't actually read the FINCEN report but copy/pasted someone else's incorrect interpretation of it.

To be fair, the thread was not started by the author of this nonsense.

[Gab1159]

Could someone give me the clifnotes? My proxy at work is killing the OP's link and i dont have time to look around for alternatives

Muchas gracias!

As predicted here last month, USG is killing Bitcoin - I'm pretty sure.  FINCEN has just issued its guidance on virtual currencies.

TL;DR: every currently operating Bitcoin exchange is operating in violation of the law - or, if you prefer, "law."  (Obviously "laws" made in this way are a profound and utter mockery of the good old English word "law," but there you go.)  Here is the complete Bitcoin guidance:
A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, 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. 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.
IANAL, of course, but as I read this: here are the things it is now perfectly "legal" to do with Bitcoin.   One, you can mine BTC and use them to buy alpaca socks.  Two, you can accept BTC in exchange for your alpaca socks.  Awfully generous of our wise masters, don't you think?

Operating a BTC exchange anywhere in the world, however, is now "illegal" (as I read it).  So, in a particularly ingenious touch, is mining BTC and selling it for money.  Ie, mining BTC.  Ie, it is quite plain that every player in the Bitcoin economy violates this grand ukase of the Holy Procurator - and, if prudent, will begin making plans to shut down permanently, tomorrow.

Unless, of course, it has a money transmitter license.  Obviously, none of these has been or will be issued to any Bitcoiners.  I have not of course seen the questionnaire (ha ha - the first question being, can you afford $2.5M in legal fees?), but I imagine it asks you how you know the monies you're transmitting are not the product of illegal activity.  Of course, Bitcoin provides no such assurance.  By design.  That's because it's well-designed - for a free country that doesn't exist.

It does not matter whether or not USG would issue a BTC exchange an MTL under any circumstances - because BTC will "get dead," as my daughter puts it, before even the friendliest of regimes could act on such an application.  I'm not getting the feeling this is the friendliest of regimes.

Ergo, we can expect the BTC economy to segment rapidly into two groups: those who see the writing on the wall and cash out/cut losses as fast as possible, and those who for whatever reason want to play whack-a-mole with Washington.  Washington will have great fun with the latter.

However, the essential problem is that BTC cannot maintain its exchange rate against USD, for reasons discussed in the prior post, without the present burgeoning white economy.  The BTC black economy has many ways to fight USG - but it ceases to exist if the white economy ceases to maintain the BTC price above zero.  Criminals don't work for free.

But, of course, I could be wrong.  There is certainly no investment advice here at UR...

Here's the link to the original FinCEN guidance: http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

[jgarzik]

So, some dude has a blog and writes his opinion about bitcoin dying and this is news?

Try reading the first line of the OP.

A major financial newspaper, the Financial Times, thought it was news.

[imanikin]

...
TL;DR: mine --> spend!

This is the only positive i see in this regulation; it will give "the bitcoin community" in the US more incentive to spend B on goods and services, rather than convert it to USD.  

Hopefully, it will lead to a "Separate but Equal" financial world of virtual currencies, into which some people can move completely, without ever having to convert digital currencies to wooden ones again.

[Zangelbert Bingledack]

Moldbug is just a pot-stirrer. He is good at what he does. Don't give him any more attention.

[wtfvanity]

Here we go again.  Yet another thread started by someone who didn't actually read the FINCEN report but copy/pasted someone else's incorrect interpretation of it.

To be fair, the thread was not started by the author of this nonsense.

And it was put into the Press section. Noting that this article came from the FT... as a press article about Bitcoin. Did you see who did the OP too? Idiot.

[Rincewind]

Could someone give me the clifnotes?

Anon blog poster predicts government regulation related bitcoin crash in January, comes back to shout from the mountaintop 'see, i was right,' despite the fact he's not only misinterpreted the FinCEN guidance release, but he's also applied US Treasury guidance over the operation of Exchanges as if it applies to every individual on earth.

In other words, FinCEN doc was TL;DR, but it looks officious, which must be bad, so it's bad. Bitcoin will certainly die. OP did not seem to detail why BTC price went up in wake of FinCEN release. I'm sure he'll do that in May when BTC is in its death throes at $100 USD+ per.

[cbeast]

This is the expected FUD with the latest rally. Even FinCEN is nothing but fearful and ignorant bureaucrats. The winds of change are blowing even if political promises failed to do so.