Online Payment Systems Have Been Decimated

[mgio]

I don't where conspiracy theory starts in what I am about to say.

AFAIK it seems to work a bit like this. I'd like to know a more accurate view of how it works.

The USA tends to lead the world in everything. It's still very dominant. AFAIK laws tend to be formed in the US usually under pressure from a cartel and very powerful interests and companies. This then gets exported off to the UK, pushed into the UK and then to the commonwealth and former commonwealth (like Australia), somewhere along the lines countries which have less obvious ties, less historical ties then may follow suit; countries like Chile.

Meanwhile you still have countries which don't follow suit. Argentina, Iran, China and so on. These countries could carry on using Bitcoin... but would they and would they be enough? - would they be enough to support and at what price?
Looking at where the trade is Bitcoin is still very much in the influence of the USA.

https://en.bitcoin.it/wiki/Bitcoin_Map
http://www.thegenesisblock.com/mapping-bitcoin-adoption-a-global-perspective/

The significant ones look like China & Russia. If it wasn't for this I would be more bearish. Seems amazing there's not more Bitcoin in South America.

Has anyone got a better view of how politics tend to fan out around the globe? I'm no expert, just the impression I get from the news and propaganda.

I guess countries not aligned with the USA could attack Bitcoin independently of course but my point is that the USA is a big question for Bitcoin - we are expecting the USA to attack it and when that happens we can expect many but not all countries to follow suit.

This.

If the US attacks Bitcoin it will be a historic buying opportunity for people in Non-US-aligned countries. It will also be an opportunity of geopolitical magnitude for developing countries to break the US hegemony.

Just imagine if China and Russia were backing a currency outlawed in the US. By shutting down US-based services, the services would just move to other countries and the US government would lose what little influence they have over Bitcoin atm. One could easily and anonymously connect to a Chinese-hosted e-wallet through a VPN on a mobile and use it to transfer funds without government being able to step in. It would be the perfect currency for anti-government people in the US to use as a means of exchange and also a new way for the Chinese to make money from subverting the US government. If the US tries to criticise China for this, China could simply claim it's a matter of freedom of speech as Bitcoin is simply code...the US would look fascist whereas China would look increasingly liberal.

As for Europe, one thing is influencing the individual national governments of NATO member states, but another is to convince the European parliament of a blanket ban of Bitcoin. My prediction is that most of Europe would stall any decisions. That would be a perfect opportunity for China to meddle in European politics. Already they are investing in Greece, and as we know Greek politicians can easily be bought. If Europe would go against the US and not ban Bitcoin, that would create a deep chasm between Europe and the US, further decimating US power.

My whole point is that if the US moves to ban Bitcoin, then Bitcoin will become the kind of crowbar that Non-US-aligned countries have long had wet dreams about using to apply soft power to break the US hegemony (which is based on hard power).

I'm not saying that this will influence US policymakers, as it seems like the US has shot itself in the foot many times before. But it does make it likely that US would think twice before they would try to shut down Bitcoin.

I think you are vastly overestimating the political importance of bitcoin. Presently it has the market cap of a medium sized company. A single company. It is like a single stock on the NYSE. The US isn't going to give a damn if they ban bitcoins and Europe doesn't.

Yes, I have only been talking about the US govt, because I think stopping the flow of dollars to bitcoin is enough to crash bitcoins price. Yes, bitcoins will survive if they can only be traded in Europe, South America, and Asia but they will suffer without the US dollar. People are going to still want US dollars. Whether or not you can trade them for bitcoins is not going to effect the US economy one bit. Maybe if bitcoin had taken over as one of the world's major currencies, the story would be different. But right now bitcoin is small potatoes.

[1713853920]

1713853920

[jinni]

I don't where conspiracy theory starts in what I am about to say.

AFAIK it seems to work a bit like this. I'd like to know a more accurate view of how it works.

The USA tends to lead the world in everything. It's still very dominant. AFAIK laws tend to be formed in the US usually under pressure from a cartel and very powerful interests and companies. This then gets exported off to the UK, pushed into the UK and then to the commonwealth and former commonwealth (like Australia), somewhere along the lines countries which have less obvious ties, less historical ties then may follow suit; countries like Chile.

Meanwhile you still have countries which don't follow suit. Argentina, Iran, China and so on. These countries could carry on using Bitcoin... but would they and would they be enough? - would they be enough to support and at what price?
Looking at where the trade is Bitcoin is still very much in the influence of the USA.

https://en.bitcoin.it/wiki/Bitcoin_Map
http://www.thegenesisblock.com/mapping-bitcoin-adoption-a-global-perspective/

The significant ones look like China & Russia. If it wasn't for this I would be more bearish. Seems amazing there's not more Bitcoin in South America.

Has anyone got a better view of how politics tend to fan out around the globe? I'm no expert, just the impression I get from the news and propaganda.

I guess countries not aligned with the USA could attack Bitcoin independently of course but my point is that the USA is a big question for Bitcoin - we are expecting the USA to attack it and when that happens we can expect many but not all countries to follow suit.

This.

If the US attacks Bitcoin it will be a historic buying opportunity for people in Non-US-aligned countries. It will also be an opportunity of geopolitical magnitude for developing countries to break the US hegemony.

Just imagine if China and Russia were backing a currency outlawed in the US. By shutting down US-based services, the services would just move to other countries and the US government would lose what little influence they have over Bitcoin atm. One could easily and anonymously connect to a Chinese-hosted e-wallet through a VPN on a mobile and use it to transfer funds without government being able to step in. It would be the perfect currency for anti-government people in the US to use as a means of exchange and also a new way for the Chinese to make money from subverting the US government. If the US tries to criticise China for this, China could simply claim it's a matter of freedom of speech as Bitcoin is simply code...the US would look fascist whereas China would look increasingly liberal.

As for Europe, one thing is influencing the individual national governments of NATO member states, but another is to convince the European parliament of a blanket ban of Bitcoin. My prediction is that most of Europe would stall any decisions. That would be a perfect opportunity for China to meddle in European politics. Already they are investing in Greece, and as we know Greek politicians can easily be bought. If Europe would go against the US and not ban Bitcoin, that would create a deep chasm between Europe and the US, further decimating US power.

My whole point is that if the US moves to ban Bitcoin, then Bitcoin will become the kind of crowbar that Non-US-aligned countries have long had wet dreams about using to apply soft power to break the US hegemony (which is based on hard power).

I'm not saying that this will influence US policymakers, as it seems like the US has shot itself in the foot many times before. But it does make it likely that US would think twice before they would try to shut down Bitcoin.

I think you are vastly overestimating the political importance of bitcoin. Presently it has the market cap of a medium sized company. A single company. It is like a single stock on the NYSE. The US isn't going to give a damn if they ban bitcoins and Europe doesn't.

Yes, I have only been talking about the US govt, because I think stopping the flow of dollars to bitcoin is enough to crash bitcoins price. Yes, bitcoins will survive if they can only be traded in Europe, South America, and Asia but they will suffer without the US dollar. People are going to still want US dollars. Whether or not you can trade them for bitcoins is not going to effect the US economy one bit. Maybe if bitcoin had taken over as one of the world's major currencies, the story would be different. But right now bitcoin is small potatoes.

Simply looking at the dollar trade volume of Bitcoin is misleading. Mt. Gox and BTC-E are not based in the US and are not dependent on US banks to trade Bitcoin. It is fair to assume that a big part of the dollar trade over at BTC-E is from non-americans as US dollars are big in Russia as an alternative to Rubles. About the MtGoxUSD trade it's hard to know.

Let's do a back of the envelope calculation. By adding up the 30-day volume of btc-eUSD and all non-USD exchanges we see that it already accounts for about 27% of all the transactions. So, if a third of the volume disappears overnight, then of course it will affect the price but the infrastructure can quickly be moved when all you need to do is the copy the code over to a server in another country.

Sure Bitcoin is small potatoes in terms of market cap right now. But that is just the pricing in markets - the real value of Bitcoin is much higher and I think more and more people, especially in the Chinese government are starting to realize that.

[Stephen Gornick]

Its downright insane. I never thought I'd see anything quite so insane as this. They literally shut down every single exchanger that was remotely trustworthy that allowed you to buy Liberty Reserve. Thats insane.

Looks like AurumXChange's VouchX (a redeemable code) could be gone too now, as is claimed by a merchant:

AurumXchange suspends all VouchX codes?
 - http://bitcointalk.org/index.php?topic=225327.0

[Pale Phoenix]

How are people not making the switch? Is it because all the exchangers are dead? When the wires suddenly start clearing, will the Bitcoin price go on some crazy jump upwards? Or are people just freaked out of online payments entirely and are leaving?

Heavy users are probably still reeling from the loss of their assets. It will take time for the uncertainty to clear, but I think people will eventually migrate to Bitcoin, especially if we continue to experience lower volatility.

I don't believe the USG has any intention of banning the use of Bitcoin, but they obviously intend to impose KYC and AML rules at the points of exchange. Exchanges have always been the weak links, but many are getting their houses in order, and new, compliant, exchanges will come online. In addition, there will always be ways to get money in and out of Bitcoin outside of the professional exchanges (OTC, LocalBitcoins, etc.) for people requiring some semblance of anonymity.

[Peter Lambert]

Here is a little thought experiment for you:

Let's say the government shut down all the methods to get fiat in and out of the bitcoin exchanges but the exchanges themselves weren't touched.

Let's say that there was only one method you could move cash in and out but you were limited to $10 a day. It was still free, instant, and unlimited to move bitcoins in and out of the exchange.

What do you think would happen to the price?

People will get creative to move the bitcoins. Remember when there was a guy with a bunch of bitcoins, wanted to use them to buy an airplane? A group of investors who wanted to own bitcoins used their dollars to buy the plane, then traded the plane for the bitcoins. Large amount of bitcoins changed hands, no exchange involved.


Maybe the price of bitcoins did not move upon the Liberty Reserve news because stuff like that is already priced into the market?

[ThatDGuy]

Exchanges have always been the weak links, but many are getting their houses in order, and new, compliant, exchanges will come online. In addition, there will always be ways to get money in and out of Bitcoin outside of the professional exchanges (OTC, LocalBitcoins, etc.) for people requiring some semblance of anonymity.

Very much agreed - despite that, it's incredible to have seen how all of these takedowns over the last month have only helped consolidation of BTC price. 

[EuroTrash]

http://www.paymentssource.com/news/why-there-is-a-demand-for-liberty-reserves-services-3014312-1.html

I know Matonis is extremely pro-bitcoin but he clearly explains why Liberty Reserve has left a void that can't stay empty.
This is bullish for BTC. Give it time. New exchangers will pop up in every country.

[chufchuf]

Calm down, the exchangers that are going down are only the domain names that were listed on the official LR exchangers list. And thats only because the Preet guy in NY is pretentious and prone to hyperbole and melodrama.

[Jason]

In fact, 'the next one' here is WM-Center.

Well, as they did in the past for a few sites they can't seize because they are off-shore, they seize the domain name (so people can't go to that site anymore).

Another reason why no-one should use a .com, .net, .org or other TLD that are under U.S. control.

Not a good comparison.

wm-center is up and running right now.  The only thing seized was the domain wm-center.com.  If you visit wm-center.ru you will see that the exchange is up and running normally -- with the caveat that they are no longer servicing US residents.

If the US jackboots can somehow convince the Russian authorities to arrest those behind wm-center.ru and allow them to be extradited to the US, then it will be a fair comparison.  I think it would be safe to bet that this won't happen anytime soon.

The US government is not the omnipotent force many here seem to believe.

[Matthew N. Wright]

The US government is not the omnipotent force many here seem to believe.

It's not a question of omnipotence, it's a question of boundaries, the US's lack of respect for them and the lack of accountability for their actions.

[Jason]

It's not a question of omnipotence, it's a question of boundaries, the US's lack of respect for them and the lack of accountability for their actions.

I agree with you that the US doesn't respect boundaries (and sadly, too few people object to this), but it will be a cold day in hell when the Russians allow the US to start extraditing Russian residents for money laundering.

[Matthew N. Wright]

It's not a question of omnipotence, it's a question of boundaries, the US's lack of respect for them and the lack of accountability for their actions.

I agree with you that the US doesn't respect boundaries (and sadly, too few people object to this), but it will be a cold day in hell when the Russians allow the US to start extraditing Russian residents for money laundering.

They wouldn't bother. Why do publicly what you can do privately with bribes?

[ehoffman]

In fact, 'the next one' here is WM-Center.

Well, as they did in the past for a few sites they can't seize because they are off-shore, they seize the domain name (so people can't go to that site anymore).

Another reason why no-one should use a .com, .net, .org or other TLD that are under U.S. control.

Not a good comparison.

wm-center is up and running right now.  The only thing seized was the domain wm-center.com.  If you visit wm-center.ru you will see that the exchange is up and running normally -- with the caveat that they are no longer servicing US residents.

If the US jackboots can somehow convince the Russian authorities to arrest those behind wm-center.ru and allow them to be extradited to the US, then it will be a fair comparison.  I think it would be safe to bet that this won't happen anytime soon.

The US government is not the omnipotent force many here seem to believe.

That's exactly what I said...  US seize the domain name.  The site is still up, but for 90% of the users used to type '.com' the site is inaccessible.  It happened a lot with torrent sites.  U.S. can't shut down the trackers, but since they used a '.com', the U.S. revert to seizing the domain name.  That's how The Pirate Bay switched from .com to .se (and now .sx for similar reasons).

A lot of sites like Liberty Reserve went along pretty undisturbed until Bitcoin got more attention.  Then the U.S. just got an opportunity and invented a new law that they seem to use liberally to shut down anything they can.  They are not stopping the 'problem', just making it harder to evade it's fiat control.  And they are pretty much doing show-up to the world.  Why has the U.S. stayed low profile and then, a day, suddenly jumped in with all it's guns, that's a mystery.  But all of the 'bad' news on Bitcoins and drug buying, money laundering, etc. probably precipitated the things.  In other word, a sleeping monkey in a U.S. agency just woke up or got bored of playing solitaire all day long

[Jason]

That's exactly what I said...  US seize the domain name.  The site is still up, but for 90% of the users used to type '.com' the site is inaccessible.  It happened a lot with torrent sites.  U.S. can't shut down the trackers, but since they used a '.com', the U.S. revert to seizing the domain name.  That's how The Pirate Bay switched from .com to .se (and now .sx for similar reasons).

I only intended to draw attention to the fact that a domain seizure is not quite the same thing as arresting six people, seizing numerous bank accounts and other financial assets, and arranging to extradite them so that they can be put on a kangaroo trial and then added to the prison population of the developed nation with the highest percentage of incarcerated people in the world.

I can only surmise that the value of .com, .org, and .net domains is going to decrease as the rest of the world realizes the arbitrary and capricious manner the US government is willing to act in pretending that its laws apply all over the globe and not just within the boundaries of its "hallowed" lands.

The only way the US government can avoid significant blowback to the actions they took with LR and may be taking against other online payment systems is if they manage to stay in firm control of the narrative as they have apparently managed to do so far.  When stories come out about the innocent people who's lives have been ruined by the careless actions of the government, perhaps the tides will turn.  I won't hold my breath, but I will hope.