Bitcoin at the US Senate

[waxwing]

You can also post ideas here, of course. Although I think Patrick prefers to use the Foundation forum, I read both.

Hi Mike,

Well, here is my suggestions...

I think one of the biggest issue at the moment is a wide spread misconception about what exactly is Bitcoin. As evidenced by this forum, there is a mass of people which are not aware that Bitcoin is just a software which allows people to use a medium of exchange defined as BTC. There are many people projecting their expectation and insecurities over the concept of the Bitcoin software.

If I was called to testify, I would ensure to be prepared to explain how exactly the Bitcoin software works in every detail, but with simple explanations. In other words, I would really teach the enquirers as best I could about the Bitcoin software. I would even do live demonstrations to let the audience to understand better what exactly the Bitcoin software can do.

I believe that providing the most accurate information to people in position of power always results in good outcomes. Misinformation can lead to wrong decisions and serious failures. It is important to ensure the enquirers understand that:

- BTC is NOT a currency (the enquirers need to be assured that BTC is a digital medium of exchange which is evaluated against national currencies, mainly the USD. This is very important because it will shape the future decisions to create laws regarding the utilization of BTC in the financial market. So they have to learn that BTC has to be regulated as medium of exchange, not as currency.)

Please explain the functional difference between "currency" and "medium of exchange".

- Bitcoin was NOT developed to undermine the utilization of fiat currencies or replace money transmission business (this is one of the more common misconceptions about the Bitcoin software. People believe that Bitcoin was made to replace business like Visa, Paypal, Western Union, etc. This is, of course, a delusional belief. The Bitcoin software could never replace such business because it not offer the necessary structure required to operate such business. So it is important the enquirers understand that the Bitcoin software was initially developed to offer an alternative way to transmit money. I would tell the enquirers that any financial institution today could use the Bitcoin software to transmit money, including any departments of the federal government such as the IRS.)

If you think that Bitcoin was not meant to replace the functioning of businesses like Western Union, perhaps you could explain the very first sentence of the very first thing ever written about Bitcoin by Sastoshi Nakamoto (the whitepaper):

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

- Bitcoin do NOT facilitate criminal activities (this must be explained in very precise details because is directed correlated to national security. The enquirers must to know that transactions generated by the Bitcoin network are not under control of one single entity, but it is recorded in a single virtual ledger which is quite difficult to tamper. So there is a way to keep track of how much money is transmitted in the Bitcoin network.)

I would like to hear these "very precise details". If like me, you consider that the transfer of cash is itself not a criminal act, so that money laundering is not a real crime, that's one thing; but to say that cash does not "facilitate" criminal activities is a bit of a stretch... There is no difference with Bitcoin, since it functions (at least for now) just like cash, except on the internet. My point is that trying to argue with the US govt. that "Bitcoin does not facilitate criminal activities" will be a completely losing proposition, since they do believe that there is such a crime as "money laundering", and to the extent that one does believe in such a thing, Bitcoin is an excellent way to do it, obviously.

The subtext of all your comments is that you (and many others here) think that the US government can be persuaded to look at Bitcoin in a friendly way. Indeed they can, but only if it is bent to their will.

[1715048380]

1715048380

[chsados]

By entering into a dialogue with the US govt. about it, you are tacitly accepting that they have any authority to make such rules.

They do, like it or not.  If you fail to understand this you are living in a bubble.

Bitcoin is not American, for a start.

Definitely, but they can control Bitcoin in America to a limited extent.

So what authority do you think they have? They shouldn't have authority over me at all (in theory) since I neither live nor have citizenship of the US - and nevertheless their laws impact on my freedom to transfer my money between different countries and bank accounts, which is already abhorrent.
But that aside, do you really think they have ethical authority over private transfers of wealth between individuals?

Be aware I'm not making the argument that all taxation is unethical (I'm not taking a position on that, don't want to go down that road).

And leave out these ad-hominems "dumb", "living in bubble" etc. Argue the point.

It's up for debate what authority they should have.  But they can thwart businesses from accepting it if Bitcon remains symbolic to pedo/terrorist/drug users.  

A few examples, they can shut down BitPayCoinbase (which have been instrumental to bitcoins recent success), and every other company residing in the US.  This will only force businesses to move outside of America.  I don't think the Senate is naieve enough to think they can completely control bitcoin if/when they understand it.

But I regress, why do you think it is bad for communication with the Senate?  What harm can be done in reality, and how would you argue against my statement that only good can become of this - with the stipulation that if no communication was made they would already do what they are set out to do?

Things that will likely happen and become legislation specifically for Bitcoin (and already has in the bitcoin-sphere) is the continuance of AML/KYC laws.

[waxwing]

It's up for debate what authority they should have.  But they can thwart businesses from accepting it if Bitcon remains symbolic to pedo/terrorist/drug users.  

A few examples, they can shut down Coinbase, and every other company residing in the US.  This will only force businesses to move outside of America.  I don't think the Senate is naieve enough to think they can completely control bitcoin if/when they understand it.

But I regress, why do you think it is bad for communication with the Senate?  What harm can be done in reality, and how would you argue against my statement that only good can become of this - with the stipulation that if no communication was made they would already do what they are set out to do?

We're rehashing old ground now. What you say in the first sentence, I already said in post 58. And my answer to your question "what harm can be done" is in post 61: "By entering into a dialogue with the US govt. about it, you are tacitly accepting that they have any authority to make such rules."

[chsados]

It's up for debate what authority they should have.  But they can thwart businesses from accepting it if Bitcon remains symbolic to pedo/terrorist/drug users.  

A few examples, they can shut down Coinbase, and every other company residing in the US.  This will only force businesses to move outside of America.  I don't think the Senate is naieve enough to think they can completely control bitcoin if/when they understand it.

But I regress, why do you think it is bad for communication with the Senate?  What harm can be done in reality, and how would you argue against my statement that only good can become of this - with the stipulation that if no communication was made they would already do what they are set out to do?

We're rehashing old ground now. What you say in the first sentence, I already said in post 58. And my answer to your question "what harm can be done" is in post 61: "By entering into a dialogue with the US govt. about it, you are tacitly accepting that they have any authority to make such rules."

And I have already stated that I do not think that is a logical assumption.  

Let me put it in a different context:  How will doing nothing i.e. not communicating with them help Bitcoin in any way?  Don't you think communication will at least give us a chance to "argue" our POV?  If they listen/agree or not what difference does it make?

All in all, they will do whatever they want, because they can.  Attempting to educate them is a step towards steering them in the right direction.

[augustocroppo]

By entering into a dialogue with the US govt. about it, you are tacitly accepting that they have any authority to make such rules. They don't. Bitcoin is not American, for a start. As much as I'm concerned about what governments think and do (I believe they can create huge problems for Bitcoin adoption), I'm even more concerned about the extent to which the general population will be swayed by their governments' propaganda. As you say, many possible rules they could make up are theoretically unenforceable. I mostly worry that people will fall into line though, especially with concepts like coin tainting, as apparently the masses have already been thoroughly and effectively brainwashed into believing that there is such a crime as "money laundering".

The USA federal government have the authority to make whatever rules is necessary to regulate whatever happens inside their political borders. Whatever a person accept or not, the USA federal government can and will rule over a software being used by USA citizens, mainly when this software use an algorithm which was developed by themselves.

[bg002h]

I would like to attend this meeting, even if I have to sit quietly in the back. Is there information on how I might be able to do that? I,d also like to help any way I can (I'm near DC)

Call your congressman's office and ask. The congress reps are really approachable.

Edit: Rassah -- glad to see you are on the right track.

[augustocroppo]

Please explain the functional difference between "currency" and "medium of exchange".

A currency can be literally converted to another currency, while a medium of exchange cannot be converted to a currency. This happened many times during periods of fast inflation in the Brazilian economy. The Brazilian central bank had to convert the currency in circulation for another, otherwise there would not be enough currency in circulation to keep the Brazilian economy stable. Thus, BTC cannot be converted to another currency because it supply and circulation are not under the control of a central authority.

Moreover, BTC cannot be literally hold by an individual, while a currency can be hold in form of banknotes and coins. No person hold any BTC, but only a private password which allows them transfer some digits from one imaginary point to another. Without a computer with access to the Internet, that process is impossible to be reproduced.

If you think that Bitcoin was not meant to replace the functioning of businesses like Western Union, perhaps you could explain the very first sentence of the very first thing ever written about Bitcoin by Sastoshi Nakamoto (the whitepaper):

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.

The first sentence is describing the Bitcoin software allows payments being made using the Internet without the need of a financial institution to validate the transactions.

Which part you did not comprehend?

I would like to hear these "very precise details". If like me, you consider that the transfer of cash is itself not a criminal act, so that money laundering is not a real crime, that's one thing; but to say that cash does not "facilitate" criminal activities is a bit of a stretch... There is no difference with Bitcoin, since it functions (at least for now) just like cash, except on the internet. My point is that trying to argue with the US govt. that "Bitcoin does not facilitate criminal activities" will be a completely losing proposition, since they do believe that there is such a crime as "money laundering", and to the extent that one does believe in such a thing, Bitcoin is an excellent way to do it, obviously.

The subtext of all your comments is that you (and many others here) think that the US government can be persuaded to look at Bitcoin in a friendly way. Indeed they can, but only if it is bent to their will.

If you think that conceal or disguise money obtained from illicit trade is not a crime, then I am sure you are not properly informed about the current legislation of many countries.

[corebob]

I don't know how these Senate hearings go down, but I would be very conservative about what I would be willing to talk about.
If a discussion starts to stray into issues like crime, money laundering, hacking and the like, I would constantly refuse to have an opinion about it as I can not not talk on behalf of others.
This is not something bitcoin can or should answer for.

That might be something worth preparing for.

[balanghai]

Maybe it's nice to point out that bitcoin is independent from any sovereign states that the governments do clearly understand that they should not attempt any take over.

Take over means, influence the code and the institutions bridging fiat and bitcoin.

That said it is wise to lay open the issue of privacy and also the surveillance.

[ffssixtynine]

I knew some of the bitcoin crowd were rather extreme in their views but the niavity shown by posts in this thread defies belief. Bitcoin wasn't created to take down fiat currencies or visa or paypal. They are all different things with different pros and cons. Bitcoin has nothing whatsoever to do with the rights and wrongs of the current financial system other than giving power back to individuals over their own money. Which is an awesome thing to do.

It's a financial instrument, an awesome technology, that's completely new and hence existing regulations don't cover it.

These kinds of meetings are required to ensure that when regulations and laws are updated, they are updated with an understanding of bitcoin and not without.

So do you want a bitcoin where it's entirely black market, (more) rife with scammers, and usable only by the technical elite and criminals, or do you want it to give power to real people, people who want to send money to their friends or relatives, who want to accept payment without hassles and political interference, who can't access bank accounts or credit cards, and so on?

If you want it to be black market and exclusive, tell the 'Feds' where to go, but that makes no sense at all. They aren't all against you and they aren't all out to kill bitcoin. It's the attitudes like some of you have demonstrated here that do give bitcoin a bad name, that do make people want to throw it back at you. You sound like petulant teenagers telling mum and dad you hate them before running up to your room.

Bitcoin isn't yours. It doesn't belong to you. It belongs to everyone. So don't spoil it for the rest of us. Whoever is speaking on behalf of bitcoin needs your support, not your petulant rants.

TL;DR - grow up, man up, look around and smell the coffee. Bitcoin needs to fit into the regulatory climate so it can become mainstream. Only then can it truly throw the financial shackles off much of the world. And lord help us it bloody needs it.

[Robert Lewandowski]

Will this be broadcast anywhere such as CSPAN? 

[Rassah]

Man, if simply meeting with the government regulators is going to totally kill bitcoin, I'm out. Anyone want my 10BTC? It obviously has no chance to stand up to any government, and will be worthless in... What, one or two weeks?

[Tirapon]

Man, if simply meeting with the government regulators is going to totally kill bitcoin, I'm out. Anyone want my 10BTC? It obviously has no chance to stand up to any government, and will be worthless in... What, one or two weeks?

Sure, I'll have it. Address in my sig. Cheers.

[miscreanity]

Three points:

• Governments can change in the manner that businesses threatened by the open source software development model adapted. The long-term benefits far outweigh immediate negative reactions.
• Dollar supremacy is waning. Should other nations (Europe, China, Russia, etc.) mark their assets (esp. gold) to unleveraged markets, US debt would implode virtually overnight. Bitcoin stands to be a beneficiary of that event, as it has no debt foundation and does not recognize borders; likewise, it allows access to an international market simply by holding.
  
  Having XBT on the books would offset declining assets, particularly those held by the Federal Reserve and numerous other governmental agencies. While Bitcoin may be a risky asset, there is a certain catastrophe looming - any option to mediate that should be pursued.
• The nascent Bitcoin economy has the potential to create hundreds of thousands of full-time jobs and independent contractors that do not require relocation outside of the US. This could also attract and renew international interest in American investment.

The fact that Bitcoin will thrive with or without the USG may be too confrontational, but it is a relevant item as well.

[TheButterZone]

Every time an inch of liberty is ceded, the totalitarians take googolplex light years. It will take illegal acts such as perjury and bribery to determine whether the exercises of economic liberty using bitcoin are eventually made multiple felonies (despite having no victims but we the future defendants), or not.

The Foundation vs The Establishment (which could very easily turn bitcoin against itself by paying untraceable BTC bribes and kickbacks to lawmakers to make BTC entirely "black market" i.e. eliminate their legal competition): which do you think has deeper pockets?

[thezerg]

1. Bitcoin is a unique asset class that allows Americans to diversify investments and therefore may allow America to better weather financial storms.  The 2008 financial crisis showed how the banking industry companies are tightly coupled and have a poorly understood interactive complexity.  These are the exact attributes identified by Charles Perrow in his seminal work "Normal Accidents" as creating a system that is prone to significant negative events.  Bitcoin's worldwide scope and weak connections to the traditional financial industry make it an independent system that is likely to remain unaffected by systemic financial industry crises.

1a. Banks today make most of their money in fees.  They are profiting from the financial difficulties or careless mistakes make by working Americans.  Bitcoin does not levy these fees.


2. Bitcoin is a worldwide phenomenon and so government intervention is limited in its possible scope.  Excessive regulation will simply drive companies elsewhere.  Excessive paperwork and registration fees (for MSB certification) is ALREADY driving legitimate bitcoin companies out of the USA (Tangible Cryptography, etc).  Regulation is difficult and possibly unconstitutional due to the unique digital nature of the system -- given that a Bitcoin has no intrinsic value is transferring one simply "speech"? (etc)  I'm sure Patrick knows these details much better than I, but the point is to throw out some FUD about the efficacy and value of any bill passed -- because nobody wants to author a stupid bill -- not to make an authoritative determination.

2a.  The MSB framework may make sense for a billion dollar company handling a trust-and-debt-based currency, but does not make sense for a cryptographically secure asset based system capable of micro-payment transfers.  To remain competitive in this critical emerging industry, a bill should be passed in the same philosophy as the one legalizing "kickstarter" projects.  This bill should create a single federal MSB registration system covering companies that wish to handle digital currencies below a certain value threshold.


3. The silk road headlines giving a USD value on the bust tremendously exaggerate the quantity of drugs because many of the coins were earned when Bitcoin was 1/50 or less of its current value ($300 vs $5).

3a. Arm yourself with lots of statistics about USD drug trade.

[justusranvier]

Just make sure the Senators understand that possibilities for untraceable bribes and kickbacks exist with Bitcoin, and we'll never have any more problems from Washington again.

[jbreher]

The USA federal government have the authority to make whatever rules is necessary to regulate whatever happens inside their political borders.

::le sigh:: Categorically false. The USA federal government has only the authority granted to it by the Constitution. Sadly, very few Americans understand this any longer. Even so, you will find very few elected officials that actually claim that they are not bound by the limits of the Constitution - no matter how tyrannical they act in fact.

[Siegfried]

The USA federal government have the authority to make whatever rules is necessary to regulate whatever happens inside their political borders.

::le sigh:: Categorically false. The USA federal government has only the authority granted to it by the Constitution. Sadly, very few Americans understand this any longer. Even so, you will find very few elected officials that actually claim that they are not bound by the limits of the Constitution - no matter how tyrannical they act in fact.

Might makes right.

[Arksun]

- BTC is NOT a currency (the enquirers need to be assured that BTC is a digital medium of exchange which is evaluated against national currencies, mainly the USD. This is very important because it will shape the future decisions to create laws regarding the utilization of BTC in the financial market. So they have to learn that BTC has to be regulated as medium of exchange, not as currency.)

Surely a currency IS a medium of exchange, thats its very definition.  Given that one can exchange Bitcoins for an increasingly wide range of items from electronics to holidays to ordering a pizza, or simply exchanging to other currencies of course via the many exchanges all over the world, it would be hard to convince the Senate that Bitcoin wasn't becoming a currency.