Bitcoin at the US Senate

[n691309]

I think the key is to get Bitcoin in the hands of as many people as possible.  To do that the exchanges need bank accounts.

To do that we need a bitcoin country. So why not build a country?

Definitively possible, there are ways to make new country like
http://en.wikipedia.org/wiki/Micronation

[1714791268]

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[Rassah]

Called to ask to check if it's possible to attend a hearing on Monday. The guy on the other end said, "Oh, you mean the Crypto-currency hearing? Yeah, I think it's open to the public."

Apparently they got that question about that hearing from quite a few people already, if he could just guess like that, so hopefully it won't be too crowded.

[Anon136]

Let me add a caveat - If you want to make sure Bitcoin never becomes successful keep standing by and watching while people like TradeFortress and Theymos screw everything up.  If I was trying to set up a legitimate exchange I would be absolutely out of my mind furious after what those 2 have done.

what has theymos done?

[acoindr]

Mike,

Thanks for the information and all the hard work.

It's understandable law makers will want to try to grasp how Bitcoin will impact law enforcement and banking, as it exists outside their familiar paradigm. I do have some suggestions to emphasize.

First, emphasize Bitcoin is a global technology, very much like email. Whatever they think of it, ultimately they can't completely control it, just as they can't control email, and attempting to do so might only hurt or limit the productivity of their constituents. The US tends to see itself as the center of the world, but that's a mistaken view when it comes to this. Other countries are rapidly picking up on Bitcoin.

Second, Bitcoin can be beneficial to law enforcement and the financial system. The public block chain records transactions forever enabling forensic analysis to aid detectives. Although gold isn't used now much as a currency, central banks worldwide do hold it as a financial backstop, so it continues to play a large role. Bitcoin, as a scarce commodity, could be used similarly.

So while it may be that Bitcoin changes how we do things with regard to law and banking, this may not need be seen as a negative. After all the current track record for banks and finance isn't much to boast about.

[acoindr]

As for claiming Bitcoin makes law enforcement easier because transactions can be tracked, I think that is a mistake because it is really not true.  You have change addresses that obfuscate things.  You can also just use intermediate addresses and in court they have to prove the entire chain of custody unless they have other evidence.  To trace things you have to depend on consolidation so trying to claim it makes law enforcement easier is just rhetoric.  In some specific cases it may help and it others it may hinder.

You may not be aware long before Silk Road was taken down operators of a copycat site not so buried within Tor were arrested. If I remember correctly they were identified via use of their Hushmail account, which agents also used to introduce a trojan on their machine to aid their investigation.

People, including law enforcement, will use technology differently and with various degrees of effectiveness. Very smart (or very large) law breakers will probably find a way to do what they want to do with or without Bitcoin. Using the block chain as a potential investigation aid is not rhetoric, because the degree of accuracy of computers is very high while the tendency of humans to never make mistakes is low.

[jbreher]

Bitcoin does solve some serious problems with the us economy (quanitative easing)

Bitcoin has the potential to solve such issues to the benefit of the populace. However, the Bitcoin solution to such problems (e.g. by stopping QE Infinity) actually works against the interests of congress-critters. If QE is curbed, and sound money takes the place of the FRN, then the FED and Congress lose the power to levy the hidden tax that is inflation. No inflation masking their real costs, and the gravy train of candy handouts that seem to come at 'no' cost stops. No freebie handouts, the populace starts agitating to replace those in office.

Never confuse 'things which benefit the populace' with 'things which benefit those in the legislature'. The interests of these two classes are almost always in direct opposition.

[NewLiberty]

As for claiming Bitcoin makes law enforcement easier because transactions can be tracked, I think that is a mistake because it is really not true.  You have change addresses that obfuscate things.  You can also just use intermediate addresses and in court they have to prove the entire chain of custody unless they have other evidence.  To trace things you have to depend on consolidation so trying to claim it makes law enforcement easier is just rhetoric.  In some specific cases it may help and it others it may hinder.

You may not be aware long before Silk Road was taken down operators of a copycat site not so buried within Tor were arrested. If I remember correctly they were identified via use of their Hushmail account, which agents also used to introduce a trojan on their machine to aid their investigation.

People, including law enforcement, will use technology differently and with various degrees of effectiveness. Very smart (or very large) law breakers will probably find a way to do what they want to do with or without Bitcoin. Using the block chain as a potential investigation aid is not rhetoric, because the degree of accuracy of computers is very high while the tendency of humans to never make mistakes is low.

Saying it is a potential investigative aide sounds fine.  Saying it will aid law enforcement because all transactions are traceable is rhetoric.

It aids law enforcement in that the serial numbers on bitcoin are easier to track than the serial numbers on dollar bills, and they don't need to be marked, they come that way.  Further, no subpoena is needed to look at the block chain, as they would need to pull bank records.

It is not a BIG help, so don't oversell it.

=========
Reading this before the meeting will give a bit of the perspective of what FUD the audience have already heard.
http://dailyreckoning.com/a-currency-the-fed-cant-figure-out/

[Rassah]

As for Theymos, he gave some kid special privileges, ran his ads, and made him think he was a big shot.  The TF went crazy and did all this stupid stuff.  I blame Theymos for causing this whole thing more than I blame TradeFortress.  I also blame the Foundation and the developers for sitting by and doing nothing while all this happens.

TradeFortress's #1 mistake was not using cold storage. Everyone will get hacked at some point in the future (or should at least assume they will) regardless of how awesome and official their security policies are. As for Theymos, you would have to assume that he knew how old TradeFortress was, or knew whether his service used cold storage or not. Far as I know, Theymos will run adds for everything (legal), since his job is to run the forum, not be the BBB and do security inspections for other businesses.
As for the foundation, Bitcoin Foundation and Bitcoin Police are two different entities. Plus the Foundation is trying hard to put on an image that they are not trying to control bitcoin or anyone in particular, and just want to educate people and promote bitcoin itself. Attacking TradeFortress would have hurt their image within the bitcoin community, even if it may have helped bitcoin itself in the long run.

Did you lose money with TradeFortress?

[Lauda]

I think the key is to get Bitcoin in the hands of as many people as possible.  To do that the exchanges need bank accounts.

To do that we need a bitcoin country. So why not build a country?

Definitively possible, there are ways to make new country like
http://en.wikipedia.org/wiki/Micronation

We should proceed this way.

[Melbustus]

Forgive me if this has been discussed (thread is too long to fully read now):

I'd be prepared to address consumer protection concerns. From the Chicago Fed's recent report (pdf), it's clear that a big concern is consumer protection, probably in several areas:

1) The high exchange-rate volatility of an unbacked asset; eg, consumers who buy/hold bitcoin may not be aware of the risk. Gov thinks it needs to protect them.

2) Theft/Loss of bitcoin; again, how to ensure that consumers are either aware of the risks, or have recourse.

3) Legitimacy of bitcoin-related businesses. This is obviously being discussed to death, but the path is fairly obvious; obey money transmission regs, at both the federal and state level. Obviously most established and VC-backed businesses are (or are getting) aggressive about this.


Personally, I'd rather let the market sort out each of the above issues, ultimately resulting in more intelligent consumer demand and consequently better companies, but the reality is that gov has taken a primary consumer protection role in the economy, and they're going to want to know how they can maintain such a presence in the bitcoin ecosystem. I think making the point that bitcoin companies are doing everything they can to be compliant and to set customer expectations appropriately can help. Additionally, efforts such as DATA should indicate reasonable goodwill.

FWIW, to all the "don't even talk to the gov" folks, it's in bitcoin's best interest to get into the most hands possible, and developing a decent relationship with existing authorities is a practical way to accomplish this.

[Melbustus]

On another front, there are now a few new bitcoin startups choosing to domicile in Singapore due to a more favorable regulatory environment. The US still has much of bitcoin ecosystem, but it's worth observing that this may rapidly change if the US doesn't get more inline with Canada, Germany, Singapore, and others, with regard to a sensible regulatory approach (most obviously, eliminating or streamlining the onerous state-by-state money-transmission/surety-bond situation). It'd be a shame for the US to sit idlely by while legacy regulation caused the global bitcoin/crypto-currency/crypto-asset tech boom to be dominated by another jurisdiction.

[acoindr]

Saying it is a potential investigative aide sounds fine.  Saying it will aid law enforcement because all transactions are traceable is rhetoric.

That's why I didn't say they are traceable. I said they are recorded. Transaction information doesn't need to be directly traceable to a user to be useful.

[chsados]

As for claiming Bitcoin makes law enforcement easier because transactions can be tracked, I think that is a mistake because it is really not true.  You have change addresses that obfuscate things.  You can also just use intermediate addresses and in court they have to prove the entire chain of custody unless they have other evidence.  To trace things you have to depend on consolidation so trying to claim it makes law enforcement easier is just rhetoric.  In some specific cases it may help and it others it may hinder.

You may not be aware long before Silk Road was taken down operators of a copycat site not so buried within Tor were arrested. If I remember correctly they were identified via use of their Hushmail account, which agents also used to introduce a trojan on their machine to aid their investigation.

People, including law enforcement, will use technology differently and with various degrees of effectiveness. Very smart (or very large) law breakers will probably find a way to do what they want to do with or without Bitcoin. Using the block chain as a potential investigation aid is not rhetoric, because the degree of accuracy of computers is very high while the tendency of humans to never make mistakes is low.

These market places you are refering to where not using bitcon but rather paypal, moneygram, western union.

You may have already known that, just wanted to put that out there.

[Mike Hearn]

http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=955322cc-d648-4a00-a41f-c23be8ff4cad

The list of people appearing at the Senate banking committee has been published. Tony Gallippi from BitPay will be there, as will Chris Larsen of Ripple and the president of BIPS.

[Rassah]

http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=955322cc-d648-4a00-a41f-c23be8ff4cad

The list of people appearing at the Senate banking committee has been published. Tony Gallippi from BitPay will be there, as will Chris Larsen of Ripple and the president of BIPS.

What the hell? Did they move it from Monday the 18th to Tuesday the 19th? Or is this a follow-up meeting? (I'm going to have to change my schedule at work now)

[Lauda]

http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=955322cc-d648-4a00-a41f-c23be8ff4cad

The list of people appearing at the Senate banking committee has been published. Tony Gallippi from BitPay will be there, as will Chris Larsen of Ripple and the president of BIPS.

Creator of Ripple to represent Bitcoin?
Makes perfect sense.

[waxwing]

From the Forbes article (http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/):

In the short term, they talk about a limited database that keeps track only of registered identities and their activities with participating companies, but it’s obvious that their ambitions are grander and that a longer term prospect is to take advantage of the transparency of the Bitcoin system to keep track of which Bitcoin is tainted by associations with black markets. Waters says that the development of that aspect will depend on “community feedback".

This is the kind of disaster we're trying to warn you about. How long will it be before pressure is brought to bear on core developers to make coin tainting part of the core software?
In a global network, who gets to decide which coins are tainted?

Please do not cooperate with this, it will be the end of Bitcoin.

Possessing money and transferring money should never have been made a crime. That act was the beginning of limitless government power over free speech and free enterprise.

[Lauda]

IT is a crypto currency hearing, not a Bitcoin hearing and the senate creates the list of witnesses.

This just proves my point. A fair number of people on this forum are smarter than the members of the senate.

[NewLiberty]

IT is a crypto currency hearing, not a Bitcoin hearing and the senate creates the list of witnesses.

This just proves my point. A fair number of people on this forum are smarter than the members of the senate.

Everyone knows that Bitcoiners are smarter and more attractive than most people.
How many in the senate have bitcoin?

[Lauda]

IT is a crypto currency hearing, not a Bitcoin hearing and the senate creates the list of witnesses.

This just proves my point. A fair number of people on this forum are smarter than the members of the senate.

Everyone knows that Bitcoiners are smarter and more attractive than most people.
How many in the senate have bitcoin?

Most likely none.