Forgot your password?
typodupeerror
Bitcoin Government The Almighty Buck

BitInstant CEO Says World Operates "On an Inferior Monetary System" 185

Posted by samzenpus
from the your-money-is-no-good-here dept.
hypnosec writes "BitInstant's CEO Charlie Shrem and Erik Voorhees were invited to speak about virtual currency at the NACHA (the North American Payments Association) Annual Global Payments Forum held in Rio de Janeiro. At the conference the duo stated that the world operates 'on an inferior monetary system'. One of the more interesting parts of the whole forum was how Bitcoin as a currency and transaction system "works within current legal frameworks." A presentation by Senior Legal Counsel to the Federal Reserve titled: 'The Implications of Dodd-Frank Section 1073' sheds light on requirements that need to be fulfilled by "Remittance Payment Company" (RPC) guidelines. This law requires such companies to disclose a lot of information about money transactions. This is where Bitcoin as a currency and system collide head-on with the law."
This discussion has been archived. No new comments can be posted.

BitInstant CEO Says World Operates "On an Inferior Monetary System"

Comments Filter:
  • Tracking money (Score:4, Interesting)

    by Geoffrey.landis (926948) on Sunday September 16, 2012 @12:45PM (#41353475) Homepage

    Bitcoin requires computer tracking of every single transaction, and requires distributing the information on each transaction to the public.

    At the risk of getting flamed, I don't see how "Bitcoin as a currency and system collide head-on with the law" [requiring tracking of currency transactions]; the bitcoin system would require only trivial mods to do remove the privacy and track the "who" as well as the "what".

    • Re:Tracking money (Score:5, Informative)

      by Anonymous Coward on Sunday September 16, 2012 @01:01PM (#41353609)

      the bitcoin system would require only trivial mods to do remove the privacy and track the "who" as well as the "what".

      That's not how it works. First and foremost, the creation of public addresses can be done entirely offline, without connecting to the Internet and without any information leaving RAM. I can request money to be sent to one of these addresses and only the person sending it knows that it belongs to me as there is no other record of its existence. An infinite number of such addresses could be created and there is no way to tie them directly to me.

      Secondly, any such non-trivial changes to the network would require nearly everyone on the network to agree, which is EXTREMELY unlikely given Bitcoin's user base and ideology.

      • Re:Tracking money (Score:4, Insightful)

        by kelemvor4 (1980226) on Sunday September 16, 2012 @02:07PM (#41354191)
        So basically, what you're saying is that a monetary system used almost exclusively for illegal transactions was designed to keep criminals from being caught, and the existing users would not like it if it was possible to catch the criminals. Interesting.
        • Re:Tracking money (Score:5, Insightful)

          by BenEnglishAtHome (449670) on Sunday September 16, 2012 @02:59PM (#41354695)

          Not just interesting. Wonderful.

          You could characterize the use of cash exactly the same way. I like paying cash. It would be nice if I could pay cash over the intertubes. If Bitcoin does (the equivalent of) that, lots of people are going to like it for lots of reasons, some nice and some not so nice.

          Just like cash.

  • newsflash (Score:5, Insightful)

    by etash (1907284) on Sunday September 16, 2012 @12:49PM (#41353503)
    person A trying to sell product X, says all other products are inferior to his product
    • by fm6 (162816)

      In this case, it's newsworthy for its entertainment value [pcworld.com].

    • What's even more amusing that the #1 currency exchange for his product is still MtGox, which was formerly famous for trading Magic The Gathering playing cards.

      Oh, and not only was that site hacked, but that hack was responsible for wiping out 2/3'rds of the currency's reported value overnight. Even now, it still hasn't fully recovered that value.

      Wow, this sounds MUCH better than the existing monetary system! Sign me up!

    • by Seumas (6865)

      When people first started wanking-off to the whole BitCoin thing with hourly stories on every site, I was constantly shouted down as a troll for commenting on how the whole concept just felt scammy and dirty. That even if it was entirely legitimate, describing how it works to any rational human being would make them instantly feel like that isn't a real thing, but is some sort of a shady ass scheme (and remember those shady fucking things about a decade ago where you could install clients on your computer a

  • by OldSport (2677879) on Sunday September 16, 2012 @12:50PM (#41353511)

    ...Tim Cook says that we are living in a post-PC era. Does it really surprise anyone that people with an interest in seeing things change are advocating for such changes?

  • Bitcoin is useless from a PRACTICAL standpoint. Why?

    1) Transactions aren't instant, you have to wait potentially for hours for your transaction to go through and the value in your account to change. (Even transactions between two accounts you own, because Bitcoin isn't smart enough to handle that.)

    2) Every device using Bitcoin needs a copy of the Bitcoin database. As of about a year ago, this was 700 MB of data. Every device needs a copy of this. Every device needs to go through this file and parse it. Incl

    • by tibman (623933) on Sunday September 16, 2012 @01:11PM (#41353673) Homepage

      My credit card has pending transactions for days sometimes.

      • Re: (Score:3, Informative)

        by Anonymous Coward

        Days before you get to sign the slip?

        Those transactions are not actually "pending", the bank is holding your money for a few days to collect interest off of it before passing it on to the next gent.

    • by Anonymous Coward on Sunday September 16, 2012 @01:12PM (#41353677)

      1 - Ten minutes max, usually.
      2 - Not true, there are several wallet tools now that don't hold the blockchain locally.

      • by Teancum (67324)

        1 - Ten minutes max, usually.
        2 - Not true, there are several wallet tools now that don't hold the blockchain locally.

        The ten minutes is the typical amount of time that Satoshi established for generating a block chain. It could be longer or much shorter before a transaction is incorporated. In theory the next block may take even days to be generated, but as a practical matter you are correct that about ten minutes is typical and longer than a half hour is almost unheard of. I have seen two blocks generated less than ten seconds apart, and some that take much longer to be processed.

        If you don't bother including any trans

      • by tlhIngan (30335)

        Ten minutes max, usually.

        Is it me, or does this seem like how some HFT will go in and monetize BitCoin? I mean, 10 minutes is usually "good enough", but you can bet someone will see a way to make it instant.

        And once BitCoin becomes popular, you can bet the money traders will move in. Unregulated transactions? Check. With 10 minutes between confirmations, you can do millions of transactions in between that get resolved afterwards.

        That's the future of BitCoin.

        • Is it me, or does this seem like how some HFT will go in and monetize BitCoin? I mean, 10 minutes is usually "good enough", but you can bet someone will see a way to make it instant.

          Actually it's just you, because you haven't read the protocol spec and don't know what you're talking about.

      • by makomk (752139)

        No, ten minutes is the average time it takes for the next block to come along. In practice it takes longer than that to get a transaction confirmed on average because it may not actually get included in the next block.

        It's also not unusual for there not to be any blocks for well over an hour, meaning that your transactions can actually take several hours to get their first confirmation. Plus, one confirmation isn't actually enough - there are various attacks that can be used against services which accept tr

    • by Anonymous Coward on Sunday September 16, 2012 @01:12PM (#41353683)

      I think your comments are fair, but not entirely accurate any more;
      I agree with them to a degree, and have raised those issues a number of times in the #bitcoin IRC channel on freenode;

      The response to 1) is well, sure, transaction confirmations are not instant. So what? Neither are credit-card transactions. They can take days, even weeks to confirm. The banks agree to go with instant-confirmation based on probability. In a real-world implementation of bitcoin, I suspect that people would accept small transactions without 6 confirms. In fact, in a real-world implementation, I think most stores could do a lot worse than go down the "Starbucks" route; you have an automated payment app on your phone (or accessible via the web, or via a payment machine at the counter that uses your card number etc.). This "starbucks" account is filled by bitcoin, by you, at home. Or in store etc. but the point being that you fill it before you need it, 9 times out of 10. Ergo that reduces the need for instant confirms. Since it's only a small amount of cash in your Starbucks account, it mitigates the worries over hyperinflation & governmental interference that running all your finances in this way would raise.
      2) Not every device needs a full copy of the database now. They have thin-use clients. I'm not sure on the exact specifics of how it does it, but I know it's supported, and will become "the norm" for most domestic users; I believe the main such desktop app is called "Electrum". The network as a whole isn't endangered as long as a fair number of clients continue to use the whole block chain apps. And a lot of people will. But on your iPhone or whatever, sure, thin-client, instant usage, no waiting on downloading the block chain.

      Really, the way to get BTC into common, physical-world use, is to go down the accounts system aka "starbucks". A lot of retail chains are already set up for such a system, small retailers can easily roll their own thanks to the likes of OpenTransaction, and it makes it very easy to get btc into common usage without the worries over physical terminals, having to accept low confirm levels or make customers wait for ages etc.

      • by raynet (51803)

        Here in Europe, the creditcard transactions with Visa Electron are realtime and the amount you pay is immediately taken from your account. If the realtime reservation cannot be made (due to network problems that sometimes happen), you cannot make the payment and the merchant wont sell you the goods. With non-realtime creditcards, the CC issuer and/or bank makes sure the merchant gets her money even if the customer didn't have the funds, thus the merchant can be sure to paid. With Bitcoin, if the transaction

        • by jfengel (409917)

          > Here in Europe, the creditcard transactions with Visa Electron are realtime and the amount you pay is immediately taken from your account.

          Doesn't that make it a debit card? We have those in the US, too.

          • by raynet (51803)

            Could be, I was assuming the AC used the fastest example available in his comparison...

          • by zyzko (6739)

            > Here in Europe, the creditcard transactions with Visa Electron are realtime and the amount you pay is immediately taken from your account.

            Doesn't that make it a debit card? We have those in the US, too.

            Yes, but Visa Electron and Mastercard Maestro are always verified, you can't simply spend something you don't have.

            Visa / MC Debit have an option to be verified, but it is not mandatory and when used in a non-instant way they will show up on your account either immediately or maybe 3 days later, depending on the chain of payment processing.

          • by gl4ss (559668)

            yeah it's a debit card. technically you shouldn't be able to overdraw it (it's possible when traveling, to some extent - it shouldn't be though).
            but visa isn't really consistent with it's branding nor with it's actual rules globally. it's also supposed to be used only with the chip if possible, but the main point about "electro" part is checking it live if you have enough balance.

            but visa electron, when travelling, works exactly like a credit card - whoever is charging it is just supposed to check that it h

          • by AK Marc (707885)

            Doesn't that make it a debit card? We have those in the US, too.

            No. They have credit cards that run as US debit cards, where the "account" they are taken from immediately is the credit account. Because it's taken from a credit account, it's a credit card, not a debit card. A debit card is a "credit card" tied to a non-credit account. The method of transaction is irrelevant to the account at the back end, and the card type is determined by the back-end account.

        • Here in America the merchant is mostly on the hook for credit transaction problems.

          • by raynet (51803)

            Here I would only accept Visa Electron type cards as a merchant as I would be fairly sure that I would always get to keep the funds.

            • I know, in 1991 I arrived in Germany with my Visa card and could only use it to get cash from certain banks in the center of very large cities, and not for purchases anywhere. I understand it's gotten a little better, but still not accepted the way it is in the US. MasterCard was better in Germany, and the reverse in France.

      • by gl4ss (559668)

        cc is for practical purposes instant.
        the vendor who you're buying from is instantly promised money by the system(in most cases even checked&verified promise) and you get your purchase instantly.

        though if bc was used commonly for everyday things, then for things like coffee you would load up credits on your coffeeshop card with it, same with bus etc.

      • The response to 1) is well, sure, transaction confirmations are not instant. So what? Neither are credit-card transactions. They can take days, even weeks to confirm.

        Um, no. Confirmation of credit card transactions is virtually instantaneous. It make take a while for the transfer to take place or the charges to be applied - but that's not the same thing.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      1) For low-value transactions (say, $50), 0 confirmations is usually fine. For higher value transactions, 1 confirmation (average of 10 minutes, sometimes more) is pretty good. If you're buying a car or a house, waiting an hour or two for more transactions is reasonable. You'd spend at least that time on paperwork.

      2) There are several thin clients now that do NOT require the full blockchain. For example, MultiBit, Electrum, Blockchain.info, various cell phone clients... the implementation depends on the cl

      • by Rockoon (1252108)

        If you're buying a car or a house, waiting an hour or two for more transactions is reasonable. You'd spend at least that time on paperwork.

        Who in their right mind is going to be signing paperwork before the money, or a legally enforceable promise of money, is confirmed and in their hands when talking about very large sums?

        ...perhaps the same idiot that didnt get a lawyer when you was buying or selling a house.

        • by jmcvetta (153563)

          Who in their right mind is going to be signing paperwork before the money, or a legally enforceable promise of money, is confirmed and in their hands when talking about very large sums?

          Afaik, house sales usually involve an escrow process. Buyer & seller make a contract; buyer puts money into escrow account; seller completes deed transfer paperwork; then escrow company releases money to seller.

          No reason this couldn't be done with Bitcoin, or any other type of payment mechanism.

    • A year ago, processing 0.00001% of the world's commerce was 700MB - how big would it be if they handled Visa's global transaction volume?

    • by jgarzik (11218) on Sunday September 16, 2012 @02:27PM (#41354393) Homepage

      Wrong on every detail.

      1a) Using the "move" RPC command, bitcoin makes an instant transfer between two accounts that you control.

      1b) All transactions are published instantly, and available instantly, via the bitcoin P2P network. There are also several websites like http://mtgox.com/ which facilitate instant transfers. After that, you wait on average 10 minutes per confirmation, each of which makes your transaction exponentially more secure. While not recommended, yes you can spend zero-confirmation transactions.

      2) Did you bother to look at Android Market before posting? Only full nodes require the full block chain database (2+ GB now). Lightweight software exists for phones, or you can use a web wallet from places like http://blockchain.info/ or http://instawallet.org/

                - jgarzik, bitcoin core dev

      • by makomk (752139)

        1a) Using the "move" RPC command, bitcoin makes an instant transfer between two accounts that you control.

        Except that isn't actually a transfer at all, and as one of the core Bitcoin developers you must know that. All the "move" RPC command does is update a note in your wallet which says that a particular number of bitcoins belong to a particular account name. It doesn't actually move any bitcoins - in fact, the bitcoins you're transferring don't even have to actually exist. If you want to actually transfer bitcoins from (for instance) your wallet to your Mt.Gox account, or your desktop to your mobile phone, or

  • The slow speed of analogue money is the buffer we all need, as electronic money move around too fast.

    With ultrafast transactions only we would have the stock markets crash every few minutes, albeit after a few hundred millions, or billions of transactions.

    The differently paced transactions may be a pain in the rear for stock brokers, but they have saved us all from even more disasters. Slow human brains cannot react within seconds to a system running amok.

    Now, go away Bitcoin. It doesn't matter how much you

    • A stock market that crashes every few minutes sounds like an opportunity to me!

    • With ultrafast transactions only we would have the stock markets crash every few minutes

      And the bad thing is? The stock markets are perfectly capable of crashing without Bitcoins and have done so many time in the past. High Frequency Trading is an evil anyway that should have been stopped before it started.

  • by the_humeister (922869) on Sunday September 16, 2012 @01:13PM (#41353687)

    Does he know anything about camp crystal lake?

  • This article show a great deal of pro Bit Coin bias. Sever farms for generating coins may not be common yet, but bot nets are already an issue. However the real stickler point that the Legal Council is trying to get acknowledged in my opinion is the point of Exchange. In this case the point of Exchange from Bit Coin's to USD. (e.g https://en.bitcoin.it/wiki/MtGox [bitcoin.it] )

    For now you can stay anon as long as your jacked in the system and buying goods that people will exchange for Bit Coins (I've personally never

  • The black market is the side that hasn't won and re-written history. Yet.

  • by future assassin (639396) on Sunday September 16, 2012 @02:01PM (#41354119) Homepage

    as the network. Network goes and and you're fucked. People need to learn how to barter again and save on taxes and remove the usless currency. To me there's more value in buy/sell type websites than digital currency.

    • Re: (Score:2, Informative)

      by Anonymous Coward

      People need to learn how to barter again and save on taxes

      In general, countries that have sales taxes or value added taxes officially tax barter as well. In British Columbia, and in Ontario the last time I lived there, there is no sales tax on the resale of used personal items: i.e. you don’t have to pay sales tax at a garage sale/boot sale/flea market.

      But if you trade computer repair for plumbing repair, the law says that you are required to collect the service/sales/value add tax for the computer repair and send it to the tax man, and the plumber likewise

  • In linked article, the reporter first starts by a rant about the difficulty of obtaining a visa to Brazil, suggesting he has some natural right to go wherever he wants, then:

    To my surprise, however, nobody in Rio (perhaps all of Brazil?) speaks any English. Of all the places I’ve travelled in the Middle East, Europe, and Asia, Rio was the most difficult to communicate with locals, by far (they’re in South America, right? Shouldn’t they speak American??).

    This guy is joking, right?

Do not simplify the design of a program if a way can be found to make it complex and wonderful.

Working...