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Bitcoin Crime

Could Bitcoin Go Legit? 300

Posted by samzenpus
from the turning-over-a-new-leaf dept.
Velcroman1 writes "On May 15, the Department of Homeland Security seized a digital bank account used by 'MtGox,' the world's largest exchange, where people buy and sell bitcoins. DHS alleged, and a judge agreed, that there is 'probable cause' that MtGox is an 'unlicensed money service business.' If proven, the penalty for operating such a business is a fine and up to 5 years in jail. FoxNews.com caught up with several bitcoin exchanges, including CampBX, MtGox, CoinLab and more, to ask them how they've navigated the regulatory waters — and how to go legit." In other shady bitcoin news, it appears the demise of Liberty Reserve has caused hackers to find a new alternative. twoheadedboy writes "Despite suggestions Bitcoin might be the ideal currency for dealers on the dark web, it appears Perfect Money, a Panama-based operation, is proving the most popular alternative to the now-defunct Liberty Reserve. A source working the underground forums told TechWeekEurope that, for now, fraudsters are rapidly migrating to Perfect Money. Many vendors have started accepting it, having previously primarily used Liberty Reserve, which was shut down following the arrest of its founder and four other members this past week. Internet fraudsters might be interested in Perfect Money as it has distanced itself from the U.S., cutting off all new American registrations. However, one forum user said he was turned down by Perfect Money as their 'type of activity is not welcome.' Other currencies may yet win out."
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Could Bitcoin Go Legit?

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  • While Bitcoin tends to grab headlines, there's other crypto-currency projects that are focused on merchant adoption:

    http://www.feathercoin.com/about/

    • by Anonymous Coward on Thursday May 30, 2013 @08:54PM (#43868013)

      http://forum.feathercoin.com/index.php?topic=1059.0

      [IMMEDIATE ACTION NEEDED] Post some Feathercoin Love over at Slashdot

      Looks like crypto-currencies are to be the new pyramid scheme/multi-level marketing. BitCoin has a chance because it was the first of it's kind, so people were all going to choice it. A million new crypto-currencies will never take off.

    • by marcello_dl (667940) on Thursday May 30, 2013 @09:16PM (#43868181) Homepage Journal

      In fact I guess most virtual currency schemes are inherently less pyramidal and electricity wasting than bitcoin.
      OTOH those things I perceive as shortcomings make bitcoin more popular (at present) for "opportunity driven" people.

      • by timeOday (582209)
        Wasting electricity is what ties bitcoin back to a scarce natural resource to prevent its devaluation.

        I wonder if China has considering purchasing oil rather than US Treasury securities. They could either stockpile it domestically (surely crude oil has a long shelf life, it is quite old already), or leave it in the ground of an oil producing nation they either trust or can invade if necessary to redeem their oil securities.

        • by hibiki_r (649814)

          If China wanted to stockpile natural resources, they could. However, they prefer buying treasury bonds. That means that if they were afraid of dollar inflation, they'd buy a different currency, or TIPS.

          You won't find many people that manage large amounts of money that are afraid of dollar devaluation.

          • by mhajicek (1582795)
            Actually China is stockpiling natural resources in huge quantities. Primarily metals from what I've heard.
        • by dbIII (701233)

          surely crude oil has a long shelf life

          Not so much up on the surface with a lot of oxygen about, and storage costs are not trivial for the stuff that's not liquid at room temperature.

    • There are a number of "alt coins" which appear legitimate, and are used by a wider community. This thread on the Bitcoin forums has a good overview, it also includes the less popular and dead crypto currencies: https://bitcointalk.org/index.php?topic=134179.0 [bitcointalk.org]

      I like the idea of PPcoin very much, being an ecologic alternative to Bitcoin. They still have mining, like Bitcoin and all other alts, and this will consume as much electricity. But when all coins are mined, the power needs will drop significantly. The

    • by Agent ME (1411269)

      What is the difference between this and Litecoin, besides a few seemingly minor parameter tweaks?

      • Re: (Score:3, Insightful)

        by Embrionic (152953)

        Valid question. I find it interesting that Litecoin gets a pass on this exact question. Litecoin's "innovation" was adding scrypt, however, there were coins before it that used scrypt. If you follow Coblee's original launch post, Litecoin's biggest difference was the number of coins and the fair launch. Somehow a new crop of alt currency enthusiasts missed that transition.

        Aside from our 504 block retarget (max of 41.4% difficulty change), we have a strong network of miners/developers available on the offic

    • by hairyfeet (841228)

      That doesn't change the fact that there is really no way to "go legit" without killing the whole damned point of such software, which is to be as easy to use as credit with the anonymity of cash, since the feds want everything traceable and tackable and going through them.

      So I'd say the best bet would be to set up in some country that gives the finger to the USA, otherwise the feds are gonna raid you and shut you down no matter what you do, or did everybody forget what happened to the "liberty coin" which

  • by Anonymous Coward on Thursday May 30, 2013 @08:24PM (#43867809)

    Bitcoin, whether you are a believer in government funny money or not, is a legitimate currency, like any other currency that is used as a substitution or a value representation for goods and services.

    Also, the economic impact of Bitcoin is huge. People are spending millions developing ASICs to mine what bitcoins remain, even though more than half of them have already been awarded and it endeavors to be a scarce new resource. And, it's still barely profitable to mine with GPUs, so that is also a thriving industry.

    I, for one, am waiting for the Bitcoin GPU bust when the ASICs come out in volume and used GPUs flood the market for cheap as people scramble to buy ASICs.

    Like it or not, there are people who accept BTC as payment for goods and services, and there is a somewhat thriving market for them. That is legitimacy.

    • Very true, and deserves to be modded up.
      but bitcoin's success my be it's undoing.
      to comply with financial regulations opens a nightmare of regulation.
    • Yes, bitcoin is a legit currency.
      However money laundering is not a legit activity.
    • by D1G1T (1136467)

      And, it's still barely profitable to mine with GPUs

      I think this is only true with stolen power at this point.

    • All these Slashdot articles about Bitcoin but no subscribe with Bitcoin button?

    • Re: (Score:3, Insightful)

      by ahabswhale (1189519)

      Thriving market, my ass. A couple of hundred websites != a thriving market. Except for reddit, I can't think of a single website I use that accepts bitcoin. It's a side show and that's all there is to it. It will never be more than that.

    • I canceled my Butterflylabs Bitcoin Miner order when I was presented the opportunity.

      All alternative currency that can be converted to US dollars is subjected to taxation. Fuck that. I don't need to deal with the buttache for one. Secondly, you will make more money if you out-right by and sell BTs on the market vs mining them. Don't waste your time with ASICs. Those that can profit from them will be the people sinking hundreds of thousands of dollars into this. The average 'Joe' with his small fry ASIC and

  • Sheer genius (Score:2, Interesting)

    by Anonymous Coward

    From TFA: "Despite the regulations, technology experts say that they will not prevent people from anonymously using bitcoins for illicit things like buying drugs online. The real-world analogy is cash; the government can tell when it is dispensed by banks, and to whom, but it loses track once it is dispensed."

    If someone came up with the idea of "cash" today they would be a criminal mastermind.

  • Offshore (Score:5, Insightful)

    by LordLucless (582312) on Thursday May 30, 2013 @08:55PM (#43868027)

    "Legit" is a meaningless qualifier. If a currency is legitimate when it can be exchanged for goods and services, then Bitcoin is already legit. If a currency is legitimate when it's approved of by your government of choice, then no, Bitcoin will never be "legitimate". If that's your definition, though, the real question is "why is legitimacy necessary?"

    What will happen is probably what has already happened to other areas that have been persecuted by the US government at the behest of incumbent industries: they'll just move off-shore.

    • Re:Offshore (Score:5, Insightful)

      by UnknownSoldier (67820) on Thursday May 30, 2013 @09:47PM (#43868359)

      > > If that's your definition, though, the real question is "why is legitimacy necessary?"

      That's exactly the root of the problem!

      Why do we need a government to decide what is Legitimate Digital Currency?

      In many countries citizens ARE allowed to use a local currency:
            http://en.wikipedia.org/wiki/Local_currency [wikipedia.org]

      It seems to me that governments are trying to hold onto an archaic model of control based on fear. People need to stand up and tell the government to literally "But Out" of their business. The same shit happened with encryption before the government got a clue stick and realized that they have absolutely NO business trying to regulate how people use Math.

      It seems to me that the design of Bitcoins is designed for both accountability and authority. I've yet to see a better digital design. What are _valid_ criticism of bitcoins?

      • I see bitcoins like stocks. You can buy and sell them. You can trade them for other goods or services. The volatility is the sticking point for me. There isn't any depth to the market. People talk about having millions in bitcoins, but sure try to sell them all. You won't be able to find enough buyers anywhere close to the current trading price.
        • by brokenin2 (103006) *

          This has changed (slowly) over time.. You actually *can* dump a million USD in bitcoin without throwing the market all over hell now.. You *should* string it out over a couple of hours (or put up a wall and let the market do it for you) so that you get a reasonable price, but the market will take the direct hit as well at this point..

          This very minute, if you were to sell of 10,000 BTC (a bit more than 1 million USD) in with an order that would sell immediately, you would push the price of BTC down by 5 cent

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        What are _valid_ criticism of bitcoins?

        How about this one? Governments provide a service by establishing a safe environment for living and working. They extract payment for that service in the form of taxes. Bitcoins, by being both pseudonymous and (unlike cash) convenient for remote transactions, allow more effective tax evasion.

        Whether that's a sufficient objection to outlaw them - that they have illegal uses - isn't clear. Compare with some other cases: possession of nuclear weapons is outlawed, possession of lockpicks is legal, and posse

    • If that's your definition, though, the real question is "why is legitimacy necessary?"

      If they want, the US government can make exchanging dollars for Bitcoins in significant quantities very hard. They can also prevent law-abiding US-based businesses from accepting Bitcoins in exchange for goods and services. The utility of Bitcoins would be severely limited for most Americans.

      What will happen is probably what has already happened to other areas that have been persecuted by the US government at the behest of incumbent industries: they'll just move off-shore.

      Look at what happened to online poker. The US didn't stop it entirely, but they effectively cut off the American customer base by cutting transfers from US banks. It's to the point that Antigua filed a WTO complaint aga

      • If they want, the US government can make exchanging dollars for Bitcoins in significant quantities very hard. They can also prevent law-abiding US-based businesses from accepting Bitcoins in exchange for goods and services. The utility of Bitcoins would be severely limited for most Americans.

        In my mind, that demonstrates the illegitimacy of the US government more than it does that of Bitcoin.

        Look at what happened to online poker.

        Indeed, online gambling (and software patents) were the examples I was thinking of.

    • Re:Offshore (Score:5, Insightful)

      by girlintraining (1395911) on Thursday May 30, 2013 @10:10PM (#43868529)

      "why is legitimacy necessary?"

      Because money laundering operations, like drugs and other black market trade, is one of the ways terrorists fund their activities. That's the short answer. The longer answer is more complicated. The problem with draconian enforcement options like this is it drives things underground. Organized crime got its start in this country due to the Prohibition; By making a popular activity illegal and driving it underground, they forced people to turn to the underground. Cigarettes and other "sin products" are showing similar trends; Where I live, trucks are now arriving from Canada carrying nothing but cartons of cigarettes because the tax rates have become so high that some people have started turning to the black market to purchase them. The historical 'Boston tea party' incident was another such reaction to this -- while the mantra at the time was 'no taxation without representation,' what it was really about was an overly burdensome tax, and people started seeking out alternatives, as well as publicly venting their frustration. File sharing is another example -- the product has become so grossly-overpriced that it has fueled all kinds of technologies dedicated to getting around what could be termed the 'RIAA/MPAA tax'.

      I forget the name, but in Macroeconomics, there's a theory that suggests that whenever you raise the tax rate, you get diminishing returns because more people look for ways to avoid the tax. Beyond a certain point, a higher tax rate actually results in less tax collected. To paraphrase a US Supreme Court Justice, "The power to tax is the power to destroy."

      But what does all this have to do with Bitcoin and making it legitimate? When you have currencies not controlled by the government like Bitcoin, taxes aren't being collected. Yes, there may also be criminal activity associated with the currency, but that's only because criminal activity is like water -- it seeks the lowest point, the most efficient path. Government creates resistance in market forces for both legal and illegal, legitimate and illegitimate goods and services alike. In the 60s, numerous grass-roots efforts were made to create alternative currencies, and all of them were aggressively attacked by the FBI and Secret Service, for the same reasons Bitcoin is being hit today. There is an old saying; Don't believe what they tell you, follow the money.

      Now, all that said, these government actions have the effect of driving things underground where they can't be tracked. The problem is though that the guy who wants to buy a dime sack of weed is not really a threat to anyone; but the guy who wants to buy shoulder-mounted missiles and bomb components is. But when you drive the hundreds of thousands of people who just want a dime sack underground, it gives the terrorists a place to hide. That's the problem with the black market: When it targets something that's popular, socially acceptable, or whatever, for political reasons rather than as a reflection of the people's will, you create an area for undesireable elements to flourish.

      Take file sharing; All of this encryption and peer to peer networking would never have arisen if the government hadn't started punishing grandmas and college kids for doing it. The response was so disproportionate to the harm to society, and it was against commonly-held values by the general public, that it resulted in an immediate creation of a digital underground. And within a few years, the technologies developed to fend off the government found their way into the hands of "cyber" criminals; witness the rise of advanced persistent threats, botnets, and nation-funded espionage and sabotage, much of which uses the same technology created for a much less nefarious purpose: People just wanted to listen to music. Now our power grid, hospitals, dams, and other industrial infrastructure is at risk.

      And now we have a real big problem. The government is correct: Bitcoin does attract the criminal element. In large numbers. What they

      • The exact same criticisms (except even more so) can be made against cash. It's truly anonymous, unlike Bitcoin, which is pseudonymous.

        But what does all this have to do with Bitcoin and making it legitimate? When you have currencies not controlled by the government like Bitcoin, taxes aren't being collected.

        That's just not true. Like I said, prior to electronic banking, cash had much the same properties - in terms of governmental control of transactions - as Bitcoin*. And yet taxes were still paid. Cash, bitcoin or VISA, people can still lie on their tax returns, and most people have very little chance of being caught. People don't, because they feel a moral obligation not to. I

      • I forget the name, but in Macroeconomics, there's a theory that suggests that whenever you raise the tax rate, you get diminishing returns because more people look for ways to avoid the tax. Beyond a certain point, a higher tax rate actually results in less tax collected.

        The concept you are looking for is the Laffer curve [wikipedia.org].

    • by hibiki_r (649814)

      Legitimacy involves having actual currency like properties, in the sense that it should be a decent method of account. Thus, it behaves much more like a commodity than a currency: Its price fluctuates wildly, and those fluctuations have very little to do with the fluctuations of major indicators of the real economy.

      I'd argue that the shares in any company in the DOW industrial average have more currency-like properties than Bitcoin.

      • There are plenty of national currencies that have wildly fluctuated in the past; hell, in recent years, there are plenty of national currencies that have been more stable that the US dollar. Does that mean they are "more legitimate" than the USD?

  • There is also an interesting report from Krebs on Security [krebsonsecurity.com], about how underground web actors talk about moving to new digital currencies.
    • The hardest thing about Underground Web Actors is that they can't stay underground if they're actually any good. Digital currencies ensure that once the actors have become famous for their acting, that they can adopt a new unknown persona.
  • by dkleinsc (563838) on Thursday May 30, 2013 @09:27PM (#43868245) Homepage

    The key thing to understand about government-backed currency is this: You have to pay your taxes in them. If you don't, said government can and will force you to do so. The government may also force a creditor to accept your currency to pay whatever debt you may have. In other words, it's backed up by the long arm of the law, and has value because if you choose to ignore its value guys with guns will show up to help explain the situation to you.

    By contrast, Bitcoin is backed by absolutely nothing. It has no inherent value, and unlike government-backed currencies there's no use of force to back it up. In Hyper-inflation World that many Bitcoin enthusiasts think is America's future, you still have the guys with guns to demand that you use dollars to pay for certain things. By contrast, if Bitcoin goes belly-up, you have nothing except a bunch of bits that are of no use to anyone.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      There's no such thing as inherent value. Value is governed by supply, demand, and marginal utility. Political economics cannot change this fundamental equation, it can only tweak the input variables.

      • by dkleinsc (563838)

        By "inherent value", I mean that the commodity in question can be used for something other than exchanging it for something else. For example, a bushel of apples has inherent value because I can eat it.

        There are some historical currencies that had inherent value: bronze objects in Bronze Age Britain were extremely valuable, for example, both as useful tools and weapons, but also as a medium of exchange. Later on, the dominant currency in the same area was grain.

        • By "inherent value", I mean that the commodity in question can be used for something other than exchanging it for something else. For example, a bushel of apples has inherent value because I can eat it.

          Good luck eating your paper dollars.

    • So you're saying that if, for some strange reason, the US decided to mandate Bitcoin as the only currency it would accept for tax purposes, Bitcoin would become inherently valuable, and the USD would lose its inherent value?

      Inherent - I don't think this word means what you think it means.

  • by Okian Warrior (537106) on Thursday May 30, 2013 @09:34PM (#43868293) Homepage Journal

    I'm curious about something, maybe the community here can point out an answer.

    There's a sizeable audience of slashdot readers that are interested in the technical aspects of digital currency, the economic aspects of using such currency, the legal aspects of such currency, the social effects of using such currency, and it's importance in combating tyrrany (the political aspects of such currency).

    It would appear that some techies realized that currency control is a tool to unjustly oppress people, and decided to do something about it. The engineering (ie math) seem to be solid, the economic rationale is logically sound (more so than standard economic mantras such as "a little inflation is good"), and the potential to protect human rights is enormous.

    What we have here is a rare example of people recognizing a problem and doing something about it.

    Despite this, all early posts are negative. Paraphrasing, "Oh, look, it's the weekly Bitcoin post", "Bitcoins will never rise to the status of a real currency", "it'll never work because you will never be able to pay US taxes in bitcoins", "it's a joke", "it's a scam", and so on.

    So far (relatively early) there are about a dozen dismissive articles, all by anonymous coward.

    What's with BitCoin? Why all the negative press? I've seen no named commenter put forth a rational argument as to why it won't work - that can stand up to logical scrutiny. All arguments so far have been handily shot down by subsequent responses. (You're welcome to try, though.)

    Does the government hire astroturfers to guide discussions on this site for selected topics or something? (I'm not saying that there is - I'm asking if this is a well-known fact and I missed it.)

    Why all the unfounded dismissive posts about BitCoin?

    • by tftp (111690) on Thursday May 30, 2013 @09:52PM (#43868403) Homepage

      It would appear that some techies realized that currency control is a tool to unjustly oppress people

      All money issuers were using money to oppress people, to some extent. Why was the privilege of minting coins given only to the top aristocracy? Gold coins often were the sole privilege of the king. Lacking some advantage, why would aristocracy bother with a metalworking business?

      The engineering (ie math) seem to be solid

      The crypto scheme appears to be reasonably well done. However in practice there are several attack vectors, and they are possible to execute if you want to. It will cost you, but governments can do that already. It's just the matter of commitment and resources. BTC also has several usability problems, like the long time to clear a transaction (with 6 recommended confirmations, it's between 15 and 30 minutes.) Are you willing to stand in limbo at the grocery store for that much? There are no trusted BTC terminals; and if they were, they could be subverted because BTC depends on access to the network to calculate hashes - and the merchant does not control the network. Plug this merchant's network cable into your own router, run a hundred pet peers, and you can confirm any transaction you want. (On an open Internet you need to subvert the majority of hosts.)

      the economic rationale is logically sound

      It is debatable, and that's what is always debated in every article about BTC. In essence, there is no rationale that would work for pretty much anyone except Silk Road users. BTC transactions are not even free; but a Visa c/c pays me for using it. Why would I want to pay in BTC?

      "it's a scam"

      Scam or not, but early miners mined millions of BTCs when mining was good. Where are those BTCs? If the exchange rate of one BTC goes to $10K, for example, those early miners will become richer than Bill Gates. Will that be fair? I think not. Those guys (still anonymous!) may have done good for the society, but the society cannot value the formula (that doesn't even save lives!) that high. BG's Windows does save lives, as part of many computers.

      • ...BTC transactions are not even free; but a Visa c/c pays me for using it. Why would I want to pay in BTC?

        This is a good example of the thinking that accompanies BitCoin posts. You think that Visa pays you for using the card. I'm assuming that you mean the "1% back" that you get for making a purchase.

        Since you don't see this simple situation clearly, what am I to make of your other unfounded assertions?

        ...in practice there are several attack vectors...

        I was a security researcher In a previous life. You say "...in practice there are several attack vectors" without references or listing any, and I wonder if you are making things up. We'd all like to hear what th

        • Re: (Score:2, Interesting)

          by tftp (111690)

          Can you tell us more?

          https://en.bitcoin.it/wiki/Weaknesses [bitcoin.it]

          what you characterize as unfair seems more like a reward for hard work

          I respect your desire to reward BTC inventors and early miners with your own money. But I have no plans to join you :-)

          • Re: (Score:3, Informative)

            by Okian Warrior (537106)

            Don't bother to read that site - not that there's any evidence that you did - because there are no real attack vectors there.

            Unless you think "denial of service" is a valid there's nothing on the linked site that constitutes a real attack.

            Yet another example of the "unsupported allegation" type of post... but I applaud your attempt to make it sound legitimate by supplying a link.

            Try again.

      • by elucido (870205)

        It would appear that some techies realized that currency control is a tool to unjustly oppress people

        All money issuers were using money to oppress people, to some extent. Why was the privilege of minting coins given only to the top aristocracy? Gold coins often were the sole privilege of the king. Lacking some advantage, why would aristocracy bother with a metalworking business?

        The engineering (ie math) seem to be solid

        The crypto scheme appears to be reasonably well done. However in practice there are several attack vectors, and they are possible to execute if you want to. It will cost you, but governments can do that already. It's just the matter of commitment and resources. BTC also has several usability problems, like the long time to clear a transaction (with 6 recommended confirmations, it's between 15 and 30 minutes.) Are you willing to stand in limbo at the grocery store for that much? There are no trusted BTC terminals; and if they were, they could be subverted because BTC depends on access to the network to calculate hashes - and the merchant does not control the network. Plug this merchant's network cable into your own router, run a hundred pet peers, and you can confirm any transaction you want. (On an open Internet you need to subvert the majority of hosts.)

        the economic rationale is logically sound

        It is debatable, and that's what is always debated in every article about BTC. In essence, there is no rationale that would work for pretty much anyone except Silk Road users. BTC transactions are not even free; but a Visa c/c pays me for using it. Why would I want to pay in BTC?

        "it's a scam"

        Scam or not, but early miners mined millions of BTCs when mining was good. Where are those BTCs? If the exchange rate of one BTC goes to $10K, for example, those early miners will become richer than Bill Gates. Will that be fair? I think not. Those guys (still anonymous!) may have done good for the society, but the society cannot value the formula (that doesn't even save lives!) that high. BG's Windows does save lives, as part of many computers.

        Bitcoins will save as many lives as the Internet did if it goes mainstream. So what if some people get richer than Bill Gates? You think Bill Gates and Steve Jobs are the only people allowed to get rich from good timing?

      • by Anonymous Coward

        "Why would I want to pay in BTC? "

        Because the thing you want to buy is sold in Bitcoins, and the equivalent sold in dollars are 3% or more more expensive (the Visa service charge ). Visa doesn't pay you money, it takes more and hands back a little. BTC transactions undercut that. I bought ASICs in Bitcoins and will be donating the next ones I find to EFF/Wikileaks and other things that benefit society.

        "Those guys (still anonymous!) may have done good for the society, but the society cannot value the formula

      • by mcelrath (8027)

        BTC also has several usability problems, like the long time to clear a transaction (with 6 recommended confirmations, it's between 15 and 30 minutes.)

        Keep in mind that ACH transactions take upwards of 4 days to clear while your money is in limbo, and wire transaction fees are exorbitant (generally $50 or more). So bitcoin wins. Of course, this is a US problem...the rest of the world has faster and cheaper transactions.

    • by gandhi_2 (1108023)

      You must be new here.

      Slashdot is a Perl implimentation of the Greater Internet Fuckwad Theory, with a twist of nerd rage, leftism, and contrarianism.

    • by hibiki_r (649814) on Thursday May 30, 2013 @10:37PM (#43868677)

      Even if we ignored every other problem (and it has many), the supply of Bitcoin does nothing to try to adapt to monetary demand. Modern economics will tell you that there's a base demand for money, that is dependent on economic activity. Therefore, if we do not change the money supply, the value of a currency changes along with said levels of economic activity. Today, central bankers change the money supply levels to try to keep the value of a currency relatively stable : Most target a 2% inflation. This makes most contracts, and holding currency, relatively simple. When the value of money changes unpredictably, an economy will not work anywhere near as well: Keeping any contract working on nominal term becomes a pretty big gamble. Imagine being paid 200 BitPesos an hour. when one week the loaf of bread costs 20 BitPesos, but next week could go to just 0.1 BitPesos: It'd be quite the nightmare.

      Now, Bitcoin is built to be naturally deflationary due to the way the supply curve is defined. A naturally deflationary currency is a very bad idea, because, in essence, keeping it in your hand is a form of investment. This means you are always better off keeping it in your hand than spending it. So, over time, the number of Bitcoins actually in circulation would naturally decrease, which would only make the prices spiral, until in the end, there's so few bitcoins out there, that people abandon it as a currency. At that point, the currency collapses.

      Neither of those are features me, or any economist, would want in a currency.

      • by diamondmagic (877411) on Friday May 31, 2013 @03:04AM (#43869827) Homepage

        Fatal flaw with your logic: If people anticipated prices going up, then prices would already be that high, minus the price of time. This is a mathematical theorem [wikipedia.org]. Likewise, if people know that Bitcoin will achieve mass adoption in the future, they will buy the currency and hold it, until they believe it reaches its peak, at which point they spend it. This is how new money effectively enters circulation, or to be more accurate, this is how price levels remain stable, regardless of the method of money allocation (the reason that central bank inflation is wrong is, even if predictable, the created money effectively steals from the existing base of savings to be given to creditors, banks, and the politically well-connected -- the so-called inflation tax). If Bitcoin's price is far below this level, this is due to the perceived risk: People holding Bitcoin will be greatly rewarded if it does achieve adoption, at the risk that they lose everything.

        Another way to put it is: The total amount of natural resources at our disposal isn't increasing, why should the money supply?

        Before a US central bank oversaw the money supply, prices largely remained stable, the price of commodities remained stable or went down (as manufacturing methods improved). Post-gold-standard, though? Prices go through the roof [stlouisfed.org].

        Your description of prices suggests that they somehow form a positive feedback loop. They most certainly do not. The only aspect of prices that could be spoken of in this form is speculation, and since there are limited resources to speculate with, bubbles always burst.

    • [quote]What's with BitCoin? Why all the negative press? I've seen no named commenter put forth a rational argument as to why it won't work - that can stand up to logical scrutiny. All arguments so far have been handily shot down by subsequent responses. (You're welcome to try, though.)[/quote]

      It won't work because there's a limit to the number of Bitcoins you can make. Additionally all the control mechanisms that market makers normally employ on major currency pairs won't work. It's a threat to the world's

    • Well, as a named person, I have put up quite a few negative posts about BitCoin. Well, maybe not negative – I think it is an interesting experiment that will fail because BitConn's monetary policy – or lack thereof – is inherently deflationary. But that is my opinion of BitCoins ultimate fate – not a judgment on what it is.

      As for the pro-posts themselves – they seem a bit self righteous – the tone reminds me of the post going around that the dotcom bubble was not a bubble

      • You make a cogent and logical argument that BitCoin is deflationary. On first reading, I also thought that deflation would be a problem.

        It turns out that BitCoin is not deflationary, as explained in this link [bitcoin.it].

        This is exactly the sort of post I'm wondering about. You argue that BitCoin won't work - based on an untruth.

        No one who has looked deeply into the concept has come up with a viable reason that it won't work. No one here - of all the people named or anonymous - has put forth an argument that has stood

    • What's with BitCoin? Why all the negative press? I've seen no named commenter put forth a rational argument as to why it won't work - that can stand up to logical scrutiny. All arguments so far have been handily shot down by subsequent responses. (You're welcome to try, though.)

      Are fucking kidding me? There are always numerous logical arguments that shoot down bitcoin. I guess for you, any argument against bitcoin cannot possibly be logical because that's the only explanation for your outrageous statement

    • When I first learnt about Bitcoin, I considered starting an online shop to provide the sort of goods that people said weren't available through Bitcoin payments. (e.g. You can only buy drugs/WOW gold/play poker etc etc).

      Considering the idea, one of the challenges I faced was how to handle the volatility. I thought I had solved that issue, except a few weeks later the first of the bubbles popped, and I realised my solution wouldn't work.
      At the time, I thought it was the outcome of manipulation - a cl
    • by Kiuas (1084567)

      the economic rationale is logically sound (more so than standard economic mantras such as "a little inflation is good")

      There is a very simple reason why a "little bit of inflation" (usually anywhere from 0 to 2 percent a year) is preferable to a deflationary currency: if people know for a fact that in some given timeframe the value of the money they have is going to go up, instead of using it to buy things that they don't absolutely need they're going to wait for when they can get more things with that same a amount of money, which in turn is generally not too god for the economy. Out of hand deflation is just as bad (if no

    • by dbIII (701233) on Friday May 31, 2013 @01:24AM (#43869511)

      What's with BitCoin? Why all the negative press?

      Because it is none of those things you've mentioned above and is instead a pyramid scam targeted at people that are interested in digital currency. When somebody is deliberately targeting YOU with a scam it's hard not to take it personally, hence the negativity.

      Does the government hire astroturfers to guide discussions on this site

      Perhaps you think they could afford them due to all the money they saved due to hoaxing the moon landing? I'm sorry little pyramid scam participant looking for extra marks to exploit, we're not going to swallow this stupid conspiracy theory.

    • by kamapuaa (555446)

      Because Bitcoin is a concept that obviously isn't going anywhere and is driven by marketing. It's all hype and no substance. It's a "currency" that you can't actually use to buy anything, and (be realistic) never will be able to. Instead of your crazy conspiracy theory (the government pays for Anonymous Cowards to post against it on Slashdot), how about a more realistic conspiracy theory - a good part of the interest in Bitcoins is from people who have a financial stake in Bitcoin Speculation?

  • It is inevitable that this world will go towards a real global economy with a common currency for all. BitCoin is a step towards that. More than likely at some point there will be a real line drawn in the sand as to "legal" currency and "black market" currency. Maybe another 20 yrs down the road.
    • If there's anything the Euro crisis is teaching the political leaders of the world, it's that if you give up control of your nation's currency, you risk giving up control of your nation's fate and losing your political power. No one wants to be the next equivalent of the Southern Europeans groveling before the next equivalent of the Germans. Global currency in 20 years? Yeah not going to happen.
      • by dbIII (701233)
        I think it's teaching us what happens when you bail out the banks with government money, and then find that the governments don't have enough money left to run. It's still aftershocks of the Goldman Sachs et al utter fuckups that came to a head in 2008. It pisses people off immensely when their savings are going to be raided purely due to someone else's debt being forgiven (eg. the Cyprus debt is only slightly higher than the amount of money that they had loaned to Greece).
    • Still need cash.

      also what about areas with no / slow network? 3g / 4g dead areas? things in vending machine setting (lot's are non networked)? casino will they real want all people to have to use the cage to get chips / a cash on a ticket? ATM there have high fees.

  • by elucido (870205) on Thursday May 30, 2013 @10:25PM (#43868615)

    Why wont Slashdot let me subscribe to the site in Bitcoin? Coinbase makes it easy.

  • I pay you two chickens for a goat, what's the difference? I think the legitimacy question here isn't so much for the medium but for the cash exchanges from government currencies to barter currency without the law required accountability.

I took a fish head to the movies and I didn't have to pay. -- Fish Heads, Saturday Night Live, 1977.

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