Federal Judge Declares Bitcoin a Currency 425
tlhIngan writes "An East Texas federal judge has concluded that Bitcoin is a currency that can be regulated under American Law. The conclusion came during the trial of Trendon Shavers, who is accused of running the Bitcoin Savings and Trust (BTCST) as a Ponzi scheme. Shavers had argued that since the transactions were all done in Bitcoins, no money changed hands and thus the SEC has no jurisdiction. The judge found that since Bitcoins may be used to purchase goods and services, and more importantly, can be converted to conventional currencies, it is a form of currency (PDF) and investors wishing to invest in the BTCST provided an investment of money, and thus the SEC may regulate such business."
Obligitory Reagan quote... (Score:5, Funny)
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Ronald Reagan
Re:Obligitory Reagan quote... (Score:5, Insightful)
Of course, much better to live and die by the sword... err... Caveat emptor principles?
While there are areas where regulations are silly, this (atleast on the face of it) doesn't seem to be one of those. The accused was running a ponzi scheme. The fact that the currency could be exchanged for real cash puts it in the SEC's realm.
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The fact that the currency could be exchanged for real cash puts it in the SEC's realm
Indeed, but the ruling that it's a currency is odd. The fact that it can be exchanged for 'real cash' means that it's a commodity, and so well within the SEC's mandate. A commodities exchange where you can only trade commodities for other commodities, but have to make the exchanges to currency elsewhere is still an exchange that can be regulated by the SEC.
Re:Obligitory Reagan quote... (Score:4, Insightful)
Peace, Tolerance, Humility.
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I understand many people are not happy with its control over the money supply, but your critique is curious. Do you mean "the Fed looks like a giant Ponzi scheme" as a general " I don't agree with fed policy" critique, or do you actually think that they are actually a legit webster dictionary Ponzi scheme ( one where people pay money in and the money from new investers goes to pay earlier investors). The most common critique I hear, is that the fed is devaluing the Dollar with its QE2/QE3 bond buyback. A
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Which incidentally is the proper method of operation. Government exists to maintain homeostasis of the population. Safety nets prevent complete failures and taxes limit hoarding of success. That's why we only tax a businesses profits, to encourage them to spend more of their revenues and push cash into the economy. No business is overtaxed, because a business that pays any taxes at all is doing it wrong. If your business is going to owe money on April 15th then you need to lower your profits to the ideal 0-
Re:Obligitory Reagan quote... (Score:5, Insightful)
The ideal zero point neglects that it takes capital to run a business. "Profit" is nothing more than the people who helped fund a business (the stockholders) getting a return on their investment, a return without which they'd not have bought stock and made the business possible.
Re:Obligitory Reagan quote... (Score:5, Informative)
The purpose of the AMT is to make "rich" people pay more not less. And "rich" in this case is merely middle class because the criteria for the AMT don't change automatically with inflation. The last few years a lot of people have found themselves liable for paying it.
Re:Obligitory Reagan quote... (Score:5, Interesting)
âoeGovernment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.â -- Ronald Reagan
All of this depends on the government's ability to find the bitcoins, and then provide some kind of evidence that it was exchanged for something. If I transfer funds from my checking to savings accounts, that isn't taxed because no goods or services were exchanged.
The government can try to regulate it, but it'll be as successful as the IRS demanding people pay taxes on their purchases of marijuana. Now yes, they'll pass a law anyway, and yes they'll spend an exorbinant amount of money to prove they can enforce it and then make an example out of a few people in highly-publicized cases, but they won't change things substantially.
This will rapidly evolve into another "war on _________", with innocent people being caught in dragnets while the guilty ones rapidly develop the skills to evade it. It's like big banks -- they were too big to fail, and so they were also too big to jail. The government doesn't take down large organizations, criminal or legal... it goes after the people who are isolated. It goes after the low hanging fruit... and it hopes that scares enough people off to keep them in line.
But business will go on as well as ever... already, people using the Silk Road website within Tor have started switching over to virtual machines that do not store any persistent state information... in the next few weeks, I expect many, if not most, will be. Criminals adapt in a matter of hours or days... law enforcement adapts in a matter of months or years. It's not hard to see who has the upper hand here.
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âoeGovernment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.â -- Ronald Reagan
All of this depends on the government's ability to find the bitcoins, and then provide some kind of evidence that it was exchanged for something. If I transfer funds from my checking to savings accounts, that isn't taxed because no goods or services were exchanged.
The government can try to regulate it, but it'll be as successful as the IRS demanding people pay taxes on their purchases of marijuana. Now yes, they'll pass a law anyway, and yes they'll spend an exorbinant amount of money to prove they can enforce it and then make an example out of a few people in highly-publicized cases, but they won't change things substantially.
This will rapidly evolve into another "war on _________", with innocent people being caught in dragnets while the guilty ones rapidly develop the skills to evade it. It's like big banks -- they were too big to fail, and so they were also too big to jail. The government doesn't take down large organizations, criminal or legal... it goes after the people who are isolated. It goes after the low hanging fruit... and it hopes that scares enough people off to keep them in line.
But business will go on as well as ever... already, people using the Silk Road website within Tor have started switching over to virtual machines that do not store any persistent state information... in the next few weeks, I expect many, if not most, will be. Criminals adapt in a matter of hours or days... law enforcement adapts in a matter of months or years. It's not hard to see who has the upper hand here.
Don't underestimate the power of the government.
When you transfer money from checking to savings and back, they don't care. At the moment, anyway.
But when you transfer money from either of the above into or out of an IRA, it's totally different. And you will very swiftly discover that yes, the goddam gubmint keeps a very close eye on how you move your money around, even though it may technically may have no more "changed hands" than a checking/savings transfer.
Goods and services aren't really what gets taxe
Re:Obligitory Reagan quote... (Score:5, Informative)
A man who's administration set in motion all of the major changes that lead to the last big financial collapse.
Certainly not all of the major changes. Clinton signed the Gramm-Leach-Bliley Act, repealing key elements of Glass-Steagall. Clinton also made the mistake of listening to Robert Rubin and Larry Summers' belief that derivatives didn't need the transparency of regulated exchanges.
Re:Obligitory Reagan quote... (Score:4, Informative)
Under an all-republican congress with a veto-proof majority.
The Republicans didn't have anything near a veto-proof majority in the Senate; they had only 53 seats at the time of the Gramm-Leach-Bliley Act. The vote was 54-44 [govtrack.us], with only Hollings (D-SC) crossing party lines to side with the Republicans. Fitzgerald (R-IL) voted "Present" and Inhofe (R-IN) didn't vote. So even if the Republicans picked up Fitzgerald and Inhofe, they would have still needed to flip 11 Democrats to override a veto, which was highly unlikely.
Re:Obligitory Reagan quote... (Score:4, Interesting)
http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act [wikipedia.org]
The bill then moved to a joint conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November. On November 4, the final bill resolving the differences was passed by the Senate 90–8, and by the House 362–57. The legislation was signed into law by President Bill Clinton on November 12, 1999.
90-8 in the Senate, and 362-57 in the House are, indeed, veto-proof.
But here's something more telling: Republicans under Newt were doing anything and everything they could to torpedo ANYTHING Clinton wanted to do (It seems to be their only tactic for governing since 1994). You have a bill named: Gramm-Leach-Bliley Act; Phil Gramm (Republican-Texas) Jim Leach (Republican-Iowa), and Thomas J. Bliley, Jr. (Republican-Virginia). Does ANYONE actually living during that time think that these three republicans would have given their name to a bill Clinton wanted, then the entire republican delegation vote overwhelmingly for it? Seriously? If you do.. you need to put down the crack pipe.
As for the poster below saying it didn't cause any problems:
During debate in the House of Representatives, Rep. John Dingell (Democrat of Michigan) argued that the bill would result in banks becoming "too big to fail." Dingell further argued that this would necessarily result in a bailout by the Federal Government.
Geez... doesn't that sound familiar....
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And you apparently don't know dates or history. FDR became president in 1932, after the Depression started. His presidency saw unemploment decline steadily- until they tried to stop spending and balance the budget. Then it rose again until WWII ended that nonsense. Austerity fails again.
Wilson was president until 1920- 9 years before the collapse. He may have contributed, but not as much as the guys in charge of the next decade did. Hoover only became president in 1929- the year of the collapse. H
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Proof and sources:
http://www.theatlantic.com/business/archive/2009/02/liar-liar-pants-on-fire/317/ [theatlantic.com]
http://www.uri.edu/artsci/newecn/Classes/Art/INT1/Mac/1930s/1930sAA.html [uri.edu]
http://www.economonitor.com/danalperts2cents/2009/01/23/unhappy-days-are-near-again/ [economonitor.com]
Or just look at https://www.google.com/search?q=unemployment+1930s+graph&client=firefox-a&hs=9cz&rls=org.mozilla:en-US:official&channel=fflb&source=lnms&tbm=isch&sa=X&ei=riwDUqS_CqOdyQHG24DYDw&ved=0CAkQ_AUoAQ&biw=1536 [google.com]
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He was, however, demented while holding the presidency.
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Is everything currency, then? (Score:2)
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The government gets to make more subtle judgements than you claim to recognize. Usually we discover this as we grow up. Sometimes not, however.
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Jesus. Anybody who thought that was an insult has a skin thickness measured in nanometers and could never cope with the conversation of English gentlemen.. It was a simple observation.
Spectacular case of "if the shoe fits" though.
Re:Is everything currency, then? (Score:5, Informative)
Re:Is everything currency, then? (Score:4, Interesting)
Joules / kWh: bitcoins (Score:4, Interesting)
Is it really such a huge leap to mark a joule or watt as a form of currency?
Well given the way bitcoins are generated and the whole network is working (Hashcash [wikipedia.org]), bitcoins are in a way backed by the electrical power that went into minting them (computing the necessary hashcash powering the transaction).
It's not exactly the same as a real gold standard: in a currency backed by gold, somewhere in some bank's vault there should be piles of gold ingots corresponding to the value of the circulating money. With bitcoins, you don't have actual piles of batteries containing the kWh corresponding to the circulating bitcoins, but for each bitcoin in circulation and bitcoin transaction, there are corresponding hascash which got computed (and is stored in the bitcoin's equivalent of a bank, i.e.: distributed across all nodes of the network). And you can map Joules or kWh to them.
And the current price of bitcoins tends to oscillate around the price of the energy which went into minting them.
You can see bitcoins as a way to convert electricty into another virtual currency. And given the crazy minting rigs that some bitcoin-nerds are building, this relationships become quite obvious.
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Now you're getting it.
Re:Is everything currency, then? (Score:5, Insightful)
You barter with the intrinsic value of the items. If you need boots and can offer a hat or dinners for them, you do that because you need boots to walk in, and the guy with the boots needs to eat or needs to cover his head.
Currency is a representation of value as an abstract. It's useful because it lets us set prices without having to negotiate barter, or more importantly, to have to produce and carry around things that we believe we could barter.
However, because currency does not have an intrinsic value by itself, it can be manipulated and used in certain ways that are not naturally regulated. In that sense, currency needs some sort of regulation. I don't know how much, and I think it should be as little as required, but I can accept that it may need a lot.
Bitcoin may be backed by some sort of store of abstract value, but it has no intrinsic value on its own. There is nothing you can do with a Bitcoin other than use it to buy something else. In that sense, it is a currency and is nothing like barter.
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currency does not have an intrinsic value
Unless the currency is backed by something tangible and rare (typically gold and/or silver).
Re:Is everything currency, then? (Score:4, Insightful)
The value of gold and silver isn't because of any intrinsic values they have besides rarity. (Yes, I know there are industrial uses of them, but that's not the driving force behind their price.) Good currency similarly also has a limited supply.
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isn't because of any intrinsic values
That's why I wrote tangible instead of intrinsic.
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Re:Is everything currency, then? (Score:5, Insightful)
A one to one exchange of goods/services with intrinsic value is called bartering. Currency is anything used as a token to simplify trading where more than one exchange would be required to get the goods what you want. Something durable and hard to obtain such as gold is ideal for those tokens. Problem with that scheme is the economy now has an artificial growth boundary defined by the supply of gold. Of course when politicians start firing missiles at each other people will be drawn to the "safe haven" of gold, but the fact is currently "the market" sees US treasury bonds as "safer than gold".
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But then the bank charges interest, so then from 10 pounds of gold you end up with debtors owe 510 pounds..., and thus it becomes impossible ... for them to all pay off, since there is no longer enough gold in the world to cover the debts.
You can eventually pay off any debt, no matter how large, with any non-zero amount of currency, provided the currency remains in circulation. You just have to do it incrementally. You pay the bank, the bank puts the gold back into circulation (if only to pay its own expenses), you get paid, you pay the bank, etc.; repeat until the debt is paid. Naturally, both the interest rate and rate of circulation factor in to whether you can pay the loan off faster than it grows, but the actual amount of gold in the wo
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However, because currency does not have an intrinsic value by itself, it can be manipulated and used in certain ways that are not naturally regulated. In that sense, currency needs some sort of regulation. I don't know how much, and I think it should be as little as required, but I can accept that it may need a lot.
Oh, so woefully backwards. Nutria who said "Unless the currency is backed by something tangible and rare" also has it quite backwards.
Money naturally evolved as a good, just like any other. It has the same price mechanism as any other good, that is - whatever somebody is willing to pay for it. Money is just a good which a lot of people happen to want because a lot of other people also want it. So you get gold, silver, salt, etc., naturally used as money. You know if you take a bit of gold for your hat, yo
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...this ruling would seem to imply everything is currency, and thus subject to SEC regulation in the States.
Thank you for your cooperation citizen. Extra soylent rations for you.
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"I can barter my services for goods or other services. Trade one item for another. So, effectively, then this ruling would seem to imply everything is currency, and thus subject to SEC regulation in the States."
United States Constitution, Article 1, Section 10:
"No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; ..."
While the Federal government has the Constitutional power to coin money, it does not have the power to declare anything it wants to be money. Everything has value. That doesn't mean everything can be regulated as money.
People have argued that Article 1, Section 10 applies only to States. And that may be true, but it doesn't matter. If a State may not accept (or force anyone to accept) anything but gold and silver as payment, then gold and silver are in pr
Re:Is everything currency, then? (Score:5, Insightful)
*facepalm*
Given Article 1 Section 10 starts with "No state" and follows with a list of prohibited items... there isn't much of an argument.
You are also ignoring Article 1 Section 8 which says (regarding the powers of congress):
So no, gold and silver aren't the only constitutional forms of currency, congress alone has the authority to print (fiat) money as they see fit. If states wish to create their own, then it must have an actual recognized value (ie precious metal) rather than be fiat currency.
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The SEC regulates this because the BTC is being treated like a commodity. People are buying the BTC with the hopes of selling it later on. Making it similar to people who buy barrels of oil to sell at a future date. And like those oil barrels, there's people buying and selling purely as a way of profiting on movements in the price of the commodity.
Bartering is normally just trading one item for another item. Now, you might then take that item you got and trade it to somebody else, but you're not usually try
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Barter networks are kinda halfway between.
I do something for you and get credit in the system.
I use those credit to get something from a person besides you.
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Currency speculators affect anybody that buys or sells items that involve international trade. So, if you sell a product made domestically with resources gained domestically to domestic buyers, then currency speculators don't affect you to any meaningful extent. But if any of that is international, then currency speculation affects you.
The point isn't so much that it's good or bad, just that the SEC does have regulatory authority over it in the US.
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I don't know the SEC, but the IRS has had rules on this forever.
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Bartering-Tax-Center
I don't know why more people don't know about this... this was covered in elementary school for me. All part of some unit on early American life and how some places still barter instead of using money -- but they still are supposed to pay taxes. (Kinda hard to enforce, but they try.)
Not quite the right conclusion... (Score:5, Insightful)
Bitcoin is a currency that can be regulated under American Law
Well, yes. When has the government ever ruled that it lacks the power to regulate something?
The motivation behind Bitcoin wasn't to create a currency that government would choose not to regulate; it was to create one that government could not regulate.
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The US government can't regulation bitcoins. But it can regulate businesses based in the US.
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The US government *CAN* regulate bitcoins, it's just not going to be able to enforce it where it does not have jurisdiction.
The Legislature can make any law that is not unconstitutional, and it can affect non-citizens. The only issue becomes one of practicality and foreign relations. Don't confuse legality of the law with its enforcement. There are a number of laws out there that provide for universal jurisdiction, even though the laws cannot be enforced realistically outside of the place that made the l
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Sure they can. They can arguably prosecute the individuals that are creating these BTC on US soil. Under http://www.law.cornell.edu/uscode/text/18/486 [cornell.edu]
It's something that would have to be tested in the courts as the statute literally only applies to physical currency, however, with so much "money" these days being digital only, it would seem that the USC would have to be interpreted to include those digital dollars as well.
Ultimately, if not, then the code will likely need to be updated to deal with that cha
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The "stand your ground" laws are not the demon you think they are.
They say, generally, that if you are confronted with the threat of "serious bodily harm" (defined in AZ as "physical injury that creates a reasonable risk of death, or that causes serious and permanent disfigurement, serious impairment of health or loss or protracted impairment of the function of any bodily organ or limb"), you can defend yourself even if you possibly could have run away, provided that you are not doing anything illegal and p
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The United States can pass a regulation that all aliens in the universe must use US dollars as their currency, but they will not be able to enforce it.
The US may one day, if extremely lucky, be able to imprison or kill a few aliens for violating US law, just like how the US may imprison a few people for using bitcoin, but that is not really "enforcement" in any meaningful sense.
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The motivation behind Bitcoin wasn't to create a currency that government would choose not to regulate; it was to create one that government could not regulate.
In theory the government can't regulate cash changing hands either. That won't stop them from bringing you up on charges of tax fraud if you're found out and you didn't file that income on your taxes.
If that was the thinking behind Bitcoin maybe that should have been thought over a little better.
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Sure. The whole point of Bitcoin is to establish something that makes it harder for them to "find out".
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If that was the thinking behind Bitcoin maybe that should have been thought over a little better.
Who knows what the person who made bitcoin thought. We don't even know who he/she is.
What we do know is that Bitcoin is not able to be controlled by any individual or government. At least not in the way that it can control currency that it prints.
For example, while the US is probably powerful enough to affect gold prices, it can not control the price of gold because it can not prevent people from mining or selling gold in other places around the world. It is even easier to avoid detection with in the cas
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> When has the government ever ruled that it lacks the power to regulate something?
When it relates to shooting children in a school zone. There was, briefly, a federal law punishing use of firearms in a school zone under the idea that since they could regulate commerce, and guns and ammo are sold on the market, it was all good. The Supreme Court, rightfully if you ask me (if the your state can't pass a law against shooting kids, is that really a federal problem?), decided that this did not hold muster.
Wh
Re:Not quite the right conclusion... (Score:5, Insightful)
What pisses me off, of course, is not this ruling, as I said, its a local/state problem at best, and already taken care of by the majority of states, but that it was held up as the first time in 40 years that the commerce clause had struck ANYTHING down.
I mean seriously, this clause has been extended to apply to a farmer who would rather grow his own feed (apparently "not participating in the market" is a market activity and still subject to regulation) than buy it.... using it at all to strike down anything at this point is the height of ridiculousness.
This case is Wickard v. Filburn, 317 U.S. 111 (1942) for those who are interested. Old farmer Filburn was charged with growing too much wheat. He argued that the federal government had no jurisdiction to regulate wheat he grew on his own farm for his own consumption. The Supreme Court held that by growing and eating his own wheat, he was failing to buy wheat in interstate commerce like a good little subject. The next time the Supreme Court struck down a federal statute under the Commerce Clause was United States v. Lopez, 514 U.S. 549 (1995), where the Court struck down the Federal Gun-Free School Zones Act. This was a big victory for Justice Rhenquist, who was on a quest to reign in the Commerce Clause. However, his successor, Justice Roberts, although considered a pariah and arch-conservative by the Left, has shown less will to do so. Notably, in his Obamacare decision, he gave a nod to the commerce clause, but then blasted a big old hole in the Constitution by saying basically that Congress could do anything they wanted to as long as they pretended it was a tax.
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The Bitcoin network's computational power "far exceeds the combined processing strength of the top 500 most powerful supercomputers" [cnn.com]. Plenty of nodes have specialized hardware developed specifically for Bitcoin mining; the only way any actor could take over the network would be to invest shit tons of money in specialized hardware they can't use for anything else. This isn't a situation where they can just repurpose their existing supercomputers for a day.
Sure it's within the realm of physical possibilities,
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Exactly. And even if they turn their computing power against it, all they can do is erase transactions from the block chain. They still can only generate new transactions if they have the account, and there is nothing that stops the original transactions from re-entering the block chain. In fact, I would assume that the client already deals with this by finding all of the previously accepted transactions that are not in the new chain, and adding them to its pool for the next block.
So unless they already hav
SEC has lost (Score:2, Interesting)
To sum up, he took Bitcoins for trading into and out of dollars and returned a huge profit (in dollars). But when measured in Bitcoins he returned a loss, investors could have gotten more by sticking to pure Bitcoins, than any dollar trading minus his commissions. So they complained. Not really a Ponzi scheme, but SEC thinks they can use that law.
This really says more about the dollar than anything else. There are 3 times as many dollars now as in 2000 and at no time has there been any export surplus in any
Re:SEC has lost (Score:5, Insightful)
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The motivation behind Bitcoin wasn't to create a currency that government would choose not to regulate; it was to create one that government could not regulate.
Unfortunately while bitcoins design makes it difficult to regulate there are still a few options governments have.
One option is the ."51% attack". If a party has control of more hashing power than the rest of the network put together then they can arbitrarily block transactions they don't like from properly confirming. I'm quite sure if the US goverment chose to do so they could do this, it's a question of whether they would consider it worth committing those resources.
Another option is to go after the exch
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One option is the ."51% attack". If a party has control of more hashing power than the rest of the network put together then they can arbitrarily block transactions they don't like from properly confirming. I'm quite sure if the US goverment chose to do so they could do this, it's a question of whether they would consider it worth committing those resources.
The computing power in the bitcoin pool today is 8 times [qz.com] the computing power of the top 500 fastest super computers in the world combined.
Even if NSA, Russia and China have more powerful setups than what's on the official Top 500 list (and I'm sure they do), it would take an immense effort to create something matching.
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Keep in mind that a lot of that computing power in the pool currently comes from ASICs, some FPGAs, a bunch of GPUs, and oodles of CPUs from users who forgot to disable CPU mining/giving up entirely.
Basically, a few ASICs will easily outclass a supercomputer for the specific task of Bitcoin mining.
So while all the supercomputers combined would bring nothing beefy to the t
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The computing power in the bitcoin pool today is 8 times [qz.com] the computing power of the top 500 fastest super computers in the world combined.
That article stinks of BS. It claims "The bitcoin network also qualifies as the world’s first exascale computer, meaning it’s capable of a quintillion floating point calculations per second.". The source seems to trace back to http://www.bitcoinwatch.com/ [bitcoinwatch.com] who quote a "Network Hashrate PetaFLOPS" but don't seem to indicate how they come up with that number.
AIUI bitcoin mining is a purely integer process. My guess is they looked at the performance of a typica GPU at a floating point benchmark and
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Sex (Score:2, Offtopic)
Substitute "Sex" for "Bitcoin" and see if this holds true.
Sex may be used to purchase goods and services, and more importantly, can be converted to conventional currencies, it is a form of currency
Yup, it fits. Sex is now under regulation of the SEC.
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This is BS. You can't convert sex to money after you received it - that's the difference between a service and a currency.
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This is BS.
(Ummm... let's try)
"BS is a currency and can be regulated under American Law"...
Hey, wad'da ya know? Great insight, buddy, it fits!
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"Bodily fluids obtained during sex" =/= "sex".
Re:Sex (Score:5, Insightful)
Yup, it fits. Sex is now under regulation of the SEC.
I'm sorry, but no. Any person receiving bitcoins can sell them for dollars. That does not hold true for sex.
Re:Sex (Score:4, Funny)
Paid for sex is a service, not a currency. You can't return or convert the sex as an abstract unit of value. It is not a currency.
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Beer isn't very fungible. There's many different types of it, there's varying qualities, and age can affect it. Any dollar is as valuable as any other dollar.
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I'm pretty sure it only gets fungible if you leave it out in the sun too long. But yes, it can go bad. So can dollar bills. They get ripped, torn, washed, lost, etc. I will admit that coins are a bit more resilient than beer.
As for the varying types/qualities ... there are how many different forms of currency? US Dollars, Yen, Canadian Dollars, Euros, Aussie Dollars, Bitcoins, Bahamian dollar, etc. We just need some people to track the exchange rate of beer. A 6-pack of Stone IPA is worth at least
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Not legal tender. Therefore, not a currency. (Score:5, Interesting)
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Euros are not legal tender in the USA; but they are currency. If I have Euros and want to buy something in the USA, the merchant will usually refuse them.
Gold and silver are listed on the currency exchanges even though they are not issued by a government. They are both commodities *and* currencies.
BTC is arguably more of a currency than gold or silver. Unlike metal, it's useful only as a medium of exchange.
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I think the definition tends to be unclear when people want it to be unclear. Not saying that it isn't unclear, but from the Bitcoin reddits, bitcointalk, etc. it becomes pretty clear that a lot of Bitcoin users want Bitcoin to be a currency one way (use it to pay everywhere, getting everybody and their dog to accept it, create physical tokens embodying a particular Bitcoin value, etc.), but abhor the idea of it being a currency in other ways (regulation, taxation, etc.)
Can't really have it both ways.
What would happen if... (Score:2)
A couple thousand alternative currencies such as Bitcoin started surfacing? What would happen when the economy is completely watered down with different types of currencies just because people started using them as heavily as Bitcoin?
The IRS can "legally" tax barter agreements for their monetary value, just to tax trade.
I'm getting an image of an arrogant, bratty red faced child with their hands out, waiting for their piece of cake.
If Bitcoin can't exist outside of the economic iron fist, then what possibil
How to fail in court (Score:5, Insightful)
From the tippy-top of the bitcoin.org [bitcoin.org] website:
Bitcoin is an innovative payment network and a new kind of money.
Now, IANAL, but I suspect walking into court with an argument that bitcoin isn't a new kind of money when its creators clearly and demonstrably assert that it is a new kind of money is likely to fail pretty hard.
And yes, I'm well aware of the of the distinction between money and currency. Gold bugs, sufferers [ronpaul.com] of Fed derangement syndrome and others spend a lot of time proselytizing about this stuff. The thing is that the SEC and the courts don't, which is why no one has ever succeeded in evading financial laws by attacking the legitimacy of fiat money.
At least not without an army.
Re: (Score:2)
Good point. But I think the operative words are "kind of". Just like cigarettes were a kind of money after WW2 in Germany.
Euros are money. Does that mean the SEC can regulate them?
fantasy (Score:4, Insightful)
Was there really anyone who believed that bitcoin was somehow going to exist outside of the ability of any government to regulate it?
That belief reminds me of the "sovereign citizens" who believe that some obscure 19th century district judge's decision puts them outside of the federal and state government's ability to prosecute them for any crimes.
Comment removed (Score:5, Insightful)
The Tittle is Missleading (Score:5, Interesting)
The Judge didnt rule that bitcoin is a Currency, from the PDF:
"Therefore, the Court finds that the BTCST investments meet the definition of investment
contract, and as such, are securities.2
For these reasons, the Court finds that it has subject matter "
It clearly says that it find that BTCST is subject to law. no ruling related to Bitcoins. move along nothing to see here
YIPPIE! (Score:5, Funny)
I would LOVE to see Miss Leading's tittles!!!!
Don't Steal (Score:2)
The government hates competition.
Oh, my ISK! Oh, my lawsuits! (Score:2)
If Bitcoin are a currency because of its attributes (convertibility, common use), what does that mean for "Virtual Currencies" that can be converted back to monetary value?
EVE online? Second Life? Does this ruling apply to them? (I do not play either, I just recall stories...)
Get your hands off my L$ (Score:2)
Comment removed (Score:3, Interesting)
Fairly obvious verdict ... (Score:3)
And yes, tough luck for people who thought they could make an end-run around regulations and taxation by coming up with an "unofficial" new currency.
As long as bitcoin was a fringe phenomenon it could be ignored, but now it's time for it to grow up apparently.
I don't think ... (Score:5, Insightful)
Making Bitcoin subject to SEC regulations is a whole other issue, with additional requirements. The SEC regulates (most*) securities and imposes requirements such as registration and transaction reporting. This is far beyond the sort of regulation applied to money. When was the last time you had to report the serial numbers on all the currency you held?
So, which is it? A currency, subject to income reporting rules? Or a security, under the SEC's authority? IANAL, so I'd really like some enlightened input on what is being decided here.
*Derivatives and commodity contracts are subject to CFTC regulation.
Re: (Score:3)
So, which is it? A currency, subject to income reporting rules? Or a security, under the SEC's authority? IANAL, so I'd really like some enlightened input on what is being decided here.
Arguably neither. You can convert your warcraft gold into US Dollars; that doesn't make your warcraft gold money.
Arguably bitcoin could be not a security, and "Bitcoin Savings and Trust" still subject to SEC regulation, and could be a ponzi scheme --- not because bitcoin was a currency, but because They promi
Re: (Score:2)
Currencies are issued and backed by governments.
Really? [wikipedia.org]
Distinct from centrally controlled government-issued currencies, private decentralized trust networks support alternative currencies such as Bitcoin, as well as branded currencies that are based on reputation of commercial products.[9]
Re:Currency? (Score:5, Insightful)
Shesh.. Not even close on this..
In this case the judge is saying that even though the investors used BitCoin, the activities of the investment where essentially the same as investing dollars so the argument that BitCoin isn't a currency didn't apply. If it walks like a duck, quacks like a duck, acts like a duck and looks like a duck, it's a DUCK.
So.. Even if you make somebody trade in some kind of voucher to invest in your scheme, if you live in the US and are operating in a way that looks the same as something the SEC regulates, you are subject to the regulations.
So the judge is NOT saying BitCoin is a currency, but that the guy was operating an investment scheme that was illegal and is not shielded from the SEC because he used BitCoins.
Re:Currency? (Score:5, Informative)
Re: Currency? (Score:3, Insightful)
You are not reading the same court opinion that we are.
The court (correctly) ruled that because BTC can be freely exchanged to other currencies, it is currency. (Well, duh.)
The judge also ruled that because the "investment" that was offered involved money, it is a securities note - hence the SEC has jurisdiction.
Future Bernie Madoffs should take notice: BitCoins are not a "get out of jail, free" card.
Re: (Score:2)
This is a lot more like stating that a call-girl is the same as a street-walker and, therefore, must fall under the same street-pimp purview.
This is slashdot. Can you do a car analogy?
Re: (Score:2)
"Can't almost anything that can be bought/sold technically be converted to conventional currency..."
Yes! And that is why the Judge's ruling is hopelessly flawed.
You can trade wheat or rice for any currency on the planet. You can "convert" it to gold (in some places). You can buy it with Yen and sell it for Rubles. You can trade it around the world.
I hereby declare wheat and rice to be money.
Re: (Score:2)
Can't almost anything that can be bought/sold technically be converted to conventional currency...
No. Let's say you have a stack of "currency" in the form of Justin Bieber tickets. That alleged currency will have high value to tween girls, but is worthless to middle-aged men like me. The idea of currency is you can convert those Justin Bieber tickets into some medium and use that medium to get stuff you want, while the tween girls can use the same medium to buy Justin Bieber tickets, and I can use the medium to buy books that the tween girls don't have the attention span to read. Otherwise, I would have