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Online Gambling Site Bets On Bitcoin To Avoid U.S. Laws

Unknown Lamer posted about a year and a half ago | from the hopeless-endeavor dept.

Bitcoin 347

SomePgmr writes with a story about an online gambling site planning to use Bitcoin to sidestep U.S. regulations that effectively ban online gambling. From the article: "Michael Hajduk had sunk one year and about $20,000 into developing his online poker site, Infiniti Poker, when the U.S. online gambling market imploded. On April 15, 2011, a day now known in the industry as Black Friday, the U.S. Department of Justice shut down the three biggest poker sites accessible to players in the U.S., indicting 11 people on charges of bank fraud, money laundering, and illegal gambling. ... Infiniti Poker ... plans to accept Bitcoin when it launches later this month. The online currency may allow American gamblers to avoid running afoul of complex U.S. laws that prevent businesses from knowingly accepting money transfers for Internet gambling purposes. 'Because we're using Bitcoin, we're not using U.S. banks — it's all peer-to-peer,' Hajduk says. 'I don't believe we'll be doing anything wrong.'"

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347 comments

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Another idiot buying into the bitcoin scam. (1, Insightful)

Chas (5144) | about a year and a half ago | (#42551869)

Yep! This'll stop the government from coming after you!

Not!

And good job. Base your business off a virtual currency with ZERO backing and no control whatsoever.

Re:Another idiot buying into the bitcoin scam. (1, Insightful)

YodasEvilTwin (2014446) | about a year and a half ago | (#42551899)

It kind of sounds like someone exploiting idiots who have bought into bitcoin, actually.

Re:Another idiot buying into the bitcoin scam. (5, Funny)

Cryacin (657549) | about a year and a half ago | (#42551913)

And good job. Base your business off a virtual currency with ZERO backing and no control whatsoever.

And it's worse than US Dollars exactly how now?

Re:Another idiot buying into the bitcoin scam. (-1)

madsenj37 (612413) | about a year and a half ago | (#42551937)

The US has a vast supply of gold and land backing its currency, at least theoretically it has something backing it. I realize what a fiat currency is, i am just pointing out that it could pay creditors.

Re:Another idiot buying into the bitcoin scam. (4, Funny)

VAXcat (674775) | about a year and a half ago | (#42551957)

And platinum...don't forget the platinum...

And plutonium. (4, Insightful)

bdwoolman (561635) | about a year and a half ago | (#42552037)

We should not forget about the plutonium.

Re:Another idiot buying into the bitcoin scam. (4, Insightful)

IamTheRealMike (537420) | about a year and a half ago | (#42551999)

The US hasn't been able to back its currency with gold since Nixon formally abandoned the gold standard (and in reality, much before that). Land? What currency has ever been backed with land? Can I go to the US government with a stack of $100 bills and say "ok, I'd like the land that backs this currency now please?". Er, no. The US, like most countries, doesn't back its currency with anything. The only thing that people can exchange dollars for with the government is .... more dollars.

Re:Another idiot buying into the bitcoin scam. (4, Insightful)

Anonymous Coward | about a year and a half ago | (#42552123)

The US backs its currency with a fleet of nuclear-powered aircraft carriers. That's far better backing than land or gold.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552251)

The US backs its currency with a fleet of nuclear-powered aircraft carriers. That's far better backing than land or gold.

Apparently not if the currency exchange rate is to be believed. Numerous currencies have gained and surpassed the US dollar in the last couple of years.

Re:Another idiot buying into the bitcoin scam. (4, Interesting)

Rockoon (1252108) | about a year and a half ago | (#42552243)

Actually, like most countries the U.S. backs its currency with the authority to tax .

The dollar has value because it can pay a dollars worth of taxes.

When Germany jumped into the eurozone, adoption of the euro was extremely slow until the year that Germany required all taxes be paid in euros, and in that year almost everyone converted.

Re:Another idiot buying into the bitcoin scam. (1)

Hatta (162192) | about a year and a half ago | (#42552653)

The dollar has value because it can pay a dollars worth of taxes.

If that were the case, wouldn't the tax rate affect the value of the dollar? Does the tax rate affect the value of the dollar?

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552281)

You obviously never learned about how the US paid off its war debts repeatedly (1776.,1812, Mexico) by selling land from the Louisiana Purchase. They've still got plenty if they ever decided they needed some cash.

Re:Another idiot buying into the bitcoin scam. (5, Informative)

IamTheRealMike (537420) | about a year and a half ago | (#42552481)

That isn't what backing means. Every single reply to my post has the same issue. Backing does not mean "the issuing authority has assets they can sell" and it doesn't mean "the issuing authority can force me to use their tokens through the barrel of a gun".

To say a currency is backed by something has a very specific meaning, which is that there is an asset literally "behind" the currency. The currency itself is merely a proxy for the backing material, one can be exchanged for the other at a specific rate. The gold standard meant you could, at least in theory, go to a bank or the government, hand in some currency and walk out with gold bars.

So given this clear definition it's meaningless to say a currency is backed by "the authority to tax". That authority might incentivize a large population to obtain these tokens and thus give them some value - but that isn't backing. It's taxation. It's also wrong to say a currency is backed by the ability to sell something like land - OK, so the government sells some land it owns. What does it sell that land for? Oh, right, it sells the land for dollars. So if I lose confidence in the dollar and want to hand them in, in return for the asset that backs them, the government selling land and giving me back more dollars doesn't help. I'd need the actual land itself and there'd need to be an actual somewhat fixed exchange rate between dollars and land. But there isn't.

If you want to argue that dollars have value because the US government taxes its citizens in that way, go right ahead. That argument doesn't lead to "Bitcoins are worthless because no government taxes in them" though. Bitcoins obviously aren't worthless because they started out having no value when they were first created, and obtained value over time as people learned about them. The system is an existence proof that you'd be wrong.

Re:Another idiot buying into the bitcoin scam. (2)

complete loony (663508) | about a year and a half ago | (#42552341)

Most of the currency that is circulating is really just accounting entries at banks, backed by the securities the banks hold for the loans they have issued. What's the most common security? Houses, or the land they are built on.

Re:Another idiot buying into the bitcoin scam. (1)

GodInHell (258915) | about a year and a half ago | (#42552353)

Instead the U.S. backs its currency with the force of law. You must accept U.S. dollars as legal tender in the U.S. or you are in breach of law. There are penalties. I wonder if anyone's revisited this issue since the price of Gold shot through the roof. There is quite a lot of it at fort nox, and in the treasury's vaults.

Re:Another idiot buying into the bitcoin scam. (3, Informative)

TheCarp (96830) | about a year and a half ago | (#42552537)

Only if a debt is created actually. I can offer to sell anything I own for barter, gold, bitcoins, or even euros, and I can, quite legally, refuse any currenct, including US currency...so long as no debt is created. Should a debt be created, then I would have to accept some amount of US currency to settle it (though I am still not required to exclusively accept it).

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552677)

Federal legal tender laws require creditors to accept payment denominated in dollars, but generally do not require businesses to accept any particular form of payment -- such as cash.

Re:Another idiot buying into the bitcoin scam. (4, Informative)

nedlohs (1335013) | about a year and a half ago | (#42552419)

The Rentenmark was backed by land.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552473)

What currency has ever been backed with land?

It was briefly tried in Revolutionary France. [wikipedia.org]

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552015)

The US has a vast supply of gold and land backing its currency, at least theoretically it has something backing it. I realize what a fiat currency is, i am just pointing out that it could pay creditors.

The gold standard, really? The USA abandoned the gold standard long ago. The only thing backing the US Dollar is their word.

Re:Another idiot buying into the bitcoin scam. (1, Flamebait)

bigkahunah (1093791) | about a year and a half ago | (#42552111)

The US has a vast supply of gold and land backing its currency, at least theoretically it has something backing it. I realize what a fiat currency is, i am just pointing out that it could pay creditors.

http://www.youtube.com/watch?v=SjxY9rZwNGU [youtube.com]

Re:Another idiot buying into the bitcoin scam. (3, Insightful)

Chas (5144) | about a year and a half ago | (#42552205)

Is the US going away tomorrow? No.
Are they going away next year? No.
Are they going away in 5-10 years? No.

Is "A. Random H@X0R" going away tomorrow? Who?
Are they going away next year? Who?
Are they gone in 5-10 years? Who?

Essentially currency is based on trust.
For anyone who's not a complete, gullible rube, Bitcoin fails the "smell test" there.

Re:Another idiot buying into the bitcoin scam. (1, Troll)

TheCarp (96830) | about a year and a half ago | (#42552559)

> Is the US going away tomorrow? No.
> Are they going away next year? No.
> Are they going away in 5-10 years? No.

So is there evidence that we should know 5-10 years in advance when the US government IS going to fall?

You can put your trust where you want, I don't expect anything is so set in stone. Not that they wont go away, and not that they wont fall apart to the point that their own currency becomes untrusted and worthless....it could very well happen, and it could happen in less than 5 years.

Re:Another idiot buying into the bitcoin scam. (2, Insightful)

Jafafa Hots (580169) | about a year and a half ago | (#42552705)

Yeah, the US is more likely to fail in the next 5 years than Bitcoin.
Also, Obama's going to take your guns and put you into a FEMA camp.

Better start hoarding shit in your basement and storing your own urine in mason jars. You know...

just in case.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552579)

Is the US going away tomorrow? No.
Are they going away next year? No.
Are they going away in 5-10 years? No.

Small problem: The opposition to your argument has a very high proportion of survivalist wannabe nerds. So, their answers would be more of:

Is the US going away tomorrow? IT MIGHT!!! I've got the TRUTH right here in this warehouse full of binders that THEY can't get to! Read over ALL of them before you decide if you agree with me or not, because I sure have, and if you don't, YOU ARE WORSE THAN ROBO-YETI-HITLER. Oh, he was real, all right.
Are they going away next year? Don't be silly, the corporations will have taken over your guns by then. They're the ones really in charge.
Are they going away in 5-10 years? ZOMG ZOMBIE APOCALYPSE!!!1!

Is "A. Random H@X0R" going away tomorrow? Who?
Are they going away next year? Who?
Are they gone in 5-10 years? Who?

Is "A. Random H@X0R" going away tomorrow? Of course not. I can really trust him, man, he hooked me up with some awesome hentai torrent sites.
Are they going away next year? No! That's when he'll get me in on the really sweet movie torrents!
Are they gone in 5-10 years? ZOMG ZOMBIE APOCALYPSE!!!1!

Sprinkle in a few pop culture references to "irrefutably prove" all those answers, and you've got yourself all the answers you'll ever get from that audience.

Re:Another idiot buying into the bitcoin scam. (3, Insightful)

LordLimecat (1103839) | about a year and a half ago | (#42552235)

Its not terribly useful in the real world?

I mean honestly, can I buy food with it? Gas? How many merchants within 50 miles of my home (DC area) are currently accepting bitcoins? What about amazon, or ebay / paypal? Newegg?

Sure, I could transfer it to other people, but its also a pretty volatile currency. I have no reason to believe the value sent will reflect anything near the value once I exchange it into dollars, if I can even perform the exchange (since it requires Bitcoin exchanges or a willing purchaser).

Its kind of like trying to transfer money by trading stock: sure, it sort of works, but who really wants that kind of volatility? What supermarket would ever want to do that?

Re:Another idiot buying into the bitcoin scam. (1)

TheCarp (96830) | about a year and a half ago | (#42552627)

And how many accept euros?

Silk road accepts it, so if you don't have a better connection for drugs, there you go. That one site is believed to do about $92,000 US a month in business...all bitcoins.

Its also useful for some services.

As for volitility....well its been in existance for all of a couple of years now... but on a day to day basis...its pretty stable. I have been watching it on and off for a while and...while it does fluxuate, it does so slowly.

So who wants it? Maybe people who care about more than just the economics? People who want to be part of a systsem that excludes coercion (no use of force can ever deprive me of my bitcoins without first getting the private keys that protect them)?

perhaps people interested in new things? Is anyone saying "invest for retirement in bitcoins?" or "put your life savings into bitcoins"? or "Bitcoins: better buy than land"..... cuz I don't see it.

Re:Another idiot buying into the bitcoin scam. (2, Insightful)

diamondmagic (877411) | about a year and a half ago | (#42551919)

So I pay for a product - someone signs over a certain amount of Bitcoin to my private key - and I receive the product (the ability to do the same to someone else). So I'm sorry, what's the scam, again? It's all there, in black and white mathematics.

Re:Another idiot buying into the bitcoin scam. (1)

Anonymous Coward | about a year and a half ago | (#42552001)

You give them your bitcoins. They give you poker chips. You ask for bitcoins back for your poker chips. They say, "What poker chips?"

What do you do?

With banks you can initiate chargebacks and sue them because something of value (money) was lost. With bitcoins, good luck proving bitcoins are of value if you want to sue.

Re:Another idiot buying into the bitcoin scam. (4, Interesting)

IamTheRealMike (537420) | about a year and a half ago | (#42552043)

Proving Bitcoins have value is trivial - there are exchanges where they are traded against other currencies for non-trivial prices, so they clearly have value. What more proof could you demand?

Yes, you can charge back with credit cards. This is great for the credit card companies who then lose the incentive to make their systems more secure, because merchants (ie, the poker companies) lose the money. With Bitcoin you cannot, so the deck is metaphorically stacked in favor of the merchant vs the punter. It's a little better than the reverse because most merchants at least have reputations they want to protect and aren't going anywhere, unlike buyers who can disappear in an instant. But Bitcoin does have ways to offer buyer protection - it's discussed in the very first page of the white paper describing the systems design. The protocol allows for dispute mediators who can decide who gets the money (buyer or seller) but who cannot steal the money themselves.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552083)

Poker sites are operated off-shore, good luck getting back your real money if one disappears.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552099)

Considering the large transactions made in Bitcoin every day, I doubt proving they have value would be troublesome.

Re:Another idiot buying into the bitcoin scam. (2)

chrisautrey (1960196) | about a year and a half ago | (#42552149)

And then you and everyone else stops going there and their buisiness goes toes up. As a general rule, you don't stay in buisiness and make money when you fraud your customers. How many times have you picked the 3-star vendor with crappy feedback over the 5-star one?

Re:Another idiot buying into the bitcoin scam. (2)

LordLimecat (1103839) | about a year and a half ago | (#42552253)

They pay you today's $50 worth of bitcoins. How confident are you that that will be $50 worth of bitcoins tomorrow?

Youre essentially bartering with stock; if that floats your boat go for it.

Re:Another idiot buying into the bitcoin scam. (1)

Anonymous Coward | about a year and a half ago | (#42552405)

They pay you today's $50 worth of bitcoins. How confident are you that that will be $50 worth of bitcoins tomorrow?

Youre essentially bartering with stock; if that floats your boat go for it.

Welcome to the world of currency trading! (forex). Every currency in existence constantly goes up and down in value against all others. The largest trading exchange in the world is not the NYSE or any of the stock markets, its the Forex market. It dwarfs all others in order flow.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552471)

Or you could keep your 10 BTC worth of US Dollars. But how confident are you that that will be 10 BTC worth of of US Dollars tomorrow?

Re:Another idiot buying into the bitcoin scam. (4, Insightful)

IamTheRealMike (537420) | about a year and a half ago | (#42551955)

No control? That's an interesting way to look at it. Bitcoin is controlled by the consensus system that underlies it, if you decide you want to violate the rules then you are split off automatically into a parallel universe where whatever you do won't be recognized by your trading partners. That is a much stronger form of control than traditional currencies have. To change the rules requires the economic majority to upgrade (and thus force everyone else to upgrade with them, so trade can continue). It's pretty democratic, in that sense.

Contrast this to, eg, the US dollar, where control has been deliberately passed to a quasi-private branch of government known as the central bank. Its unelected leader pulls the levers of monetary policy in an attempt to plan the economy.

So both types of currency are controlled, just in different ways.

Re:Another idiot buying into the bitcoin scam. (-1, Troll)

Anonymous Coward | about a year and a half ago | (#42552173)

Bitcoin is controlled by the consensus system that underlies it, if you decide you want to violate the rules then you are split off automatically into a parallel universe where whatever you do won't be recognized by your trading partners.

Yes, because what we need is a trading system where a bunch of drug traders and antisocial nerds can decide to entirely devalue someone's life savings on a whim one day because that person doesn't have as strong of opinions on whether or not Han shot first than the rest of the collective.

Oh, wait, that's right, "that's no different than the US dollar, derp derp". I keep forgetting that the currency system we've had in place, tried and tested, for around a hundred years or so is now rendered invalid because a nerd has paranoid conspiracy theory fantasies that he really REALLY thinks are real. Herp. A. Derp.

Re:Another idiot buying into the bitcoin scam. (0)

Chas (5144) | about a year and a half ago | (#42552291)

Other than the fact that exchanged have been broken into and people have been robbed of bitcoins of supposedly VERY non-trivial worth.

With the government, a bank, and the dollar, you have some assurance of getting your money back.

With Bitcoin, it's "Sucks to be you!"

And that also doesn't account for the fact that many of these exchanges operate with ZERO oversight.

Sure, they can only do it for so long before trust is broken. But how long is that? And how much is lost during that time?

And, since starting up a venture online is far more trivial than starting up a physical business, what's to stop the perpetrators from simply spinning up another exchange again later under a new identity?

Or, what's to stop them from starting up multiple, parallel exchanges and manipulating Bitcoin?

NOTHING.

If you're stupid and want to trust a pyramid scheme like this. Fine. I'll simply laugh at you until you lose your "investment".
Then I'll laugh *harder*.

Re:Another idiot buying into the bitcoin scam. (4, Informative)

IamTheRealMike (537420) | about a year and a half ago | (#42552549)

I don't get it. What do you have against Bitcoin? Has it killed your dog or something?

Your post is a stream of non-sequiturs. Yes, the primary exchange was hacked ... once ... and it resulted in a minor loss that the exchange covered from their own profits. Users did not lose any money. Yes, very tiny ad-hoc "one man and his dream" exchanges have also been hacked, but hardly anyone used them, so again, impact was very minimal. Do you think US banks never get hacked or robbed? Think again [krebsonsecurity.com] .

Many US banks have unbelievably woeful security that results in accounts being routinely emptied. Consumer accounts are insured by the government but business and organizational accounts aren't, yet many of them are protected by nothing more than a password or secret question/answer. That's absurd. Now nothing stops you under-protecting your Bitcoins, but at least you can upgrade to more security if you want. You're not at the mercy of your local bank.

What on earth makes you think that starting a "virtual business is more trivial than a physical business"? Did you step out of a timewarp from the 70s? Do you think competing with Amazon is inherently easier than competing with your local supermarket? Exchanges, as you note, rely heavily on their users trust in their security (as do all financial institutions). That's what stops them "simply reforming under a new identity". They'd be starting from zero and have no advantage over anyone else. And FYI financial regulations do apply to Bitcoin exchanges as they would any other online currency exchange. That's one reason the big ones all demand government issued ID in the same way a bank would.

Feel free to laugh at people who are using a next-generation financial system. It's been many years and Bitcoin is still around and doing fine, so I doubt anyone will care.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552645)

You're a fucking idiot. Like US money never gets stolen, even in "large amounts". You could use sed to replace bitcoin by USD in most of your posts and nobody would notice the difference.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552347)

pfft i know right, theres tons of control-- like the way the market is manipulated everytime an exchange gets hacked or someone does a huge buy/sell or similar.

OR

hah, the afghanni has more stability than your pipe dream currency.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42551963)

What are you talking about? I bet you're one of those suckers who takes things at face value and doesn't realize, for instance, that you legally don't have to pay income taxes because of some obscure argument that I'll describe to you for just $19.95.

That said, the laws against online gambling are pure crony capitalism.

coming 7/19/2013: (1)

Thud457 (234763) | about a year and a half ago | (#42552191)

blah blah blah
blah blah blah
you don't have to pay taxes because it's unconstitutional, but the IRS doesn't want you to know that.
blah blah blah

Wesley [forbes.com] , they let you have internet access there?

Re:coming 7/19/2013: (0)

logjon (1411219) | about a year and a half ago | (#42552373)

woosh

Re:Another idiot buying into the bitcoin scam. (1)

Chas (5144) | about a year and a half ago | (#42552317)

Oh. I never denied that it wasn't crony capitalism.

I'm just making the point that Bitcoin is a scam. Top to bottom, with greed being its only TRULY cohesive force.

Re:Another idiot buying into the bitcoin scam. (3, Interesting)

Mitreya (579078) | about a year and a half ago | (#42551983)

Yep! This'll stop the government from coming after you! Not!

It should, actually.
Otherwise, the government could come after anyone who plays Monopoly, too. Or anyone who plays poker with virtual gold coins in an MMORPG.

Re:Another idiot (4, Informative)

Frobnicator (565869) | about a year and a half ago | (#42552193)

There is more to online gambling law than that.

There are different laws for making bets, taking bets, facilitating payments (this is what usually gets prosecuted), accepting advertising for gambling, displaying advertising for gambling, and even differences in regulation between types of gambling (sports betting, gambling machines, card games, etc.)

Then there are issues with corruption (throwing the game), and money laundering. For better or worse, organized crime loves gambling because it is easy to casually shift funds from one account to another without a paper trail.

On top of that, the government wants their cut in tax revenue.

Re:Another idiot (0)

Anonymous Coward | about a year and a half ago | (#42552557)

The government may 'want their cut in tax revenue' but they do not 'need their cut in tax revenue'...at least not to pay any government bills, the only benefit of taxes is to control the money supply in the economy, increase taxes & the money supply decreases and vice versa...so what you mean to say is 'the government wants control of the money supply'...that may or may not be a good thing with the current US government in power (both parties, their equally to blame & complicit in the current problems)...

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552221)

If a casino decided to used Monopoly money as its "chips", then the government would most certainly consider those transactions to be the same as any other casino real-money transaction.

The government doesn't care about virtual currencies for a lot of reasons, but one of the major ones is that you can't turn it back into dollars in any reliable way. You can, on the other hand, with casino chips, and those are treated as money for all kinds of legal purposes. If you can turn Bitcoins into dollars in a reliable way, then they'll probably fall under the existing regulations that affect gambling with casino chips. If you can't, then perhaps the government won't intervene - but good luck running a successful casino for US customers with a currency you can't turn into dollars.

Re:Another idiot buying into the bitcoin scam. (2)

man_of_mr_e (217855) | about a year and a half ago | (#42552483)

Not really. In a normal casino, the casino itself trades the money for the chips (or Monopoly money in this example) and they also exchange them back to real currency.

There is a difference here. The user is not giving the casino real money, and the casino Is not giving the user back real money. All echanges of money to and from bitcoin happen on the users end without the involvement of the casino.

The US would have to, effectively, say that BitCoin is real currency in order to prosecute. Maybe they will, and will treat it no differently than if the casino were using Euros or Yen.

Re:Another idiot buying into the bitcoin scam. (1)

gl4ss (559668) | about a year and a half ago | (#42552597)

I seriously doubt a casino could operate in alabama simply by only accepting and giving away jewelry or other valuables instead of dollars.

the point for this is simply that usa can't order credit card processors to stop payments to this casino. but he would do well to stay the fuck out of USA if he accepts american gamblers in his casino knowingly.

and I doubt him being the first bitcoin casino either.

Re:Another idiot buying into the bitcoin scam. (1)

gl4ss (559668) | about a year and a half ago | (#42552689)

well,

in case an exchange is converting dollars into bitcoin and that is used for gambling and then exchanged back, the government could slap all parties involved with money laundering charges.

so none of the parties would do well to stay the fuck out of USA and the stupidest thing to do would be to be usa based and go on businessweek saying that you have a loophole because another party exchanges your tokens.

next up someone claiming that you don't have to pay taxes if you bill your clients in bitcoins.

Re:Another idiot buying into the bitcoin scam. (1)

Yoda222 (943886) | about a year and a half ago | (#42552279)

What about people playing poker with poker chips ?

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552699)

The government only cares if you buy your initial chips with money and sell back your final chips for money.

Re:Another idiot buying into the bitcoin scam. (1)

Hentes (2461350) | about a year and a half ago | (#42552059)

People who go to gambling site don't mind risks. At least you don't necessarily lose on btc, unlike other gambling services.

Re:Another idiot buying into the bitcoin scam. (0)

Anonymous Coward | about a year and a half ago | (#42552287)

And good job. Base your business off a virtual currency with ZERO backing and no control whatsoever.

It's like musical chairs. You're hoping you can convert your Bitcoins back into a real currency before the music stops.

But anyway, you're relying on some distant online gambling site to be honest and give fair odds and payouts. Really? It's like betting on the professional wrestling. The use of Bitcoins is not your biggest risk.

Bitcoins aren't a scam, but they do suck (1)

sirwired (27582) | about a year and a half ago | (#42552465)

BitCoins aren't really a scam. They are a perfectly valid currency, by any definition of the word. Few currencies these days are backed by anything, so that's not much of a criteria. And the supply of BitCoins is very tightly controlled; it's just done with an algorithm instead of a central bank.

However, the expansion curve was designed by somebody with utterly no understanding of economics, and the built-in deflation inherent that would come with expansion in BitCoin use guarantees they'll never become widespread for mainstream transactions because of widespread volatility in the exchange rate vs. stuff you actually want to buy. (You'd have to be utterly nucking futs to take out a loan in BitCoins... this kind of prevents a credit market. And credit is the lifeblood of any modern economy.) The volatility is important because the acceptance of BitCoins is, and will remain, too low, so knowing what kind of value you can get for your bitcoins in the real-world is not really possible.

Re:Bitcoins aren't a scam, but they do suck (1)

IamTheRealMike (537420) | about a year and a half ago | (#42552651)

However, the expansion curve was designed by somebody with utterly no understanding of economics, and the built-in deflation inherent that would come with expansion in BitCoin use guarantees they'll never become widespread for mainstream transactions because of widespread volatility in the exchange rate vs. stuff you actually want to buy.

This argument is both very common and wrong. So I'd like to address it here.

Firstly, let's put aside the appeal to authority. Conventional economic theory/monetary policy has led to an absolute clusterfuck - a worldwide recession that shows no signs of ending any time soon. If the current understanding of economics leads to this, then it's time to question that understanding from bottom to top.

Secondly, let's also set to one side the arguments that are contradicted by reality. Empirical evidence shows that deflation does not lead to depression [minneapolisfed.org] . If the Minneapolis Feds study doesn't convince you, look at Bitcoin itself. Despite a dramatic increase in the value of the currency, the Bitcoin economy has grown equally dramatically. BitPay went from 1000 to 2000 merchants in the space of only a few months, and that's only a small subset of Bitcoin-accepting entities. So the system is, again, an existence proof that this common belief is mistaken. Likewise, Bitcoin has been remarkably non-volatile this year. It spent almost all of 2012 at one of two price points: $5 per coin in the first part of the year and somewhere between $10 and $13 per coin in the latter part. Hardly different to the volatility you'd expect from any other currency.

Thirdly, let's address the idea that credit is the lifeblood of the economy. Any economist will tell you that growth comes from innovation. Improvements in productivity, in technology, reductions in the cost of doing business. Wealth - the things we have around us, the quality of our food, our healthcare, the stability of our society ..... none of this comes from credit. It comes largely from technological innovation and good governance. If anything, history shows us that massive amounts of cheap credit has a destabilizing effect on the economy, that's why classical economics says that very low interest rates cause "overheating" and an increasing number of commentators place our current woes on many years of ultra-cheap credit. All that money had to go somewhere, and after the stock market bubble of the late 90s popped, it ended up flowing into real estate speculation. Now that bubble burst too, the only question is where all the cheap money is going now ...

Re:Inaccurate Bitcoin Diatribe (2)

DanielRavenNest (107550) | about a year and a half ago | (#42552485)

Bitcoin uses a global distributed transaction history and account book, known as the "block chain" (because it is a series of blocks of transactions). There are many copies of the transaction history - each user of the official client gets one. Therefore it is more secure against accidental loss or forgery than a typical bank database. Transactions have to be cryptographically signed by the account owner, or they get rejected. There also has to be enough balance in that account number, or they also get rejected. To say the Bitcoin network has no control whatsoever clearly shows you don't understand it. Distributed control is still control.

Most US dollars exist in electronic form in various accounts in the banking system. The majority of the backing of Federal Reserve Notes (the paper currency) is by Treasury debt which also only exists in electronic form (the Federal Reserve and the Treasury stopped using paper T-bonds decades ago). Therefore to attempt to say bitcoins are "virtual" being any different than the official US currency clearly shows you don't understand our monetary system either.

You claim Bitcoin is a scam. In that case, someone must be perpetrating a fraud. Who, exactly? The people verifying blocks of transactions (ie miners)? They are performing a useful service, one that every bank has to do. The exchanges that convert bitcoins for other currencies? How is that different than every stock exchange and bank foreign currency desk? For that matter, how is it different than any other commodity that is bought or sold? The network that makes it possible to send funds internationally with low fees? PayPal, Western Union, and bank wires have done that a long time. Bitcoin just does it cheaper.

What it seems like, to me, Chas, is you are projecting your failure to understand Bitcoin onto others. What gives it value is the ease of moving funds, and, for a business, the lower chance of getting ripped off by PayPal or chargebacks. Even if it is not perfect, if it is better than the alternatives, people will tend to use it.

LOL (-1)

Anonymous Coward | about a year and a half ago | (#42551871)

And because it's not wrong, no one will do anything at all to stop it. Because that would be wrong.

Rulers, not rules (0)

Anonymous Coward | about a year and a half ago | (#42551873)

Betting on some legal loop hole is folly. The laws suit the law makers and if they want to go after you, no technicality is going to change that.

Re:Rulers, not rules (4, Insightful)

hguorbray (967940) | about a year and a half ago | (#42551925)

yep -and I am sure that Vegas, Atlantic city and the mob are putting their money and politicians into making sure it stays illegal regardless of the currency used

-I'm just sayin'

Re:Rulers, not rules (1)

Anonymous Coward | about a year and a half ago | (#42552693)

No. They are actively trying to get online poker/cards legalized, but only for states that have already approved it (ie: Nevada and New Jersey). They want to control the online gambling market.

Sweet (3, Informative)

SleazyRidr (1563649) | about a year and a half ago | (#42551883)

It'll be nice to have an established poker site taking Bitcoins. Not that I want to disparage the current bitcoin poker sites (I like seals with clubs) but they just don't have the polish and finish to which I've become accustomed.

Betting on Bitcon is risky enough (0)

Anonymous Coward | about a year and a half ago | (#42551889)

Without even bringing in games of chance.

Poker is a game of skill (1)

Todd Palin (1402501) | about a year and a half ago | (#42552249)

Poker certainly has chance elements to it, but the game involves choices as a hand progresses. You can call, raise, or fold depending of your assessment of the hand and your opponents. Those are choices that take skill if you plan to come out ahead. Make bad choices and you lose overall. Make better choices than your opponents, and you win overall. It is mostly, but not totally, a game of skill.

Re:Poker is a game of skill (1)

man_of_mr_e (217855) | about a year and a half ago | (#42552605)

While I agree that Poker is a game of skill, it's not for the reasons you mention.

Let's take a casino game such as Let it Ride. In that game, you also make choices as the hand progresses. There is also skill involved, but it's entirely a game a of chance in reality.

The difference is that poker players play against each other, and not against the house. The house just takes a cut, called the Rake.

Gambling comes in a lot of forms, though. For instance, sports betting requires skill as well, and information. There is of course elements of luck, but it's still considered gambling.

What about betting on who wins a poker game? ;)

Unrelated, but still (0)

Anonymous Coward | about a year and a half ago | (#42551891)

Can anyone remind me as to why gambling is illegal?

Re:Unrelated, but still (5, Insightful)

Cryacin (657549) | about a year and a half ago | (#42551917)

Because the right people don't make money with it.

Re:Unrelated, but still (2)

pixelpusher220 (529617) | about a year and a half ago | (#42551923)

Because it doesn't involve horses?

Re:Unrelated, but still (2)

WillgasM (1646719) | about a year and a half ago | (#42552003)

It makes Jesus cry

Re:Unrelated, but still (1)

ThePeices (635180) | about a year and a half ago | (#42552049)

How do you know* this?

* Please note that I am using the word "know", not "think".

Re:Unrelated, but still (-1)

Anonymous Coward | about a year and a half ago | (#42552337)

Thanks for feeding the troll, fucktard.
 
Any semi-intelligent person knows that Christianity really doesn't apply to the law anymore. Would abortion be legal if Christians had their way? There is a general sense of morality in society and far too many people try to find the Christian parallel. It says more about the people making such false arguments than it does about the society that upholds certain values that are (often) based on little more than tradition over religion.

Re:Unrelated, but still (2)

Bigby (659157) | about a year and a half ago | (#42552035)

It is selectively illegal. Games of chance are only illegal for those not associated with the government (in most areas). Investment/insurance gambling is legal but regulated enough that you need to be rich to be the "house" (on the good end).

Amazingly, casino games give house odds of 0.1%-20% per roll/hand. But PowerBall games give more than 50% house odds. Make the better ones illegal or limited in availability. And when they are there, tax the crap out of them and make them advertise gambling addiction prevention stuff.

Re:Unrelated, but still (2, Insightful)

Miamicanes (730264) | about a year and a half ago | (#42552397)

> Can anyone remind me as to why gambling is illegal?

To ensure a never-ending supply of new daytraders to supply Wall Street's liquidity needs?

Re:Unrelated, but still (2)

gl4ss (559668) | about a year and a half ago | (#42552625)

Can anyone remind me as to why gambling is illegal?

it doesn't provide industrial meaningful benefit, so it's free game for the government to tax to hell(and to build monopolies on, just another way of taxing to hell) since there's no productivity involved in it in the first place. it doesn't create eggs for anyones omelet, it produces no milk, it produces no steel girders to be used in building butchering facilities.

you could argue any entertainment to go into this category though.. and largely it's all taxed to hell anyways, whilst some other fields are actively subsidized.

Re:Unrelated, but still (0)

Anonymous Coward | about a year and a half ago | (#42552639)

Because it hurts people besides the ones who actually participate?

Why not do what everyone else does? (1)

For a Free Internet (1594621) | about a year and a half ago | (#42551909)

Use chips instead of coins.

Much simpler. All the major gamboling casiemos do it. I should know because I am an expert pokor grandmaster milliolnair.

So... It's an Arcade (5, Informative)

CanHasDIY (1672858) | about a year and a half ago | (#42551971)

Sounds like a dumb idea, until you realize that Chuck E. Cheese and similar businesses have, for decades, been using a similar tactic to avoid running afoul of gambling laws: You're not playing for gifts or money, you're playing for worthless tokens!

The fact that said worthless tokens can be exchanged for things with monetary value is, apparently, non sequitur.

Re:So... It's an Arcade (3, Interesting)

bitt3n (941736) | about a year and a half ago | (#42552131)

this is also how pachinko parlors in japan work to get around japan's gambling laws, except you exchange the trinkets for actual money at an establishment next door to the pachinko parlor.

Re:So... It's an Arcade (1)

TubeSteak (669689) | about a year and a half ago | (#42552521)

Sounds like a dumb idea, until you realize that Chuck E. Cheese and similar businesses have, for decades, been using a similar tactic to avoid running afoul of gambling laws: You're not playing for gifts or money, you're playing for worthless tokens!

I doubt the Feds would allow Japanese style Pachinko gambling, where one business sells/buys the steel balls and another has the gaming machines.

Maybe you could do something online, with a non-US company selling/buying Entertainment Bucks and online casinos accepting/paying out with the same.

The Feds would probably call it all money laundering and make your life hell.

Doomed to fail (5, Interesting)

Dishwasha (125561) | about a year and a half ago | (#42552033)

Not too long after Black Friday I had the same idea of using Bitcoin currency instead of real moolah. A site called Betcoin [betco.in] had already done this using the jpoker/jspoker [pokersource.info] library. I frequented the site for a while and even went back to it months later. In both cases the volume of people on the site was extremely low and the amount of bitcoin compared to real USD value was paltry even in comparison to the Full Tilt Poker $0.25/$0.50 tables. There just wasn't enough money in circulation on the site and not many people wanted to stake their futures on the volatile Bitcoin currency in the poker world. Plus, anyone that did any decent research just found various overseas and Indian-owned online casinos (harder for the US Gov to prosecute Indian territory casinos in Canada) and could exchange money by select Visa merchants, cash proxy sites, or by money order.

Re:Doomed to fail (1)

Lord Strongpants (2751893) | about a year and a half ago | (#42552143)

This is a good point. All this froth about Bitcoins being a scam or worthless or illegal or blah blah is a very useful smokescreen for people with a business model that's falling apart at the seams. If a U.S. citizen wants to gamble online despite the legal restrictions they can. That market is already filled. What's this guy got that the other's don't? Bitcoins? Is that it? Wow. I wanna invest.

Dragon's Tale does this (1)

Anonymous Coward | about a year and a half ago | (#42552047)

Dragon's Tale, an mmo/casino hybrid, has already been doing this for two years. As does seals with clubs(an eu betting site, sealswithclubs.eu).
If you're looking for hold'em style poker, Seals is awesome.

However Dragon's tales(http://www.dragons.tl/) is a bit unique in that it has a LOT of different styles of games. There's the standard "luck" based games, some slot machine style, some complex paytables with various interesting things. Coconut trees are roulette style red/black odds. But they also have quite a few games of skill, which means there are behaviors you can learn about the game to improve your odds, and price adjusts to reflect the average level of play. So if you're good and careful with betting, making money there on a regular basis is possible. I'll also point out they have a rakeback policy that goes up as you play, which they also use to encourage older players to teach younger ones (in the form of the house giving a small part of its share to mentors).

All in all, bitcoin has proven itself to be quite versatile for online gambling. And at $14USD per btc, you can't really say bitcoin is a failed experiment. :P Stop on by dragons or seals if you doubt and i'll show you around. Both have free options (seals does hourly free tournaments, and dragon's offers free seed money through various activities)

Re:Dragon's Tale does this (2)

Umuri (897961) | about a year and a half ago | (#42552095)

whoops, the above is me, just to put my reputation a bit on the line so it's not thinking the above anon is a paid shill.

Dragon's Tale, an mmo/casino hybrid, has already been doing this for two years. As does seals with clubs(an eu betting site, sealswithclubs.eu).
If you're looking for hold'em style poker, Seals is awesome.

However Dragon's tales(http://www.dragons.tl/) is a bit unique in that it has a LOT of different styles of games. There's the standard "luck" based games, some slot machine style, some complex paytables with various interesting things. Coconut trees are roulette style red/black odds. But they also have quite a few games of skill, which means there are behaviors you can learn about the game to improve your odds, and price adjusts to reflect the average level of play. So if you're good and careful with betting, making money there on a regular basis is possible. I'll also point out they have a rakeback policy that goes up as you play, which they also use to encourage older players to teach younger ones (in the form of the house giving a small part of its share to mentors).

All in all, bitcoin has proven itself to be quite versatile for online gambling. And at $14USD per btc, you can't really say bitcoin is a failed experiment. :P Stop on by dragons or seals if you doubt and i'll show you around. Both have free options (seals does hourly free tournaments, and dragon's offers free seed money through various activities)

Uh... (0)

Anonymous Coward | about a year and a half ago | (#42552081)

"Michael Hajduk had sunk one year and about $20,000 into developing his online poker site

Doing it wrong. Oh so very wrong.

It's all good bro! (1)

alphatel (1450715) | about a year and a half ago | (#42552115)

Hajduk says. 'I don't believe we'll be doing anything wrong.'
Tell that to the US Federal Marshal, FBI, CIA ('I' stands for "It's National" not 'International'), and every other ATF-related or unrelated agency that every existed when they come knocking at your door with handcuffs. With 15 years defending yourself, maybe, just maybe, you'll get out before 2030.
Bitcoin forever, oorah.

Re:It's all good bro! (1)

JazzHarper (745403) | about a year and a half ago | (#42552261)

Hajduk says. 'I don't believe we'll be doing anything wrong.'

Then, why does he call himself "Hajduk"?

Please place sociopolitical ramblings under this. (4, Insightful)

SuricouRaven (1897204) | about a year and a half ago | (#42552121)

Of course the government has to outlaw gambling. It is dangerous and addictive, encourages crime and exploits the poor. Except the state lotteries, of course - those are somehow none of the above.

I predict the future (4, Funny)

bitt3n (941736) | about a year and a half ago | (#42552151)

I don't believe we'll be doing anything wrong

shortly to become

I didn't believe we were doing anything wrong

Re:I predict the future (0)

Anonymous Coward | about a year and a half ago | (#42552691)

The great thing about bitcoin (possibly the only thing that makes it interesting) is being essentially engineered from the ground up to permit strong anonymity when used correctly. See Silkroad for the most well known proof of this. If the man decides to take a heavy handed approach about the only thing they could do is ban it altogether, and good luck with that.

bitcoins should be fine (0)

Anonymous Coward | about a year and a half ago | (#42552165)

It really doesnt matter if bitcoins dont have anything backing them. Im pretty sure the whole backing thing is a sham. Currency is worth whatever the public puts confidence in them. If OPEC stopped using dollars to trade for a crude oil, they dollar would be lost as we know it. Bitcoins can be used in many ways that normal currency cannont so i think they will keep their value

im guessing Goldman Sachs probably already does (2)

decora (1710862) | about a year and a half ago | (#42552339)

have a whole department gaming the bitcoin system.

funny how gambling is illegal -- unless you do it with other peoples money

I think this is the one useful app. for the things (2)

sirwired (27582) | about a year and a half ago | (#42552345)

I think BitCoins were poorly designed (from an economic standpoint), and will never be a serious form of payment for anyone NOT wanting to engage in currency speculation on the volatile rate, but for gambling, they totally make sense. That is, as long as they realize that their BitCoin exchange rate will be an additional element of their bet.

bitcoins disruptive technology (1)

faustoc4 (2766155) | about a year and a half ago | (#42552451)

Who could have thought that bitcoins were a disruptive technology and could bypass international banking oversight, like economic blockages or sanctions. Maybe Iran will accept bitcoins for their oil.

Naive (1)

Sqreater (895148) | about a year and a half ago | (#42552575)

The law is what they say it is. Don't try to use logic to determine what is legal and what is not. See the TV Show "Law and Order" to get the idea. Watch the prosecutors stretch and massage the law to cover anything they want covered, criminalize anyone they want in jail. I believe that represents reality. If he's really going to create and maintain a bitcoin gambling site Michael Hajduk should stock up on cigarettes and practice keeping his mud together because he's headed to jail sooner or later, probably sooner. Being clever with the law isn't clever, it's just stupid.

Won't work, because . . . (0)

Anonymous Coward | about a year and a half ago | (#42552581)

. . . "Infiniti Poker" is a business, and they accept transfers of bitcoin money for gambling purposes. So, they still break that law - at least if authorities decide to accept bitcoins as a form of currency.

Tor Sites Already Do This (0)

Anonymous Coward | about a year and a half ago | (#42552601)

There are [at least] 2 onion sites already using bitcoin for gambling. Found them in August.

Karma (1)

Synerg1y (2169962) | about a year and a half ago | (#42552695)

indicting 11 people on charges of bank fraud, money laundering, and illegal gambling

Gambling period runs a very high profit margin, to try and increase that through illegal means is just well... messed up. The use of bitcoin shows that the owners of these websites will do just about anything for even potentially earning a buck.

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