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US Government Embraces Bitcoin in Hearing on Virtual Currency

Unknown Lamer posted about 10 months ago | from the coal-to-pretend-money dept.

Bitcoin 233

Daniel_Stuckey writes "Congress held its first-ever hearing on virtual currencies this afternoon, and it may have been the best PR boost bitcoin's had yet. The tone at the hearing held before the Senate Homeland Security and Government Affairs Committee was overwhelmingly positive as the panel weighed the risks of the technology that grew out of the criminal underbelly of the web, with the potential economic value of the now-booming futurist money. The prevailing sentiment over the two-hour deep dive into the pros and cons of the digital coins boils down to this: We need to uphold America's position as center of technical innovation by welcoming the new currency—but that that can't be done without government safeguards and regulations." SonicSpike wrote in with a link to another report in Bloomberg. The Federal Reserve has no plans to regulate Bitcoin (lacking regulatory authority), but the SEC chair wrote "Regardless of whether an underlying virtual currency is itself a security, interests issued by entities owning virtual currencies or providing returns based on assets such as virtual currencies likely would be securities and therefore subject to our regulation."

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Pipe dreams... (1, Funny)

Anonymous Coward | about 10 months ago | (#45460809)

Good grief.

Re:Pipe dreams... (1)

Anonymous Coward | about 10 months ago | (#45460821)

Well, it is the US government after all. They always pipe dream.

Oh look! (-1, Flamebait)

Chas (5144) | about 10 months ago | (#45460819)

The government embracing yet another shady economic plan!

See! If the US embraces a Ponzi scheme, it MUST be okay!

What complete and utter bullshit!

Re:Oh look! (3, Informative)

Anonymous Coward | about 10 months ago | (#45460871)

The fact that you think Bitcoin is a Ponzi scheme shows just how little you know about the currency.

Re:Oh look! (-1)

Anonymous Coward | about 10 months ago | (#45460909)

No this is your typical 'expert' who also read about Bitcoin (last year) and hasn't tried, considered, or even actually investigated it.

Kind of like the kind of people who shun a doobie or a beer but they haven't ever tried one.

Chas don't be that guy, nobody likes that guy.

Re:Oh look! (2)

triclipse (702209) | about 10 months ago | (#45461079)

... or what a Ponzi scheme is.

Re:Oh look! (1, Informative)

InsightfulPlusTwo (3416699) | about 10 months ago | (#45461485)

It's not a Ponzi scheme... it's a Poncey scheme!

The way in which a 'ponce' may act. The actions of a pompous tosser who thinks their value is higher than it is actually worth. The actions of one who thinks they are either overly stylish, cool or smart etc, when usually their IQ is akin to a fruit and they seem like a stunt double for one of the 'idiots' on the programme 'Nathan Barley'. Usually anyone with half a brain tends to laugh at these types, but unfortunately for society, this type of action is actually accepted amongst the 'Celeb' and 'Music' industry with open arms and is also worshipped. Oh well.

Source: http://www.urbandictionary.com/define.php?term=poncey [urbandictionary.com]

Re:Oh look! (5, Interesting)

aaronb1138 (2035478) | about 10 months ago | (#45460895)

A few really simple reasons the government would be in favor of Bitcoin:
1) Gain control early.
2) Every transaction leaves a trace. The idea that Bitcoin is anonymous is a bit of bullshit. Yes, right now the exchanges keep one hand from knowing the other. This is easily changed.
3) In aggregate, it's impossible to trace for a non-government entity. This means slush fund spending woohoo time.
4) Politicians have figured out that the extreme anti-social end of the internet from which Bitcoin has gained its popularity are a bunch of socially inept jack offs. They know these people have poor impulse control and too much intellect, but are easily swayed by marginal amounts of lip service.

Re:Oh look! (5, Insightful)

firex726 (1188453) | about 10 months ago | (#45460991)

Downside though is the extreme volatility of them.

No one is going to convert their millions in a slush fund into bitcoins if it'll mean that the value will spike and dip on daily basis. Financial security means confidence in a currencies value.

Re:Oh look! (1)

mysidia (191772) | about 10 months ago | (#45461077)

No one is going to convert their millions in a slush fund into bitcoins if it'll mean that the value will spike and dip on daily basis. Financial security means confidence in a currencies value.

Well; they can maintain their slush fund in USD; in order to transact in BTC safely, convert only funds required to make a payment into BTC, require a contingent contract, for the time in between agreement and payment; that is, a contract that the buyer (at the buyer's sole option) can cancel, or re-price based on the current exchange rate, if the price of BTC fluctuates too much; between the time the agreement is made, and the time prompt payment can be completed.

Re:Oh look! (3, Insightful)

data2 (1382587) | about 10 months ago | (#45461303)

It really depends on the amount of invested (or converted) money. The ups and downs are a symptom of the poor market depth of bitcoin. My real problem with it is that I don't see the market depth becoming deeper any time soon with the deflationary properties of bitcoin.

Re:Oh look! (0)

Anonymous Coward | about 10 months ago | (#45461353)

Convert it to fiat!

Re:Oh look! (0)

Anonymous Coward | about 10 months ago | (#45461883)

Convert it to fiat!

I'd prefer to concert it to Rolls Royce.

Re:Oh look! (1)

Anonymous Coward | about 10 months ago | (#45461669)

Stability will come from a larger userbase.

Re:Oh look! (2, Interesting)

Anonymous Coward | about 10 months ago | (#45461119)

embrace extend extinguish

Re:Oh look! (0)

Anonymous Coward | about 10 months ago | (#45461223)

Don't forget to mention that the government (NSA) created Bitcoin in the first place in order to harness the computing power necessary to secretly decode the 8th chevron on the Stargate...

Translation (4, Insightful)

Anonymous Coward | about 10 months ago | (#45460825)

...but that that can't be done without government safeguards and regulations

What they really mean: Congress is very excited at having found something new to tax.

Re:Translation (2, Insightful)

Anonymous Coward | about 10 months ago | (#45460883)

Bitcoins have always fallen under the current tax laws. There haven't been any new tax laws designed for e-currency like BTC.

Re:Translation (5, Informative)

mysidia (191772) | about 10 months ago | (#45461107)

Bitcoins have always fallen under the current tax laws. There haven't been any new tax laws designed for e-currency like BTC.

They are subject to government regulation when used as a medium of trade.

However; at other times, there is a great deal of uncertainty -- for instance, the IRS has yet to issue any guidance, as to : whether bitcoins are classified as non-tangible personal property under the tax code, or as a foreign currency/ cash-equivalent/financial instrument.

The difference could be very important to miners and people holding bitcoins as well: if the former, then mining bitcoins may be a non-taxable event, and tax liability might not be incurred, until bitcoins are exchanged, and a capital gain is realized.

On the other hand --- if classified as a currency/cash-equivalent/financial instrument, there could be immediate taxes due whenever bitcoins are mined, and also: for tax purposes, requiring anyone holding them, to mark their bitcoins to market at the end of every year, and report the gain or loss based on the change of fair market value of their bitcoins in USD.

Re:Translation (1, Interesting)

bluemonq (812827) | about 10 months ago | (#45461091)

Forget about taxing. Imagine how much mining the federal government could do.

Re:Translation (1)

cykros (2538372) | about 10 months ago | (#45461271)

Hey, look, you found a better use for the NSA's facilities. Embrace a more technologically sound method of easily moving money around (if not a stable currency) while in the meantime save face by shutting down the NSA's current agenda while replacing it with something far more profitable in the first place (ooh, you could use all that money to go build NEW facilities with MORE op-sec in mind with TWICE the floorspace!). And provided you regulate the exchanges with KYC laws, the taxes are an added bonus.

That anyone was worried they'd be really cracking down on bitcoin after the events in the EU and China was a little amusing.

Re:Translation (0)

Anonymous Coward | about 10 months ago | (#45461815)

Forget about taxing. Imagine how much mining the federal government could do.

No matter how much processing power they throw at the problem, they wouldn't be able to mine more than about 2016 bitcoins every two weeks.

The difficulty is adjusted every two weeks based on the number of bitcoins mined in the previous two weeks. The system tries to stabilize around one bitcoin every 10 minutes.

Re:Translation (0)

Anonymous Coward | about 10 months ago | (#45462027)

I think that if anyone has the computing power to mount a 51% attack on the network it's the NSA.

you don't have to have a fish for face to know (0)

db10 (740174) | about 10 months ago | (#45460833)

IT'S A TARP!

Most Obvious Conspiracy Ever. (1)

Anonymous Coward | about 10 months ago | (#45460835)

This is how it is. Bitcoin has been rising in price massively over the last few weeks. People in the Gov knew this hearing was coming, which would spike the price. The recent increase is due to the corrupt rich and "public servants" buying in for the big explosion in coming days... and then the crash.

Re:Most Obvious Conspiracy Ever. (0)

Anonymous Coward | about 10 months ago | (#45461357)

A lot of the volume has been in China. Are US government employees buying Bitcoin there to avoid suspicion or are Chinese spies privy to the unreleased policy information as well?

Re:Most Obvious Conspiracy Ever. (2)

lxs (131946) | about 10 months ago | (#45462041)

Oh yes! This is a huge conspiracy based on top secret information found in the press.
Don't you know that "the Illuminati" refers to that elite cabal of people who possess a secret technique called "the Reading of the Newspapers"?

When is the government actually right? Ever? (4, Insightful)

roman_mir (125474) | about 10 months ago | (#45460841)

Think about it, governments are basically contrarian indicators to any truth or knowledge or insight. That's all I wanted to say about this: BTC can be 1,000,000 USD per coin tomorrow or it could be 10 cents. Nobody knows, there is no intrinsic value whatsoever, more currencies of this type are created all the time, that's how you have inflation in BTC (never mind that every single BTC is actually a stack of 10,000,000 coins in its own right, all of which have exactly the same intrinsic value as the 1BTC, which is to say 0).

BTC may as well be 1,000,000,000 dollars in 2 months, who knows, but without a mechanism to SHORT this coin (except by not owning it), what I mean is without a mechanism to borrow coins to sell them, there is no downward pressure at all, while so many people are enticed into this particular pyramid, feeling like they are missing out on something. The early holders of BTC may all be millionaires right now if they sell. They have everything to gain from higher prices, they won't sell and if you want to buy, you have to pay more and more.

What happens when large holders want to sell without any prior shorting in the market?

Re:When is the government actually right? Ever? (3, Informative)

Copid (137416) | about 10 months ago | (#45461015)

What prevents you from simply borrowing them and selling them? That seems like an operation that should be completely doable with any good that is traded as freely as bitcoin.

Re:When is the government actually right? Ever? (5, Informative)

cykros (2538372) | about 10 months ago | (#45461283)

The exchanges I know of thus far provide no shorts yet, but Kraken has the code laid for it (they're brand new and are waiting for volume to increase before they add that along with some other advanced trade options). And yes, this would add market stability, which is part of the reason they're adding it.

Unfortunately, they're only available in a few states as of yet. The regulations in the US that apply to them unfortunately are on a state by state basis, and have significantly slowed the rollout of the exchange (unlike some of the prior exchanges that's gone up, they're A) operating in the US and B) being now scrutinized enough to really need to be fully compliant).

Re:When is the government actually right? Ever? (0)

Concerned Onlooker (473481) | about 10 months ago | (#45461033)

"Think about it, governments are basically contrarian indicators to any truth or knowledge or insight."

Did you ever think you might be happier in a country with no government? Somalia perhaps?

Re:When is the government actually right? Ever? (1)

rhodium_mir (2876919) | about 10 months ago | (#45461473)

Unfortunately there is no nation on earth that lacks a government hell bent on stealing all it can from its citizens.

Re:When is the government actually right? Ever? (3, Informative)

triclipse (702209) | about 10 months ago | (#45461117)

Like many people, you fail see that Bitcoin does have an intrinsic value: it is a useful medium of exchange. There is a predictable inflationary curve, it is impossible to counterfeit, and there is a low transaction cost.

It's usefulness as a medium of exchange is the same as it being useful for another purpose (such as copper's use as a conductor).

Re:When is the government actually right? Ever? (5, Informative)

Solandri (704621) | about 10 months ago | (#45461793)

Like many people, you fail see that Bitcoin does have an intrinsic value: it is a useful medium of exchange. There is a predictable inflationary curve,

There is a predictable deflationary curve if you want to think of it as a currency - it is consistently going up in value. That makes it a terrible medium of exchange, because it encourages people to shove it under the mattress and wait for its value to go up instead of using it to get real productive work done. A good medium of exchange encourages you to go out and do something useful with it, thus encouraging more economic activity, and increasing the productivity of the people using it. As long as bitcoins' value is going up, it is a speculative investment, not a medium of exchange.

The trick to getting a currency to work, and the reason pretty much every developed country has switched to a fiat currency, is to keep the currency's value relatively steady despite the growth of your country's economy. If your currency's value goes up over the long term, it encourages hoarding and discourages productive economic activity. With a fiat currency it is easy to maintain this balance - print more money as your economy grows. With a currency based on a fixed resource (whether it be gold or bitcoins), this only happens if by sheer luck the rate of mining new gold/bitcoins matches the rate the economy is growing. If the mining rate does not keep up with economic growth, you get deflation and people will try to hoard the currency as a method of getting rich, instead of spending it or investing it to do actual productive work.

Re:When is the government actually right? Ever? (2, Insightful)

triclipse (702209) | about 10 months ago | (#45461999)

There is a predictable deflationary curve if you want to think of it as a currency - it is consistently going up in value.

You conflate two different concepts. There is no doubt that the number of Bitcoins is increasing on a predictable curve - by definition that is an "inflation" of the currency. Do not confuse that with a rise in the purchasing power of the currency and the consequent drop in the price of goods and services as priced in BTC.

But you are right that it is also deflationary, just not in the way in which you think. It is my understanding that Bitcoins can be irretrievably lost. Eventually, after all the Bitcoins have been mined, the number of Bitcoins in existence will start to fall (in other words, the currency will deflate, however slightly).

If your currency's value goes up over the long term, it encourages hoarding and discourages productive economic activity.

It's hard to believe that people actually think this way, but a century of central banking propaganda has had its intended effect.

Though certainly true that rapid fluctuations in a currency's value make it inconvenient as a medium of exchange (the problem with BTC right now), a rise in the value of a currency rewards savers and increases the pool of savings available for investment in productive economic activity at lower interest rates. An endlessly inflated fiat currency has the opposite effect: it encourages malinvestment in unproductive economic activity (also known as "bubbles" - e.g., internet stocks and real estate), punishing savers and rewarding debtors. Though interest rates can be kept artificially low for a time, eventually either interest rates must rise or the value of the currency must fall (or even both).

Re:When is the government actually right? Ever? (0)

Anonymous Coward | about 10 months ago | (#45462037)

Well... look at this [slashdot.org] . Ladies and Gentlemen, what we have here is a 9/11 Truther. I'll say this once and I'll say it proudly. Fuck conspiracy theory cocksuckers like you. I'm not American and I don't really have any connection to the events on September 11th, 2001, but tossers like you are one of the more disgusting forms of humanity. No wonder you like Bitcoin so much. You're fighting against the New World Order!!!!!

Re:When is the government actually right? Ever? (-1)

Anonymous Coward | about 10 months ago | (#45462013)

Like many people, you fail to understand how very little value Shitcoin has in the real world. Aside from directly converting Shitcoins to real money, Shitcoins can only be exchanged with other idiots who also believe Shitcoin is so great. In fact, I won't conduct any transactions with any business or individual who supports Shitcoins, and I let them know that is the reason why. Sometimes principals are more important that "Internet Play Money".

Re:When is the government actually right? Ever? (1)

Anonymous Coward | about 10 months ago | (#45461135)

Shorting bitcoin for dummies:
1. Find someone willing to buy a bitcoin IOU.
2. There's no 2.

Re:When is the government actually right? Ever? (2)

buck-yar (164658) | about 10 months ago | (#45462019)

Or campbx.com...

Two things glossed over in the summary (5, Interesting)

Derec01 (1668942) | about 10 months ago | (#45460849)

From watching a bit of the C-SPAN coverage, I found it interesting to note that several of the witnesses from law enforcement effectively stated that:

1.) Current regulations had not hampered their ability to pursue criminals
2.) They saw more danger from centralized currency systems based in fringe countries than from "decentralized currencies such as Bitcoin"

Re:Two things glossed over in the summary (1)

Yvanhoe (564877) | about 10 months ago | (#45461301)

The fact that the content of every bank account and every transaction is public makes bitcoin a very bad tool for money laundering.

It would give you a pseudonymous social network of criminals. A law enforcement firm then just has to play crosswords and make some honey pots to get the big picture.

Bitcoin suppresses the need for extorsion fees during international wire transfers, not the need for suitcases full of cash during shady transactions.

Criminal Underbelly of the Web? (0)

Anonymous Coward | about 10 months ago | (#45460869)

Then the dollar came out of the Criminal Underbelly of the real life. Please, don't give it the PR it doesn't need.

Re:Criminal Underbelly of the Web? (0)

triclipse (702209) | about 10 months ago | (#45461133)

The Federal Reserve Note certainly came out of the criminal underbelly of real life. See The Creature from Jekyll Island.

Re:Criminal Underbelly of the Web? (2, Insightful)

jcr (53032) | about 10 months ago | (#45461267)

Technically, the current "US dollar" came out of the criminal underbelly of Wall Street.

-jcr

Re:Criminal Underbelly of the Web? (1)

buck-yar (164658) | about 10 months ago | (#45462031)

Well its not criminal as they control washington and make the rules up as they go along.

Untraceable currency great for bribes ? (1)

Crashmarik (635988) | about 10 months ago | (#45460877)

And slushfunds ?

It's the only motivator I can think of for congress to do this

Re:Untraceable currency great for bribes ? (1)

osu-neko (2604) | about 10 months ago | (#45461503)

And slushfunds ?

It's the only motivator I can think of for congress to do this

Do what? They haven't done anything. All they've done is talk. And politicians don't seem to need much in the way of motivation to spend lots of time emitting hot air...

That explains the spike (4, Interesting)

gman003 (1693318) | about 10 months ago | (#45460885)

So that's why BTC jumped up to $900 today, after opening around $500. I bet some speculators made a ton of cash that way.

Re:That explains the spike (3, Interesting)

Seumas (6865) | about 10 months ago | (#45461203)

Despite the flood of the Bitcoin Defense Force, I still purport that Bitcoin is what it clearly was from day one, back when the presentation on what it is and how to use it on their website made it look like one of those scummy scams that you had over a decade ago. You know, the "we pay you to run calculations on your PC!". Run their application on your PC 24x7 and they'll (maybe) pay you a few pennies a month. They were absurd and that Bitcoin chose to present itself in such a similar way as to give off "wait, is this some goofy scam?" way from day one was very telling.

Anyway, I have one point and one question to pose:

Question: If the government regulates, controls, monitors, tracks, and taxes bitcoin, what is the benefit of bitcoin, anymore?

Comment: For the price of Bitcoin to really mean anything, you have to be able to exchange it for local currency that you can use to actually buy things with (you know, unless you want to use your one bitcoin to buy $600 worth of shampoo from the online version of a shitty dollar-store or pay your webhost online). To do that, you have to sell them. Now, take a look at the spread on Bitcoin. Seriously, look how wide that spread is. Makes it pretty clear what the game is, doesn't it?

Further, governments have been pushing for the eradication of hard currency for quite awhile. They may just see Bitcoin as something they can usurp to push for the whole "cashless society" bullshit.

Re:That explains the spike (0)

Anonymous Coward | about 10 months ago | (#45461257)

Sacrilege! Heresy! Blasphemy!

Give up your 4-digit ID and BE GONE!

Re:That explains the spike (1)

Seumas (6865) | about 10 months ago | (#45461313)

Took me way too long to realize what four-digit ID you were talking about. *sigh*

Re:That explains the spike (1)

osu-neko (2604) | about 10 months ago | (#45461551)

Took me way too long to realize what four-digit ID you were talking about. *sigh*

noob :p

Re:That explains the spike (0)

gmhowell (26755) | about 10 months ago | (#45461817)

Took me way too long to realize what four-digit ID you were talking about. *sigh*

noob :p

oldfag

Re:That explains the spike (3, Informative)

VortexCortex (1117377) | about 10 months ago | (#45461455)

Question: If the government regulates, controls, monitors, tracks, and taxes bitcoin, what is the benefit of bitcoin, anymore?

Answer: 'Controls' is the operative word there. Right now they control the dollar -- Well, actually a non-federal owned Federal Reserve does. Would you rather be paid in IOUS redeemable at the company store, or have a real currency? The dollar is the IOU, they can print as much as they want. The same isn't true of bitcoin. The other benefit is decentralized digital transacitons without the high price-fixed cost of wire transfers. True cash exists. However, I can't throw it half way around the planet, nor can I send cash by mail.

Comment: For the price of Bitcoin to really mean anything, you have to be able to exchange it for local currency

Ignorance: Blissfully believing that the price of stock or the dollar really mean anything; It's the exchange rate for GOODS AND SERVICES you fool. These can be transacted with bitcoin or dollars. Except with bitcoin I can exchange them for stuff not in the company store.

Re:That explains the spike (2, Insightful)

jd (1658) | about 10 months ago | (#45461673)

First, not really. Bitcoin is only usable because those IOUs exist. (Well, they're not really IOUs, since the sum value of hard currency will always equal the sum value of what they're pegged against. A floating currency is pegged against the nation. Print all the hard currency you like, the value per unit will drop until equilibrium is reached. They are shares, just like any other, and are priced by the market just like any other.)

Because the sum of the hard currency ALWAYS equals the sum of the goods and services available, a virtual currency for goods and services cannot have value if the hard currency has no value, since they value precisely the same thing.

Can bitcoin actually buy goods and services, though? One pizza place is a start, but not a very exciting one. Mondo started with the entire town of Swansea and still didn't get enough momentum going. The only way to currently use bitcoins for anything* is to convert them at places like MtGox for hard currency.

*Anything not pizza. Or drugs. I suppose I should include that, since there are bound to be people wanting to recreate the Excel flight simulator effect.

Re:That explains the spike (-1)

Anonymous Coward | about 10 months ago | (#45462001)

VortexCortex, aka Tim Landers, well-known Slashdot troll, FOSS zealot, massive asshole, and one of the developers working on Project Retrograde, because people really want to play a shitty remake of Doom. It then comes as no surprise he's a nerdcoin apologist.

Re:That explains the spike (4, Interesting)

jd (1658) | about 10 months ago | (#45461635)

Have to say you make excellent points. It's why I avoided even looking at bitcoin for the longest time. (Early on, the value was less than the cost of the electricity and as the computations were only going to get harder, the likelihood of benefits was nil. It didn't help that something for nothing often ends badly for the people who think they're paying nothing.)

Really, for a good virtual currency, you need it pre-generated and beyond the ability of computers in the next 30-40 years to potentially break. 150-200 years would be ideal. That isn't bitcoin. Don't get me wrong, bitcoin looks less vulnerable to counterfeiting than regular currencies, but I remain unconvinced that it will prove strong over the lifetime of currencies. When currency lifetimes are measured in centuries, knowing something was strong last week isn't really good enough.

(I can't say the US decision thrills me, knowing that the same people applauding bitcoin have interfered with crypto development.)

What we have right now is hyperinflation due to rampant speculation. A few will get rich quick, a lot will get poor even quicker when the bubble bursts. We've seen, what, 800%, 900% inflation this year? Competing with Zimbabwe? This isn't remotely sustainable, especially as everyone and their pet dog can run a bitcoin miner and cash out via one of the ATMs or an exchange service.

We've also now seen cases of virtual bank robberies, with owners of online wallet services cutting and running. Yes, that happens with physical banks too, but all that tells me is that a lot of old problems remain, a lot of new problems are added, and still no sign of actual benefits.

I want a virtual currency that works. Mondo experimented with electronic cash in the late 80s, early 90s, where you had smart cards you could actually use in real stores to make payments without going via any bank. It was an interesting system, it used a real currency rather than a virtual one but that's immaterial as it could have used anything. The fact is, they had a working system for utilizing electronic money without involving central systems. It should be very easy to do better today and have more places adopt it.

Combine that with a currency that isn't scattered at random on some mathematical version of a sidewalk (pavement in the UK), and you'll have something that really does impress for all the right reasons.

Re:That explains the spike (1)

triclipse (702209) | about 10 months ago | (#45461851)

Name one currency (with the exception of precious metals) whose lifetime is measured in centuries. You can't.

Re: That explains the spike (2)

Anonymous Coward | about 10 months ago | (#45461983)

The British pound. Around 400 years so far.

Re:That explains the spike (1)

luther349 (645380) | about 10 months ago | (#45461927)

its like playing the stock market buy low sell hi.

It's been compromised. (1)

Spudboy2003 (717547) | about 10 months ago | (#45460897)

Nothing to see here, move along.

Re:It's been compromised. (0)

Anonymous Coward | about 10 months ago | (#45460977)

Bitcoin has NEVER been compromised.

Re:It's been compromised. (2)

jd (1658) | about 10 months ago | (#45461747)

The NSA designed almost all existant crypto to be breakable by them, and from the looks of what The Guardian has been reporting, that includes SSL/TLS. The reports also make plain that they can waltz into any Windows or Mac without effort.

That means all online (or remotely accessible) wallets, online mining pools, bitcoin exchanges and bitcoin-accepting vendors are vulnerable, possibly already compromised. All bitcoin transactions via the Freedom Servers, regardless of destination, were certainly recorded and all bitcoins involved are potentially hijackable at any time.

Because the NSA weakened all crypto standards (ps: Do NOT use SHA 3 in the weaker forms, I am extremely suspicious of remarks made on the official SHA 3 mailing list regarding strength, though the stronger forms are probably ok), it is entirely within the realms of possibility that the NSA already has a complete list of all possible bitcoins. The currency depends on the maths being hard, but if it isn't, then you've nothing. They may also be capable of injecting false transactions - never trust enthusiastic supporters in US security agencies, they aren't in the business for your health.

More like... (0)

Anonymous Coward | about 10 months ago | (#45460907)

Insider trading immunity and buzzword buzz combined with insatiably greedy wolves.

Huh (5, Interesting)

umdesch4 (3036737) | about 10 months ago | (#45460927)

I guess I missed the happy, joyous part then. I watched the first hour and 20-some-odd minutes of this hearing, and if I had taken a drink every time they said "child pornography", I would be in the hospital now.

Re: Huh (1)

Anonymous Coward | about 10 months ago | (#45461197)

Overall even the law enforcement bunch say they are confident to let Bitcoin walk without causing too much trouble, and FinCen does not plan to interfere.

Kiss of death. (4, Funny)

Anonymous Coward | about 10 months ago | (#45460941)

Ha. Now the libertarians are going to abandon it wholesale.
No fun when the big bad gubmint likes your freedomcoins.

Re:Kiss of death. (1)

c0lo (1497653) | about 10 months ago | (#45461109)

Ha. Now the libertarians are going to abandon it wholesale.
No fun when the big bad gubmint likes your freedomcoins.

Like the teens that left MySpace (and will leave Facebook) only because it was too full of parents, thus no longer cool... that's what you want to say?

Re:Kiss of death. (4, Interesting)

Jane Q. Public (1010737) | about 10 months ago | (#45461115)

"Ha. Now the libertarians are going to abandon it wholesale.
No fun when the big bad gubmint likes your freedomcoins."

Nonsense. It has nothing to do with what the government likes. It has everything to do with whether, and how, government "regulates" it.

Just watch. Somebody in government will attempt to regulate it in a way that is fundamentally at odds with the mathematics of how Bitcoin works. It's almost inevitable.

Like, just for example: trying to legislate a fixed exchange rate for dollars. (Just an example. I doubt they'd be stupid enough to do that exact thing. But you never know.)

Re:Kiss of death. (2)

ThatsMyNick (2004126) | about 10 months ago | (#45461221)

Ha. Now the libertarians are going to abandon it wholesale.
No fun when the big bad gubmint likes your freedomcoins.

Nah, unless the government can start printing bitcoins, libertarians who liked bitcoins (I dont know if they did), will continue to like it. It is still, in your words freedomcoins.

Great. (4, Funny)

scottbomb (1290580) | about 10 months ago | (#45460943)

Because everything else our glorious government tries to control turns to gold.

Lacking a big feature (0)

Anonymous Coward | about 10 months ago | (#45460969)

A reason to use it.

Now for some legit exchanges (4, Insightful)

Animats (122034) | about 10 months ago | (#45460995)

The problem with Bitcoin now is that it's being used mostly for speculation, not for trade. You can't price anything in Bitcoins when the price changes 30% in one day. If you accept Bitcoins for anything that doesn't have a huge markup, you can get clobbered by the price fluctuation before you get the payment converted.

Worse, the "exchanges" are very, very flaky. Over half of the Bitcoin exchanges have gone bust. Mt. Gox hasn't paid out US dollars since August, large euro payments seem to be randomly delayed, and some days customers can't get Bitcoins out. Coinbase, which is a dealer, not an exchange (you're buying and selling to and from them) will sometimes drop out of the market because they can't buy or sell Bitcoins (and actually get the funds delivered) on some other exchange. Not one Bitcoin exchange is publicly audited or insured, yet they hold customer funds.

Tradehill was going to be the "legitimate Bitcoin exchange". They went bust. Another exchange in China just disappeared last week, with the customer money. A solid exchange, registered as a broker/dealer in some reasonably legit country, would be a big step forward.

Re:Now for some legit exchanges (2, Interesting)

Anonymous Coward | about 10 months ago | (#45461125)

Which is where paypal comes in if they are smart. If Paypal manages the red tape to become the defacto bitcoin broker, then they will have cemented their position as internet payment central. If they neglect to fill this role: they will fade in to obsolescence. Dethroned by a superior technology.

Decentralized exchanges will replace centralized (4, Insightful)

elucido (870205) | about 10 months ago | (#45461245)

And that will eventually replace everything else.

It's hardly used for trade at all (2)

Sycraft-fu (314770) | about 10 months ago | (#45461253)

Not only is it mostly speculation, but even the times when people claim it is being used for trade, like the Silk Road, it really isn't, it is being used to launder money. It wasn't actually being used because it is an amazing currency, but rather because people believed it was a way to anonymously buy illicit goods, ie launder money to pay for them.

They only legit trade uses I've seen quoted have been totally worthless: Sites that will exchange bitcoins for gift cards at places like Amazon, with a 10% or more markup (when those same sites sell gift cards with a 0% markup using standard currency).

As you say, the speculation has to go from the market if it is ever to be considered a currency. While currencies do fluctuate, they don't move as much in a year as bitcoin does in a day.

Re:It's hardly used for trade at all (0)

Anonymous Coward | about 10 months ago | (#45461521)

"While currencies do fluctuate, they don't move as much in a year as bitcoin does in a day."

LOL????

Check out OandA.com and try some currency speculation. Currencies jump around a LOT.
Good luck making money on it, probably 90% of people who speculate on the standard currencies are not making money at it.

already dead (0)

Anonymous Coward | about 10 months ago | (#45461003)

I suspect bitcoin will as valuable as Itchy and Scratchy Money soon enough. The novelty will wear off.

Anyone in politics should absoutely love this! (4, Informative)

Kaz Kylheku (1484) | about 10 months ago | (#45461009)

Bribes, prostitutes, extravagance ... all require anonymous, untraceable forms of money.

If politicians didn't require it, governments would have banned cash long ago.

Re:Anyone in politics should absoutely love this! (3, Informative)

_merlin (160982) | about 10 months ago | (#45461099)

Bitcoin is far more traceable than cash - each coin keeps its entire transaction history. Silk Road tried to do something about that with the way it would slice up all the payments and randomly assign them, so the net result was correct but it was unlikely (much of) your bitcoin went to the actual vendor you bought from. You're unlikely to have this kind of protection at a point of sale, so you're far more anonymous paying that hooker with banknotes.

Re:Anyone in politics should absoutely love this! (3, Informative)

cykros (2538372) | about 10 months ago | (#45461309)

A transaction history isn't as useful as it necessarily sounds. I use a $20 to buy scratch tickets at a convenience store, someone else cashes in their tickets, ends up with my $20, and then subsequently uses it to buy crack in a sting operation, and they see that I was formerly in possession of that $20. So? At most, the concern here is that it may get you some unwanted attention, but it's hardly solid evidence if you have the thought to just move it between a wallets on tor exit nodes. Not to mention that "Satoshi Square Meetups" happen in a variety of cities around the world, where people meet in person to relatively anonymously buy and sell bitcoin without going through an exchange at all.

So yes, bitcoin is quite traceable. That doesn't necessarily mean it can't be used as a method of exchange with fairly solid privacy when that is one's planned for goal.

Re:Anyone in politics should absoutely love this! (3, Insightful)

_merlin (160982) | about 10 months ago | (#45461533)

But if you're worried about your wife finding out you're frequenting the hookers, the only thing she needs to find is the wallet the 'coin was in immediately before it ended up in the hooker's/brothel's wallet. She just needs to see a (you,hooker) sequence. It doesn't matter where the 'coin goes after that, and the hookers could easily be keeping all the information on which wallets they were paid from before they transfer the 'coins onwards. I'll keep paying for hookers with cash, thank you very much.

eco-generation (1)

kermidge (2221646) | about 10 months ago | (#45461041)

If the government gives this at least a tacit pass, then I foresee a rise in electricity consumption. Those with non-electric heat should do well while they're crunching.

Re:eco-generation (0)

Anonymous Coward | about 10 months ago | (#45461187)

This is one of the major problems I have with bitcoins... it derives value from already wasted resources. It's like to have $100 of ``value'' I need to first *waste* $100 of value. Sure one can claim that $100 of bitcoins will be worth more in the future (since there's a limited number of them, with progressively more expensive mining), but that's like saying gold is a finite resource, and it's harder and harder to find more of it.

As a currency, it's a dead-end. The speculators are just trying to cash in before everything realizes this and moves on.

Re:eco-generation (2)

N3x)( (1722680) | about 10 months ago | (#45461195)

Not everybody who uses bitcoin mines bitcoin. To be a profitable miner nowadays you need several thousands worth of hardware. Just holding bitcoin doesn't consume any electricity, in fact you can hold bitcoin without a computer. The bitcoin ecology has shifted from an everybody who participates helps secure the network to more of a server-client relationship. As long as there are several independent mining coalitions bitcoin as system is still secure.

Tracable currency (1)

WaffleMonster (969671) | about 10 months ago | (#45461047)

From a government perspective what is there really not to like about bitcoin? Circulation is self limiting and all transactions might as well be posted on the front page of the New York times.

Re:Tracable currency (0)

Anonymous Coward | about 10 months ago | (#45461167)

Circulation is not self limiting. Rather, inflation is self-limiting, which actually removes power from the government.

FED/Gov loves it (0)

Anonymous Coward | about 10 months ago | (#45461059)

Of course they loves virtual currency - They create $85 billions money out of thin air every month named QE,
and if they can buy $85 billions of that virtual currency named "bitcoin" and buy real stuff with it -
then that $85 billions QE is now no longer virtual !!!
its real

Re:FED/Gov loves it (1)

luther349 (645380) | about 10 months ago | (#45461953)

they create trillions out of thin air every day lol. the difference is unlike the usd when bitcoin flood the market miners quit mining and walk away normally when the cost is higher then there power bill so bitcoin are common and gotten on the cheap but as the numbers dry up its value climbs then the miners return to mining. we cant just walk away from the usd until its worth something again it just becomes more worthless and the government prints out trillions for new privet jets.

What's the point of Bitcoin if this happens? (1)

mothlos (832302) | about 10 months ago | (#45461081)

The hopes underlying Bitcoin rely on the belief that this currency has qualities which other currencies lack, namely anonymity and freedom from government manipulation. This hearing seems to be a bunch of government officials saying that they love Bitcoin, but the government is already getting good at figuring out who is participating in transactions and wants to figure out how to regulate it, which would be a trick to pull off without making it vulnerable to government manipulation. What is left if these are no longer credible advantages?

Re:What's the point of Bitcoin if this happens? (2, Insightful)

Anonymous Coward | about 10 months ago | (#45461149)

Nice strawman you got there.
Find anyone with a clue about how bitcoin works (no, that does not include tech "journalists") claiming it's anonymous.
Oh, everyone says it's a pseudonymous public ledger? Who would've thunk...

Re:What's the point of Bitcoin if this happens? (1)

liwee (3407373) | about 10 months ago | (#45461277)

What is left if these are no longer credible advantages?

A new coin will be born?

Re:What's the point of Bitcoin if this happens? (2, Insightful)

Anonymous Coward | about 10 months ago | (#45461347)

What is left if these are no longer credible advantages?

A new coin will be born?

Ash nazg durbatulûk

Re:What's the point of Bitcoin if this happens? (0)

Anonymous Coward | about 10 months ago | (#45461427)

Never before has that tongue been uttered here in Slashlamdris, Anonymous the Coward.

Embracing Bitcoin, are they? (2)

InsightfulPlusTwo (3416699) | about 10 months ago | (#45461557)

From the summary: US Government Embraces Bitcoin in Hearing on Virtual Currency

So glad that they are embracing Bitcoin. However, that reminds me of a quotation. From Wikipedia:

In a famous exchange with John Montagu, 4th Earl of Sandwich, ... the latter exclaimed, "Sir, I do not know whether you will die on the gallows or of the pox," Wilkes is reported to have replied, "That depends, my lord, on whether I embrace your lordship's principles or your mistress."

bit bubble? (-1)

Anonymous Coward | about 10 months ago | (#45461631)

All we have is tech savvy early adopters and speculators talking up the completely imaginary and fabricated advantages of bitcoin ignoring the fact that currencies don't and can't exist in a vacuum outside the framework of rule of law with zero transparency and accountability, in the hope of inflating its value and cashing out, all in the name of 'libertarianism'.

For bitcoin to be useful as any freely exchangeable store of value it would have to exist in a legal framework and instantly lose all its delusions of anarchy and freedom at which point it has no reason to exist.

In the interim we have folks holding bitcoins but with no easy way to use it or cash out quickly spending their time astroturfing bitcoin discussions online, so this is a ponzi driven by human greed to get something out of nothing and sheer hope. Anyone with bitcoins has clouded judgement and cannot engage ion rational and reasoned discussion, a poor comment on human fallibility.

Re:bit bubble? (3, Insightful)

vikingpower (768921) | about 10 months ago | (#45461649)

currencies don't and can't exist in a vacuum outside the framework of rule of law with zero transparency and accountability

Oh yes they can. Was the case for centuries and centuries during the Roman Republic. Any coin would be traded on the basis of the instantaneous value of its gold, silver or copper part. If you wished to pay in, say, Greek statera or Seleucid Antiochian gold coins, the city-state in Greece or the Seleucid empire had no say in and no overview over the transaction. It was a private deal between a private person ( you ) and some private merchant. Only the Roman emperors began to draw control over currency towards them, e.g. Diocletian managed to force a ( then much-needed ) devaluation of the Roman sestertius, something that would have been impossible under the Republic.

Re:bit bubble? (0)

Anonymous Coward | about 10 months ago | (#45461869)

Except that THE VALUE (what you can get) of your coins still depended HEAVILY on where you were, what you needed, etc.!

In other news: grizzly bear embraces human (0)

Anonymous Coward | about 10 months ago | (#45461805)

'Nuff said.

What happens when BC software bugs are exploited? (0)

Anonymous Coward | about 10 months ago | (#45462021)

Does this collection of bits just become a collection of bits?

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