Senators Schumer and Manchin are upset about Silk Road, a hidden website that is an "Ebay for illegal narcotics." They accept only bitcoin as payment, because bitcoin is the closest thing to cash on the Internet. Watching the press conference, I get the impression they're also upset at bitcoin; Sen. Schumer says bitcoin is "an online form of money laundering."
First, that's just not true! The biggest bitcoin exchanger (Mt Gox) is careful to comply with all anti-money-laundering laws and regulations. If the operators of Silk Road make lots of bitcoins then if or when they try to exchange them for dollars or euros they're going to have to tell Mt Gox who they are, Mt Gox will be required to report the transaction to the government, and the Silk Road folks might find themselves explaining to an IRS agent how they managed to earn so many bitcoins. It is no different from any other financial institution.
Second, nobody can control what is purchased with bitcoins, just like my local bank cannot control what I do with the cash I withdraw from their ATM machine. I wonder if Senators Schumer and Manchin would like to replace all cash with a government-issued smart card; after all, that would make it much harder for criminals to get away with buying illegal goods anonymously, and if we are all law-abiding citizens then we shouldn't worry about the government knowing about all of our purchases... right?
Finally, I hope that the Senators realize that trying to ban an innovative new technology like bitcoin will put the United States at a competitive disadvantage versus the rest of the world. The US government tried to control strong encryption in the 90's, and only succeeded in driving a lot of cryptographic product development overseas. This is supposed to be the Land of the Free; I think we should learn the lessons of the past and be brave about taking advantage of new technologies like bitcoin, instead of fearing them.
"I wonder if Senators Schumer and Manchin would like to replace all cash with a government-issued smart card; after all, that would make it much harder for criminals to get away with buying illegal goods anonymously"
ReplyDeleteStop giving him ideas!
All new technologies are scary at first. The TV was demonized from it's inception.
ReplyDeleteOddly enough these events serve only to "legitimize" Bitcoin in the eyes of the consumer, who most likely had no idea what the hell a bitcoin was before today.
They are probably more worried about Silk Road becoming a method for buying alcohol and cigarettes. Both are offered through Silk Road for delivery through the mail (illegally, in most instances).
ReplyDeleteBecause a significant part the cost of these items when purchased at retail comes from the exise taxes, if this took off it would have an impact.
Great, a brilliant advert to the criminal underworld about exactly how perfect bitcoins are to their purposes. We should add an overlay at the end "This message was brought to you by BADASS, the Bitcoin Advertising Association".
ReplyDeleteDeclaring a war against community, which contains the brightest and most innovative people of the century? The stupidity of these politicians knows no bounds.
ReplyDeleteThey are forgetting that these are the same people who are fixing their computers and protecting them from malice in the wild
Gavin, where is Mt. Gox's posted AML program? Who is the independent AML compliance officer? What States is Mt. Gox licensed in as a money transmitter? How many SAR (suspicious activity reports) have they filed since opening?
ReplyDeleteThis is very serious business in the U.S. just ask Doug Jackson who lost his business, bankroll, health and livelihood.
You say, "nobody can control what is purchased with bitcoins, just like my local bank cannot control what I do with the cash I withdraw from their ATM machine" Are you kidding me, do you know how many hundreds of times I heard this in the past decade regarding e-gold and other DGCs? Or how many times I've hear, "why don't you arrest the chairman of the fed?" You're a young guy and have not been down this road before. You guys are new to all this, so let me give you some REAL advice, ANYONE handling bitcoin and national currency in the U.S. is an unlicensed exchanger & should now stop TODAY or run for the fricken hills. If not, I can guarantee you, from experience and based on what I'm reading in the press, that they will soon have legal troubles. They will lose their money, their freedom, and anything associated with their business--- now that this kind of bad press is out. If operating in the U.S., on U.S. soil, Mt. Gox is NOT licensed, not legal, and not going to last much longer. They[the gov] don't care if he says, "I'm legal". That is so cute, have you heard of the Patriot Act, you need to hire a lawyer to read it to you.
You want a list of the dozen of US agents charged during the e-gold crackdown? They all said the same thing, I've heard it all before and it ends the same way.
Exchange Agent: It is a great business, but the US does not want it and you can't fight them in court.
The p2p Bitcoin system is awesome, I love it, and I doubt it could be shut down- but take the exchange business, the part that deals with the dollars of national currency and run. Don't do it in the U.S. they don't want it and these businesses, the people operating them and the folks that happen to have cash in a transaction at some future point will all lose big time. You are delusional and naive if you think otherwise. I don't know it all, I'm not guru...but I have seen this all before.
Mark Editor of DGC Magazine
@Mark
ReplyDeleteWhen I read such drivel it makes me stop and wonder why we are doing what we are doing. There are people without the capacity to understand how things work, there are ignorant people, but people like you... Someone who knows right from wrong and still chooses to look the other way... You simply do not deserve to have an opinion!
@Mark, you've nailed it. Anyone exchanging bitcoin and physical cash is at serious risk. Those who don't advertise or don't do it commercially are better off. Trading cash for bitcoins with friends in small amounts is better. Best to keep bitcoin trading for goods and services and eliminate the need for national currencies altogether. Accept and spend bitcoin - don't mess with national currencies. Put them out of business by withdrawing from their use. Go Bitcoin!
ReplyDeleteI believe the following article is applicable:
ReplyDeleteThe Coming Attack On Bitcoin and How To Survive It
http://tinyurl.com/3b6d823
As for bitcoin becoming illegal, This Week in Law had some interesting points this week, particularly with regard to contract law:
ReplyDeletehttp://www.youtube.com/watch?v=R6J3ET_achU#t=1251s
The Coming Attack On Bitcoin and How To Survive It
ReplyDeletehttp://tinyurl.com/3b6d823
That is an excellent article and let me restate that I think Bitcoin will be around for many years to come. "Go Bitcoin"
It is unfortunate that in the past 72hrs BTC got more bad press from "silkroad" than e-gold did in it's first 7 years! The more non-US agents on board the better.
I enjoyed that video, Erica is pretty hot, but they seem a bit like outsiders looking in...with respect to property law and contracts, I think everyone realizes if you pay for something with Bitcoin you have no recourse if you get screwed. At least that is the way it has always been with e-gold and most other non reversible digital currency. I know the underlying contract on most WebMoney Transfer payments (Paymer) is a legally binding agreement that can be used in court, but that's rare outside of Webmoney. As usual they are way ahead of the rest of us.
Legal recourse is also one reason why credit card fees & chargebacks are so expensive. I'd rather patronize reputable merchants and build on my reputation than try to sue someone for a refund:-)
Great blog Gavin.
The bad publicity generated by Schumer and Manchin is dwarfed by their tacit endorsement of Bitcoin as a legitimately useful currency. That certainly wasn't their intention but that was the effect. You couldn't ask for better publicity. It was on reading that news article in the Sacramento Bee that I downloaded the Bitcoin client. I may even add the word Bitcoin to my browser spellchecker!
ReplyDeleteheh, land of the free.. that line sounds slightly more silly each year from an outside perspective :P
ReplyDeleteanyway, i tried out BTC thanks to this whole scandal and am loving it so far :) thanks random conservative US politician!
"and if we are all law-abiding citizens then we shouldn't worry about the government knowing about all of our purchases... right?"
ReplyDeleteWRONG...WRONG...WRONG!!!
TOO MANY people working in the government, including and especially those at the top of their domain, are corrupt criminals. So even honest law-abiding people don't want the government getting any more chances to screw them than they already have.
TOO MANY naive people think they can trust the government, "oh those politicians might be stupid but they are not evil"...wrong, very wrong...there are both stupid and evil amongst them.