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Some of the negatives:

1)Phishing, if your private keys and password are compromised your money is gone.

2)Regulations, although governments would find it difficult, if not impossible, to regulate BitCoin. They can regulate the exchange of BitCoin into everyday fiat currencies. We seen this with the likes of e-gold when exchangers were cracked down on due to the ease of laundering money in the system.

3)Value, if people have no faith in the value of BitCoins then the system will not work. Right not there's a lot of commerce with BitCoin but it seems that it's only digital products or services that are accepting it. Once sellers of physical products start accepting BitCoin then it might become are more common currency.

4)Drugs, CP and money laundering. Although I don't believe in the scaremongering tactics used by politicians in order to regulate the likes of the internet, this system is going to be vulnerable to the similar attacks. We've already seen narcotics marketplaces open up that are now accepting BitCoin by operating through the TOR network. Soon enough this will receive a lot of unwanted attention.

If you leave your wallet on the beach your cash is gone or someone could pickpocket you. Egold was located on a central server that was liable to confiscation. You can buy alpaca socks with bitcoin. You can do money laundering ,cp and drugs with US dollars.

You have recourse by contacting authorities.

E-gold's centralised system was not what I was debating. It was the exchange of e-gold to fiat currencies.

Alpaca socks I will assume are created by the person who actual sells them. Dealing with other suppliers who won't accept BitCoin was the obstacle I was detailing.

I don't debate that you can launder money in USD but it is easier in this system. There's no paper trail, well there's no identity linked to wallets.

>no paper trail

There's a lot of information in the blockchain. I'm not sure bitcoin is really that great for laundering.

You can generate multiple ids for the same wallet.

>You have recourse by contacting authorities.

I'm sorry I would have replied to your comment earlier but I was incapacitated with laughter.

How often have the "authorities" been able to help a person recover a stolen wallet? Or the funds taken from their bank account with a skimmed ATM card? Or any of the thousands of other kinds of fraud and theft or robbery?

The "authorities" file reports, thats about it. What they do provide is the illusion of protection, a false sense of security.

Really what are they the "authorities" going to do that a normal person can't?

1) see this http://news.ycombinator.com/item?id=2386956

2)In the near future there will be anonymous bitcoin exchanges, immune from government actions. http://weekly.co.nr/index.php?q=article/anonymous-money-need...

3)If people have no faith in the $ then that system will not work, the reality is than money is what people accept for goods and services, every currency whether bitcoin, USD,or gold is backed by the goods and services people will accept it for.

Right now there are merchants that accept bitcoin for goods and services, it's users do the same, I've hired someone paying with bitcoin. It works just fine.

4)Short of banning cryptography (good luck with that) there is nothing the government could do to prevent people using bitcoin whether it's used for the purchase of illegal guns, drugs, sex, hit contracts etc. The worst the governmet can do is target the exchanges, but as I said before that's not going to be an issue either.

I'm not very convinced. The excitement about bitcoin now is that it seems like a semi-mainstream alternative payment system. And a big part of that is that it seems legal in the first place.

Soon enough, I expect law enforcement to start to actively target bitcoin exchanges (see e-gold). Sure people can respond to this by using elaborate schemes like the one you link to ("When depositing or withdrawing from ATM's the runners/operators face must be concealed as they have cameras. The ATM's used must constantly be changed, they must essentially be random otherwise the operators can be caught"). Then the only way to obtain or sell bitcoins will then be to take part in this elaborate and blatantly illegal money-laundering scheme.

Criminals might still be willing to do that (although organized crime presumably have access to better money-laundering facilities already, so I'm not sure how many). But users of services like witcoin (bitcoin based micropayments to tip your favourite bloggers) presumably won't. Likewise, mining will become less popular if the only way to get money from it looks like it attracts the interest of the FBI. And how many will run the p2p client at all (so the entire trust network could collapse)?

I'm not very convinced. The excitement about bitcoin now is that seems like a semi-mainstream alternative payment system. And a big part of that is that it seems legal in the first place.

I need to write an article on kitty activism and other ways to allow bitcoin to thrive.

1)Hard money, once you receive payment in bitcoin it stays with you, meaning no chargebacks(Paypal, credit cards, looking at you).

I read this as: "If you give bitcoins to someone in exchange for goods/services and they don't deliver, you're screwed, your money is gone, there is no-one you can talk to". That sounds like it's good for sellers and bad for buyers.

Check the seller's reputation before buying. I think it's a lot better this way.

How do I do that on the web if I want to buy a book for (the equivalent of) €5? If it's too much work I'll just buy it with euro or dollar from amazon.

Use an escrow service such as clearcoin, clearcoin.appspot.com

Yeah, this is what makes no sense to me. In a f2f transaction, I exchange money for goods. In a virtual transaction, it creates a fundamental asymmetry if the money transfer can't be reversed, since you have no way of verifying the other part of the transaction, i.e., that the goods were actually shipped.

The bitcoin proponents make a big deal that transactions can't be reversed. But if you continue reading the FAQ, they also make a big deal about the fact that you shouldn't deal with people you don't trust and that it's your responsibility. I'm sorry, but that doesn't make sense to me. If transactions were only done between trusted parties, there wouldn't be a need for chargebacks either. You want to put the responsibility entirely on the customer, who has no practical ability to judge trustworthiness of an online retailer.

An escrow service doesn't make sense either. Then I have to trust that service. Maybe if some well-known non-bitcoin entity offered such a service, I would be inclined to trust it. But for now, it doesn't seem to me that any of the bitcoin entities have enough to lose to convince me that they're not front ends for scamming operations. I mean, Bernard Madoff and Enron were scams, how in the world could I judge that these operations aren't?

It's true I don't have much trust in the government to go find my money when my wallet's picked out of my pocket. But I do have some trust in that if a store front just took customers' money without giving anything back, they would be shut down pretty soon.

No, what's needed is a scheme which not only ensures the currency transaction, but the entire transaction. It seems that, at least for digital goods, one should be able to design a system where the good is encrypted, and the use of your key to decrypt it simultaneously effects the currency transaction. Still doesn't ensure the content is what they said it would be, though...

Well you have to trust someone. We have an escrow service thats trusted by most bitcoin users. ClearCoin.

It's made and run by one of the main bitcoin developers.

chargeback is a cost. That cost is then passed on to consumers.

It's a tradeoff.

That's my point. But the Bitcoin proponents don't address the tradeoff, just one side of it.

I agree. But the people promoting Bitcoin act as if there is no tradoff, as if there is never any benefit to anyone (except the greedy paypal companies) to chargebacks.

You know what else is great about it? The money is stored as a file on your computer. I can steal it from my laptop from the park across the street from your house and be gone before you know its missing, and you will never, ever be able to find me. All I have to do is steal your wallet file and transfer the bitcoins to my account, and the money is irreversibly mine.

Computer security being what it is, and with bitcoin growing at the rate you claim it is, I may soon be a millionaire without having done any real work.

Welcome to the future.

How will you do that? I don't even have wireless.

Jokes aside, the current financial system has the exact same problems, and infact can be worse, especially with username:password based authentication. If someone skims your ATM card and gets your pin number too bad, you've lost the money.

Or you could have your wallet pickpocketed, and the thief would be gone without you even knowing the money was missing.

What about credit cards? Protect consumers with chargebacks? yes. However these same consumer protections also hurt merchants, who are the ones that pay for chargebacks and frauds. Because there are no chargebacks bitcoin is very attractive to online merchants.

If users are not comfortable being responsible for taking care of their btcoins they can always use the bitcoin banking services like mybitcoin.com

Fact is bitcoin is money, clever thieves will be able to find clever ways of stealing money, it's been happening since money has been happening.

If you're looking for a perfectly secure currency don't hold your breath, cause one hasn't been invented yet and isn't likely any time soon.

While the current financial system does suffer from many of the same problems, the difference is that there is a sophisticated infrastructure that exists to combat this behavior in these cases. Law enforcement, security services, intelligence agencies, government regulators, bank and credit card employees and insurance companies, among others, all work every day to mitigate these risks on behalf of their respective systems.

And you don't think anyone in the bitcoin world is working on the same thing?

>the difference is that their a sophisticated infrastructure that exists to combat....

Infrastructure becomes moot when it's too "sophisticated" for granny(or me,I mean really, how often haveI lost my online banking key fob? or I have to enter an endless string of numbers just to see my balance?) to use.

And besides, we have the "sophisticated" infrastructure of cryptography on our side. The only real way around this is with social engineering, to which the current financial system is equally vulnerable.

With regards to the "authorities" you list see here http://news.ycombinator.com/item?id=2387022, I find it hard to imagine that the CIA is worried or working on the problem of Nigerians or Russians trying to scam people, or helping people who are victims.

While I find it difficult to believe you don't actually understand what I was saying, I will clarify.

The basic difference is that if someone manages to steal $1000USD from my bank account, the overwhelming odds are that I'll get it back, if for no other reason than my bank will cover it. If someone steals 1000BTC from my wallet, the odds are vanishingly small that I'll ever recover it.

Clearly the CIA isn't acting directly on behalf of your grandmother if someone steals her credit card, but then again local law enforcement isn't acting to derail sophisticated electronic attacks against the international banking system. Never the less, they both have their roles that they play in protecting the financial system over all.

>if someone manages to steal $1000USD from my bank account, the overwhelming odds are that I'll get it back, if for no other reason than my bank will cover it.

That all depends on how they stole it. If they skimmed your ATM card and got the pin then they have the money, and it's gone, and your bank won't give it back(you're supposed to keep the PIN secret remember), and the police can do nothing. The overwhelming odds are that your money, once gone is gone for good.

Also people don't steal bitcoins from your wallet, maybe they can steal the wallet itself but not the bitcoins from the wallet, and if that wallet is encrypted then good luck with that.

Bitcoin banks negate true anonymity, the govt can contact the bank and ask for acct details, so they are worse than regular banks, being uninsured, unregulated, and unsecured. Also, real banks have men with guns (not to mention the capability to summon heavily-armed police officers on very short notice) to protect them. Neither your computer nor your bitcoin bank is 1] stored in a vault or 2] protected by armed guards.

With that said, if you want anonymity, you don't use a bitcoin bank. Which means you store ALL your money on your computer, probably. Who carries ALL their money in their wallet? No-one.

ATM cards have various protections built into them, pin number, fraud protection, withdrawal limit, the fact that people keep them on their person and know to protect them, etc.

You can't steal an ATM card from 200 feet away without someone knowing about it.

It's also relatively hard to pickpocket people. You have to be right next to them.

The first bitcoin-stealing virus is going to be downright hilarious. (What's your physical analogy there? Someone could build a network of tiny robots and have them covertly steal cash from banks? It's theoretically possible.)

Sure online banking has risks. But do you imagine the cash in the vault at your local bank branch has anything whatever to do with your deposits at that bank? Regular banks use computers too. Police and guns (physical security) have nothing whatsoever to do with security differences between bricks-and-mortar banks and online ones.

I am talking about the security of banks (online and physical) vs. your average windows PC. It is a LOT more likely that you will have bitcoins stolen from your PC than all the cash from your bank account, assuming bitcoin were as ubiquitous as bank accounts.

In fact, let's put it this way: to steal all the bitcoins from my non-techie friend's PC is going to be much easier and less traceable than stealing all the cash from his bank account.

>the govt can contact the bank and ask for acct details

And the bank, being a website(quite possibly based outside the government in questions reach) can ignore them. And that's if the "banks" really have any information about you besides your username and password.

>they are worse than regular banks, being uninsured, unregulated, and unsecured.

Why would a website(aka, the bitcoin bank) that stores a few bits, information(which is what bitcoins are, information) need to be insured, or secured(apart from backups). And being unregulated is a good thing, it allows the "bank" to provide the services their customers want.

You do know that the reasons real banks have all these things is because they don't have all the money their depositors think they have right?

> Also, real banks have men with guns (not to mention the capability to summon heavily-armed police officers on very short notice) to protect them.

Because the criminals will "break" into your bitcoin "bank" with guns and steal your bitcoins... at gunpoint? What? Have you even read what you wrote?

Encrypt the hardrive, and not even the might of the Soviet Army can get those bitcoins. Are you truely that stupid? Really?

I don't know what else to say.

Depending on the country, maybe. Every website is hosted somewhere, though.

The reason a bitcoin bank needs to be insured and secured is so that someone doesn't gingerly walk in, pick the computer up, and take off with $40,000,000 of your customers' money. Part of the point of a bank is security. That's why people who earn no interest don't keep large sums of cash in their homes.

And yes, using a gun to force someone to give you a computer with $40,000,000 in it is likely to happen. Clearly, I have read and understood what I wrote. Have you?

You can encrypt a hard drive, sure, but do you? If the bitcoin bank isn't regulated, they don't have to encrypt their drives. Depending on the encryption, the same gun they use to steal the computer can be used to force you to give passwords. Or they can eavesdrop on you, or the account holder, or both, or an infinite variety of other things that I am not going to go into.

I'm done with this argument; you are trolling.

Invisible hand of the free market my friend.

If a bank lets a thief get away with an unencrypted harddrive full of bitcoins who is going to ever use them again?.

Bitcoin is a strange concept, I am not convinced it will take off but the potential is amazing.

What about storing Bitcoins in "the cloud" (effectively becoming a bank)?

Or even something like Dropbox, especially if the drive becomes password-encrypted without internet and there's a remote-disconnect feature when online.

Which is somehow different than owning someone's computer that has a traditional bank account that they check online?

If you access to their financial info, you can steal money. Just because it is digital doesn't make it magical.

Thanks to bitcoin it makes things possible that other microtransaction systems cant do. If anyone wants to listen to a great podcast about it I recently discovered this - http://omegataupodcast.net/2011/03/59-bitcoin-a-digital-dece...

It is well worth a listen.

4) No red tape, this is slightly related to the above but important enough to warrant it's own point. With bitcoin there are no forms, no regulations, no paperwork. You can send bitcoin to anyone, anywhere, anytime, any amount and no one will care or track you, or freeze your account or any of the other issues when dealing with the current banking system.

I'm sure your tax authorities would have something to say about that. I'm pretty certain they'll want to see your bitcoin transactions accounted for in exactly the same way as any other.

Yeah, good luck attributing those transactions to me, or to anyone else for that matter.

Sure if you're an already existing company it's a good idea to keep accurate records, file forms etc. but if your some 15 year old kid with a great idea who cares, go for it!

With the arrival of new businesses operating entirely from within the bitcoin economy and cypherspace no amount of government regulation will matter. How can you tax something you can't even find, or stop or do anything to?

I guess our political views differ. I find the idea of cheating on taxes rather distasteful.

In any case, morals aside, I don't really see why this is different to cash for taxation purposes. Cash is also basically untraceable, and while there are certainly plenty of under-the-table transactions that mean it's not taxed 100% accurately, it's pretty hard to get away with avoiding taxes indefinitely if you're handling a lot of it. I don't understand why bitcoin would be any different.

Exactly just like cash, people like cash.

However you could sell a lot of online services with bitcoins, potentially millions of USD worth without the taxman getting so much as a sniff that anything odd is happening. Nor even if they investigated you would they be able to prove anything(depending on your lifestyle,no pricy sports cars).

With regards to my political views, I'm not a fan of paying governments to screw me. I tend to like the idea of keeping the wealth I created. But more importantly I like being able to make that wealth with methods that the government might not approve of.

And bitcoin can allow me to do that.

I tend to like the idea of keeping the wealth I created.

You should add, "while letting everyone else pay for the benefits I receive," just so it's clear.

When I use those benefits I pay. Internet, I pay for it. Healthcare, I pay for that too. Education, you can be sure I paid for that. Roads, pay the toll, pay road tax.Pay petrol tax. Pay tax on the required insurance.

Research? Paid for it when I bough the product that was used to monetise it.

I've been working since I was 15, paying taxes since I was 16. I'm nearly 30 now. I'm not wealthy by any count but you can be damn sure I've paid plenty.

I save my money in the bank I pay tax in the interest, I save money in my pension, I pay tax when I withdraw it. I buy shares I pay tax, sell I pay tax. I even have to sell the shares every few years just so the government can tax me on it in the meantime.

I own a house, I pay tax just for the privalege (I don't own a house by the way, just saying).

I get taxed on the money I make as income, I get taxed on the money I spend as sales tax, I even get taxed on the money I don't spend.

If I give what little I've earned to my kids when I die, a huge whopping chunk of it is taken in tax. If I have a home, and I give it to my kids when I die, they have to sell it to pay for the tax the government has charged.

I'm wondering where other people are paying for me, cause from what I see I'm paying for everything I get and use, and paying tax.

I think, one less way the government can squeeze a little bit more blood out of a person is a good thing.

So you can just go ahead and suck my cock with your collectivist claptrap.

So you can just go ahead and suck my cock with your collectivist claptrap.

That's real eloquent of you.

Yeah, I'm sure you only benefited from services that are directly taxed. How wrong I was... If this is the level of farsightedness in the bitcoin community, I'll know to stay away now, thanks.

To remain nominally on-topic: unless you live in a place like Somalia, Afghanistan, or Iraq, I'm pretty sure you are benefiting from living in a country with a stable government and enforceable laws and contracts and all that. I'm also pretty sure you'd like someone to go after those who might all of a sudden take off with your retirement savings (unless you have them in Bitcoin) or that prevents a gang of armed thugs from kicking you out of the home you were planning to give to your kids. Well here's the news, take away your despicable, tax-stealing government and all those things go away.

I'm pretty sure that there's a very strong correlation between a government funded by general taxes and the presence of said benefits. Show me one example where there's functioning rule of law without a functioning government. And a government does in fact cost money to run.

Don't you think, that it's obviously immoral to force others to pay for the benefits, if they don't want them, like governments does? And to forbid the competition in providing of such services?

Plus if i charge different amount for the same service, i will be frowned upon. If government does this, nobody notice. Probably the only fare tax - is when anyone pays proportionally to services they got, not proportionally to income.

Don't you think, that it's obviously immoral to force others to pay for the benefits, if they don't want them, like governments does?

In principle, I slightly agree with you. But only very slightly. I tend to think it's obviously immoral to build a system where a minority live in excess while the majority live on scraps. It's clear we have a philosophical disagreement. Apart from that, I don't see how you'd run a functioning society without having it apply to everyone. If I don't want the benefit of societally-enforced laws, do I also have the right to not obey them to the detriment of others? If I do not want the benefit of regulations to prevent air and water pollution, does that give me the right to pollute it for others?

Besides, if you feel so oppressed, you are in fact free to leave. Most countries are not like the Soviet Union, and as far as I know there are alternatives without taxing governments. Those alternatives have other drawbacks, though, but that's exactly my point. It seems to me that those who complain about taxes want to have their cake and eat it, too.

Polluting someones property is an aggression. It's the current government, who forbids you to sue the polluters in the name of the progress.

Unfortunately, i'm not free to opt out my property from the government dominion and subscribe to some other government. When governments won't have a territorial monopoly, than we will get a real competition for their services.

A big chunk of your taxes are not paying for the benefits you receive. At least 47% are direct wealth transfers to other people [1]. Unless you believe that there is < 4% graft in the budget, that means the majority of your taxes are taken and given to other people.

The basic, vital services you need (police, fire, roads, water, government administrators, etc) amount to only 24% of the government budget and a much smaller fraction of the federal budget.

http://www.usgovernmentspending.com/piechart_2009_US_total#u...

(Education and the military make up the remainder.)

I draw a line at 50%. When >50% of your taxes are simply taken and given to others, I think it's morally legitimate to evade them.

Your morality may vary. I'd be curious to know where you draw the line. Is it ok for the government to waste 75% of your tax money? Is it ok for other organizations threatening violence to do the same? I.e., is it morally legitimate to evade Mafia protection payments if they spent 50.01% on publicly beneficial services?

[1] I'm counting SS, medicare/medicaid/etc, welfare and mortgage interest deduction as "direct wealth transfers". I don't know how to allocate interest on debt, so I'm excluding that from the total. There are probably other categories of direct wealth transfers that I didn't think of.

Just to make it clear, while I agree with the idea of a tax-funded government, I do have issues with specific implementations of this idea, the US budget being one of them.

Your Mafia example is spurious, as it's not subject to elections. A democratic government only exists by the consent of the governed. I do not think that corporations or organized crime have taxing authority.

By that logic - you can't tax those who don't vote, because they didn't give their consent.

Can you name some of those services that spring up? So far i have not been able to find anything that would make use of Bitcoins in an interesting way.

The site mentioned in the article is a unique use of bitcoins. It makes it possible to give as you live http://witcoin.com/charities

The big upcoming service that will be able to utilise bitcoin is nfc which google is bringing to android. They recently introduced a bitcoin library so it will be a possibility at least.

Given the ease of BTC as an electronic currency, there are not too many unique services. BTCSportsbet is cool and CoinPal allows you to buy giftcards, etc. but nothing ground breaking. Witcoin is interesting/unique because it operates in this kind of "micro-economy" space that is disallowed in other currencies because of transaction fees and the hassle of setting up paypal, etc..

Bitcoin is perfect/preferable for very small transactions. This coupled with the fact that there simply aren't many Bitcoins out there probably points to unique ideas cropping up in the micro-micro-economy space. Check out https://en.bitcoin.it/wiki/Trade for a complete list of services.

There is a lot of cool stuff in the pipeline coming out in the next couple of months. But yes, there are missing services in the bitcoin economy, it's a young economy, which is all the more reason to jump in.