Senators seek crackdown on "Bitcoin" currency | Hacker News Reader

Senators seek crackdown on "Bitcoin" currency

baltimoresun.com

80 pointsemilepetrone67 comments

There's nothing governments hate more than watching people get along fine without them.

Just as there's nothing that gives conspiracy theorists more reinforcement than a government crackdown.

I fail to see any implication of conspiracy in his statement. It isn't even referencing a real human emotion or intentional malice but anthropomorphizing the institution of government. Growth of government jobs, department budgets, and votes for elected officials all require a constantly increasing scope. It's built in to the system. There is no (easy) mechanism for relinquishing control in an area. Unfortunately, the end result is accelerating government bloat and loss of freedoms.

There is no need for conspiracy when human nature ensures the same result.

What does this have to do with the parent post? He didn't imply a conspiracy. There's no conspiracy -- except that government officials don't like things that challenge their sources of power, which is what these two senators think Bitcoin is ("people can trade DRUGS in bitcoin, we don't like that and there's no one to phone up to ask who to arrest!").

The parent post isn't really right either -- Bitcoin will never replace a traditional fiat currency. You can't pay your taxes in it, so it has no intrinsic value at all, when the bubble ends, no one will accept it as payment for goods and services except to the extent that it is exchangable for USD.

"reports that they are used to buy illegal drugs anonymously."

holy crap I can do the same thing with dollar bills! Shut down the monetary system also..

This headline seems a bit hyperbolic; the article does not actually substantiate the part about Schumer going after Bitcoin. It does reiterate the news about Schumer wanting Silk Road shut down; that was reported yesterday on HN. But there's nothing new here that says that Senators are going after Bitcoin, specifically, except for the headline.

The headline is accurate. They seek action, they are not acting yet.

You're right that there is nothing new here, however.

There's always been an untraceable currency sold and traded globally. Gold. You can't trace it back to the origin, as long as it's been melted down.

The only thing is, you can't easily transport it. And lets be honest, how many people are willing to accept gold?

This is scary stuff for governments all over the world, not because you can buy drugs or use the currency for illicit reasons, it's because -- taxes and bypassing traditional financial institutions. (Just think paypal)

If you can move money around the world securely and anonymously, you can hide your money from the tax man. At least in theory...

The problem is not how many people are willing to accept gold it is there are not enough people willing to pay with it.

Very large financial transactions on multi-currency, multi-nation, trading markets use Gold and Oil Futures as currency.

There are storage facilities around the globe that will actually move physical gold from one private 'vault' to another and confirm the transactions. The end user has an interface similar to online banking and doesn't have to leave their desk.

"You can't trace it back to the origin, as long as it's been melted down."

Allow me to introduce you to the concept of Isotope Fingerprinting http://en.wikipedia.org/wiki/Isotope_fingerprinting

So even melting doesn't necessarily prevent tracing.

I'm not sure you can do that with gold because there's only one stable/naturally-occurring isotope, and the most stable other isotope has a short half-life of six months. Labeled gold's radioactivity may be a give-away.

What about trace element analysis?

That you can do, but it's less effective because separating and purifying different elements is much easier than doing so with different isotopes.

Are you suggesting adding small impurities to the gold and then measuring them at a later stage? Surely that would be a very easy thing to change.

You don't need to add the impurites, they're already there. Metals have fairly distinct patterns of impurities depending on where they were mined from and it's basically impossible to entirely remove them. If you expose a sample of metal to a large flux of neutrons (usually in a reactor) then the nuclei of the various elements in the metal will absorb neutrons and then decay. The products of these decays can then be analyzed to work out the composition of the metal even if an impurity is very small. This type of analysis has been common for a very long time now. An example of a current use is determining the country of origin for controlled metals like plutonium and uranium.

There are ways to get around this kind of approach (by adding impurities, not removing them) but I felt like mentioning it because it makes a lot more sense in this context than isotope fingerprinting.

This isn't about drugs. This about the coercive force of government wanting a cut of the profits. Think of it as a protection racket.

Yep. Falls in the same category as money laundering.

If DEA confiscates proceeds of a crime and it's all Bitcoins. Will they cash them and give further validity to the Bitcoins or is it effectively sent to /dev/null indirectly increasing the value and indirect lesson in drug economics?

Interesting dilemma for them.

The market doesn't seem to be worried

http://bitcoincharts.com/charts/mtgoxUSD#rg10zvztgSzm1g10zm2...

Shutting down Bitcoin because of illegal drug trade is like banning cryptography because of terrorism: It is not solving the problem and it is not a valid reason for stopping innovation.

Yet, it did not stop them from trying _really hard_, for example, with the Clipper chip and export restrictions on software that used crypto. Even now, foreigners who come to the US to work or study face extra scrutiny (whatever that means) if they work in crypto.

Yep, it's exactly like that: ban something with perfectly legitimate uses under the pretext of something criminal.

yeah, this happens all the time everyday with cash. life goes on...

Parent is wisdom disguised as snark. The reason given for outlawing bitcoin: drugs. I think the real reason is taxes.

Wait a sec. You can buy illegal drugs with Bitcoins?! Thanks senators!

Didn't some politicians try to shut down Paypal in its early days? I remember that from reading The Paypal Wars.

Could you elaborate or provide some linkage? I'm curious what the perceived issues were back then.

Read the article as s/bitcoin/cash/ and you see that all the things they hate about bitcoins exist with cash already, but they don't care about that.

In case anyone's interested, this is the Bitcoin "drugs" site in question, "Silk Road." http://gawker.com/5805928/the-underground-website-where-you-...

The federal government raided the "Liberty Dollar" factory, which isn't even an actual currency (just a collector's item). Why are they being so cautious with something that's actually supposed to replace the dollar?

Liberty Dollar was absolutely meant as currency, not collector's items. What kind of collector collects certificates to the actual items and not the items themselves?

Could this be the push Bitcoin need to go bigtime? Anytime the government banning something it would inadvertently make it more popular.

Next, WoW gold.

next, money.

"I heard that this guy went to his dealer with some cash and walked away with some drugs leaving no paper trail whatsoever."

In The Sprawl trilogy, cash is almost never used for legitimate purchases. It's almost exclusively used for black/grey-market transactions.

You might not be that far off. Electronic payments are becoming the standard. Banks love electronic payments.

They're already trying to limit how much cash you're legally allowed to carry without having to explain yourself to a police officer in some states.

You don't need to make cash illegal though, you just have to make the alternatives really really attractive.

I think you're joking, but in some jurisdictions having large amounts of cash may be considered grounds for seizing it by the police. Sometimes this leads to abuse: http://en.wikipedia.org/wiki/Tenaha,_Texas#Police_seizures_s...

I'm assuming they can quite easily subpoena Blizzard to find out details of transactions if they have reasonable cause.

That's it, I'm moving all my savings over to EVE timecards. They'll never go after that, CCP has an economist on staff.

First they ignore you, then they laugh at you, then they fight you, then you win.

hmm so how will they outlaw bartering?

But than again the derivative traders, they are allowed to make free money and steal without any change..

Sorry shareme, but this is pretty much a perfect example of a bad HN comment.

hmm so how will they outlaw bartering?

Unjustified logical leap.

But than again the derivative traders

Misspelling.

they are allowed to make free money and steal

Nonsensical accusation against a group of people engaged in an activity which I'm not sure you fully understand.

without any change..

Incomprehensible.

Please think before you type.

>which I'm not sure you fully understand.

Ah, condescension, now that is a perfect example of a typical HN comment.

Is he wrong? How is he wrong?

I don't think bxr is saying that hugh3 is wrong. He's saying that he is being condescending (although I'm not so sure this is typical). I guess hugh3 could have just said "Nonsensical accusation" and his point that it was "pretty much a perfect example of a bad HN comment" might have been even stronger without speculation on shareme's level of understanding of derivative trading.

Sure, but 'hugh3 didn't write that comment to be mean. He's making an example out of something that really is an example of one of the archetypical thread-disrupting issue-forking politics-inducing conspiracy-theoretic superficial toxic comments. That's what I see there. You can obviously disagree.

I actually think we are in agreement.

Ah, the snide counter to condescension, &etc.

Let me add some nitpicking to complete the obnoxious HN trifecta. The proper ortographic representation of etc is &c. In fact, that's where the ampersand comes from (think ligature form of Et).

I appreciated this, actually. It's funny how just being in a negative tree gets you downvoted by association--good thing it's just karma, eh?

To be fair, it's less that we're in a negative tree and more that we're not adding value to the discussion.

Yeah, but I didn't expect people to take it so _personally._

(Or maybe I do, but I unconsciously resent how serious we are and fight it by taking a few downvotes every so often.)

As far as I can tell, the suggestion that they might as well soon go about outlawing bartering is a sound one. Neither bartering nor bitcoins use US minted currency, both cannot be traced unless the participants volunteer that information, and both arguably can be used for "tax evasion". I'm not trained in tax law, but it wouldn't really surprise me if legally citizens were mandated to report barters on their taxes.

Furthermore, both can be used to acquire drugs. Of course, bartering is at this point far more popular for that...

"Misspelling."

Seriously dude? This isn't slashdot.

both arguably can be used for "tax evasion"

You can use US minted currency for tax evasion as well.

Exactly.

And that's illegal as well.

So? It doesn't stop it from being done. Legality != prevention/deterrance.

The IRS, unsurprisingly, is way ahead of you on this one

http://www.irs.gov/taxtopics/tc420.html

and in fact you are obliged to report bartering income on your US taxes. Bartering, of course, remains perfectly legal, as long as you report it on your taxes.

Of course the IRS doesn't bother to enforce this on small-scale bartering. But if you set up a large-scale bartering network then they would. If you went one step further and threw in an intermediary system of "credits" so that transactions could take place indirectly (instead of swapping pigs for goats you swap pigs for credits and credits for goats) then they'd consider that as minting currency and take a rather dim view.

http://www.youtube.com/watch?v=rPypDaXfIV8&t=01m18s

You used to be able to use casino chips in Vegas just like cash. You could pay for your meal with chips in a place totally unrelated to gambling. You could pay for your taxi ride in casino chips. Casinos would accept chips from other casinos without any problem.

Then the treasury dept. stepped in and forced them to stop. All that's in the past now.

Actually, bartering is already covered in the US tax code. You're supposed to claim the fair market value of the goods/ services you received as income.

http://www.irs.gov/taxtopics/tc420.html

Isn't the time and effort of the government better spent in legalizing the drug trade and earning revenue in the form of taxes rather than trying to fight a war that is obviously unwinnable?

http://ycombinator.com/newsguidelines.html

Please avoid introducing classic flamewar topics unless you have something genuinely new to say about them.

That applies just as well to this whole thread, doesn't it? I have half a mind to flag the article except the article is actually important.

> earning revenue in the form of taxes

What good are taxes for asset forfeiture beneficiaries and the prison guards' unions?

To paraphrase the Beastie Boys[1], "You gotta fight / for your right / to barrrTER!"

[1] http://www.youtube.com/watch?v=eBShN8qT4lk

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