Bitcoin News
Daily diary of what's happening with Bitcoin.
Phil Archer’s post on TheGenesisBlock.com describes how regulators are having a difficult time figuring out what where Bitcoin fits. Excerpts:
“[CFTC’s Bart Chilton] stated on bloomberg.tv: ‘In essence, we’re talking about a type of shadow currency, and there is more than a colorable argument to be made that derivative products relating to Bitcoin falls squarely in our jurisdiction.’”
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“Bitcoin clearly does not derive its value from the future purchase of an underlying asset. Therefore, if the CFTC plans to regulate bitcoin, they must consider bitcoin either a commodity or forex, with the intent to regulate bitcoin forex or bitcoin derivatives.”
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“Since bitcoin is not the currency of a foreign government, but rather the first global currency, it would seem their power to regulate bitcoin as forex does not apply.”
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“Bitcoin being declared a commodity would create an interesting contrast with fincen’s March guidance requiring bitcoin exchanges to be registered as Money Service Businesses (MSB).”
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“So it seems the US Government has no idea how to classify bitcoin: is it a currency or a commodity? Any CFTC ruling would likely declare bitcoin a commodity and put it in a Schrodinger’s Cat state – it would coexist as both a currency and a commodity.”
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“FinCEN was forced to create a new definition for virtual currencies, and we expect the CFTC to do the same. However, those living in fear of what the CFTC’s decision may hold should have solace in the fact that any regulations will be largely unenforceable anyway.”
- http://bit.ly/10vfONv
- http://bitcointalk.org/index.php?topic=200305.0 (Further discussion of the topic)
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The latest article by columnist and Bitcoin Foundation board member Jon Matonis (@JonMatonis) is on how Bitcoin is the only real disruptive technology in the payments space but is disruptive in a way that others might be missing. Excerpts:
“We are witnessing something unique in money and payments. For those that do invest and successfully navigate the potential traps, the reward is a first-mover advantage for a new international monetary unit.”
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”Here’s the important part. Disruption in the unit of account is the way to disrupt the payments space.”
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“With a nonpolitical monetary unit, many new possibilities become apparent structurally that would not have been contemplated before, such as: peer-to-peer mobile applications that don’t require permission from legacy transaction carriers; global remittances that don’t require high-fee currency conversion; merchant categories that are no longer disallowed due to fraud and chargeback risk; and merchant reach into countries that are not even on the map for Visa, MasterCard or PayPal.”
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“Disruptive technology disrupts. That is its mission. It annihilates any substandard process or product in its path and it originates outside of the established paradigm. You don’t see it coming.”
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“A payments startup that ignores Bitcoin in its strategic plan is like a publisher ignoring the Web in 1999. Certainly, innovators can design routes around Bitcoin and established players can dismiss it as insignificant, but that won’t make the elephant go away.”
- http://bit.ly/17tznX5
- http://bitcointalk.org/index.php?topic=191021.0 (Further discussion of the article)
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Reporter Gwynn Guilford (@sinoceros) writes on Quartz.com reasons why China could drive a further bit-boom. Excerpts:
“They’ve already done the whole virtual currency thing—with Q Coin.”
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“Property, stocks, art, tea—speculation dominates in every major asset market you can think of in China. The Chinese are a people used to high risk-reward investments.”
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“As the online gamer source tells Quartz, ‘the currency’s system is so decentralized’ that it would be extremely difficult for the Chinese government to do anything about bitcoin.[…] And unlike with Tencent, there’s no company or entity to target for regulation. ‘To China’s conservative regulators,’ he adds, “Bitcoin is a game [that’s] way more dangerous.”
- http://bit.ly/ZgOoc6
- http://bitcointalk.org/index.php?topic=176010.0 (Further discussion of the article)
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Patrick Murck (@VirtuallyLaw), General counsel and board member of Bitcoin Fondation posted on FinCEN’s recent guidance regarding using and exchanging virtual currencies. Excerpts:
“Upon an initial reading two things struck me:
FinCEN firmly believes that virtual currency in general, and bitcoin in particular, does not fall under the pre-paid access rules.
FinCEN seems intent on recreating and expanding the pre-paid access rules for virtual currency and bitcoin under the mantle of money transmission.”
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“Under the Administrative Procedures Act (APA), FinCEN can’t promulgate new rules without going through a notice and comment proceeding whereby the public may have their voices heard. If FinCEN would like to expand its statutory authority over “money transmitters” to include brand new categories such as ‘administrators’ and ‘exchangers’ of digital currency it must do so through proper rulemaking proceedings and not by fiat.”
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“FinCEN’s guidance implies that every person who has ever had any virtual currency and has ever exchanged that virtual currency for real currency may now be considered a money transmitter under the Bank Secrecy Act. That is, of course, an untenable position.”
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“This framework would wildly expand the reach of FinCEN and the BSA, and would be infeasable for many, if not most, members of the bitcoin community to comply with. […] The BSA was never intended to apply this broadly and reach this far into people’s everyday lives.”
- https://bitcoinfoundation.org/blog/?p=152
- http://bitcointalk.org/index.php?topic=154672.0 (Further discussion of the topic)
- http://1.usa.gov/117bnWj (FinCEN FIN-2013-G001)
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Forbes contributor and Bitcoin Foundation (@BTCFoundation) board member Jon Matonis (@JonMatonis) considers the impact a government ban on Bitcoin would have on the fledgling currency. Excerpts:
“The demand for an item, in this case digital cash with user-defined levels of privacy, does not simply evaporate in the face of a jurisdictional ban.”
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“Ironically, the ban would create something like the Streisand effect for Bitcoin generating an awareness for entire new demographic groups and new classes of society.”
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“[Bitcoin is] a bet that career mobility and independent contractor businesses will eventually outstrip the growth of the corporate wage-slave population.”
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“[The government’s] best response to Bitcoin is irrelevancy, or failing that, extreme gold-like market manipulation for as long as possible. The end game for the State is perpetuating the fiat myth — their fiat myth not the populace’s cryptographic Bitcoin myth. They have always known that faith in money is a mass illusion, however they never considered that they wouldn’t be in charge of the illusion.”
- http://onforb.es/112nF0u
- http://bitcointalk.org/index.php?topic=139516.0 (Further discussion of this article)
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Vitalik Buterin from Bitcoin Magazine (@BitcoinMagazine) writes on ways Bitcoin has entered the conversation from governments and mega-corporations. Excerpts:
“As a result of the secretary of the Central Bank of Finland publicizing that bitcoin is legal to use in Finland, many businesses have seized the opportunity to accept bitcoin.”
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“The legal concept of e-money in Germany applies only to instruments that ultimately derive from legal tender currencies, and so Bitcoin is effectively classified as a commodity.”
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“Brazil’s [CVM, securities regulator], ordered the administrator of the ‘Grupo de Investimento Bitcoin’ to suspend what the CVM considered to be an illegal investment fund [which accepted funds only in bitcoins].”
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“Congressman Ron Paul had a subcommittee meet to explore the concept of parallel currencies. […] Although Bitcoin itself was mentioned only briefly, the hearing provides clear evidence [that the] monetary landscape is changing.”
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“NH State Rep Warden asked the Deputy State Secretary if [accepting bitcoins for campaign donations] was acceptable, the Secretary said yes [with restrictions].”
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“A job posting by Lockheed Martin, an American global aerospace and security company with strong ties to the US military, asking for a “Counter Threat-Finance Analyst [with] knowledge of emerging alternative and mobile payment methods (Bitcoin, Secondlife, etc) desired.”
- http://bit.ly/VKk1re
- http://bitcointalk.org/index.php?topic=113061.0 (Further discussion of the article).
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An article on Pokerlistings.com describes how Bitcoin can be used to overcome the restrictions preventing online poker play today. Excerpts:
“Bitcoin represents a potential paradigm shift in the online poker world as it could easily bypass the number one issue that has plagued online poker from day one: payment processors.”
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“Since the entire system is open-source and online there are fears it could be hacked. Bitcoin has only been in existence for a few years and many economists still consider it an experiment. Here’s perhaps the most surprising thing about Bitcoin, however: It’s working.”
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“Bitcoins are simply used to buy chips on online poker sites. Because banks are not involved there is no way for government agencies to restrict people from using Bitcoins on whatever they want.”
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“What if your choices are $6 rake ‘Bellagio Online’ vs. mostly professional Nevada-based opponents or .1 BTC rake SealsWithClubs vs. randoms from around the world?’ ’Bitcoin sites can gain a competitive advantage in a USA-legal online poker landscape by keeping the rake extremely low and by spreading the games that players want to play’ [said Bryan Micon]”
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“‘The chart looks very similar to the price of silver, which went from $50.00 per ounce to $4.00 per ounce and then back to $50.00 again. No one says silver isn’t money!’ [said Jon Matonis]”
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“[Bitcoin gives] us a preview of what the online poker world might look like without borders and boundaries.”
- http://bit.ly/R5j6NJ
- http://bitcointalk.org/index.php?topic=109546.0 (Further discussion of the article)
- http://bitcointalk.org/index.php?topic=75883.0 (Mem’s List including Online Poker sites)
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Keeping DGC (Digital Gold Currency) readers current with fantastic daily posts is Julia (@DGCMagazine). Excerpts from her recent post on Bitcoin:
“When I first heard of Bitcoin I was…unimpressed.”
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“I felt that ‘BitCoins are the ultimate currency backed by nothing.’ It seemed like a waste for such clever people to spend their time and energy creating money that functions wonderfully, but is backed by nothing.”
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“Goldbugs should love Bitcoin because it could be the game changer. When alternatives are accepted, when the status quo is questioned, the door is opened.”
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“The internet is abuzz with Bitcoin. I run across articles and posts about it at almost 20 times the rate to that of other DC’s. Bitcoin is almost, dare I say…cool!”
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“Goldbugs will cringe, but it’s true, Bitcoin is easier for some people to trust.”
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“Brace for impact, the regulatory onslaught is coming.”
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“For the moment it would seem that regulators have yet to interact with the exchanges. In fact, many exchanges are reaching out to regulators as they anxiously await action here.”
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“What is most important about Bitcoin, is its ability to get people to think about money differently. It has the ability to draw the average Joe into the world of alternative currencies. And as such, any enemy of fiat should be a friend of Bitcoin.”
- http://bit.ly/PVAzbZ
- http://bitcointalk.org/index.php?topic=108346.0 (Further discussion of the article)
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Timothy B. Lee (@BinaryBits)’s latest post on Bitcoin explores a frequently raised topic regarding Bitcoin and the law. Excerpts:
“Nothing like Bitcoin existed when current laws were written. A wide variety of laws regulates banks, money transmitters, currencies, and securities—but none of these categories are a good fit for bitcoins.”
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“Nikolei Kaplanov says ‘so long as you are purchasing legal things and you’re conducting yourself in a manner where you’re making regular exchanges in person or through a company online, there are no legal hurdles whatsoever.’”
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“Kaplanov said it was ‘not a laughable argument’ that Bitcoin miners are money transmitters, though he did think it was a ‘huge stretch.’”
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“Bitcoin exchanges need to register as money-transmitting services with the relevant state or federal authorities and comply with regulations governing money-transmitting services, Kaplanov said.”
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“Bitcoin products keep arriving, and if their popularity grows, states may take a more active interest in regulating the currency than they do now.”
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“Shutting down the network in one country is unlikely to have much effect. It will continue to operate in other jurisdictions, and users in the jurisdiction where the technology is banned can easily participate in Bitcoin transactions via VPN.”
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“[Kaplanov] thinks it would be a bad idea for the US government to do anything dramatic, such as try to outlaw the cryptocurrency.”
- http://bit.ly/T4c3WT
- http://bitcointalk.org/index.php?topic=103022.0 (Further discussion on the articles)
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Forbes columnist Jon Matonis (@JonMatonis) describes essentially how Bitcoin and its community are managing through setbacks that would otherwise devolve into law enforcement actions, lawsuits, and government regulation. Excerpts:
“Bitcoin entities and their customers currently operate under their own brand of lex mercatoria to enforce accountability.”
“We are actually in the midst of such a case right now as the leading Bitcoinica parties attempt to sort out the claims process to the best of their abilities with limited account records. There is no court. There is no judge. Bitcoin is not defined as legal property.”
“It is clear that a sort of ‘digital’ lex mercatoria is emerging — one that recognizes the complete voluntarist nature of the bitcoin protocol in commerce. We don’t have to imagine The Enterprise of ‘Law: Justice Without the State’ because we are living through it now.”
“The beatings will continue until security improves.”
