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back to article Bitcoin laws are coming: US Senate launches virty currency probe

The heat is on for Bitcoin and other virtual currencies in the US, with lawmakers at the highest levels of government now actively investigating how to regulate the upstart digital monies. On Tuesday, the Senate Committee on Homeland Security and Governmental Affairs sent letters to a number of prominent federal regulatory …

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Anonymous Coward

Not if, but when.

After all, it's long been clear that Governments don't like competition.

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Anonymous Coward

Re: Not if, but HOW.

After all, much as they'd doubtless love to, the whole concept was designed specifically to resist governments pissing around with it.

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Re: Not if, but when.

After all, it's long been clear that Governments don't like competition.

Oh I dunno, given how some of the various semi-overlapping departments seem to interact, they seem to love internal competition and bickering.

Maybe it's more the IRS and similar agencies don't like the thought of not being able to skim off their percentage in tax to throw into the debt hole?

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Anonymous Coward

Re: Not if, but HOW.

They can barely understand the basic workings of it all, but fancy a crack at regulation anyway.

Should be interesting..............

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Stop

Hang on hang on.... VPNs, encryption, servers all over the world..... How do you regulate that? Am I missing something really obvious here?

I can see how the coins would be linked if the likes of amazon were to accept them for goods delivered, but how about a "trusted" (by word of mouth?) escrow service for ebay transactions with a similar feedback rating system? Select "collect in person" and avoid the PayPal fees.

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No you're not missing anything. They couldn't if they wanted to because the entire system would come crashing down.

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Go on, I'll bite. Why the thumbs down?

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>Go on, I'll bite. Why the thumbs down?

Maybe someone holding bitcoins they bought at $150 on their way down from $240 hoping for a bounce? BTC threads are generally down vote magnets (see below for instance, apparently it is easier than rational discussion or counterargument)

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Thumb Up

Re: >Go on, I'll bite. Why the thumbs down?

Well if it was that I was talking about VPNs, SSL and stuff - they couldn't stop them because the internet would be done for. No more shopping, no more banking, no more ssh to manage servers etc etc..

Possibly my fault..

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Currencies need...

An army behind them, much like languages do. Without an army to defend the value, or at the very least a government to set the value (note to inflationary economies: they don't work), the value of a currency will fluctuate all over the place (Bitcoin's value looks like a roller coaster compared to others).

As with any commodity the value is only what you can get for it at the time you sell it.

Sorry!

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Facepalm

Re: Currencies need...

Let's be Frank, bitcoins are valuable to number collectors, they have no real tangible value of course. Some other number collectors like numbers enough to swap their numbers for real world goods, and others to swap them for harder currencies backed by armies. But let's face it, Waitrose aren't going to be accepting them for groceries any time soon. Especially as they pay for everything in harder currencies.

A problem is that bitcoins are not stable. Yes the price fluctuates (over 2 years or so that range has been roughly $5 - $240 each), which makes interacting with any other currency more like Zimbabwean dollars than $€£¥. But being purely fiat they are built on trust alone. Who wants to be the one holding the last wallet if the market sneezes as markets do? It takes a brave number collector to stand by his collection when the exchange rates slip. Cashing out when it goes South exacerbates the problem, especially with such a small pool, and it relies on other people to like the numbers more than you do, and have cash to bail out the whole economy. I predict this will happen at some point, purely because of historical bubbles bursting. What is the difference between BTC and any other bubble, really? Virtual pork bellies.

Note that I am not arguing against bitcoins being a clever technical system and great experiment, just that I don't see a long term future for a currency in competition with other currencies backed by tax-bought weapons. Our at least being nurtured to operate on anyone's turf if it is largely just a money laundering tool and there is no state cut.

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Re: Currencies need...

Currencies are not "backed by armies".

They are either backed by commodities (gold, silver, coconuts) or else, in the case of fiat money, by some vague idea that the currency will be acceptable going forward and the the guys "in charge" decide to not print too much of it. Which of course never happens.

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Boffin

@Cliff - Re: Currencies need...

> bitcoins are valuable to number collectors, they have no real tangible value of course

You mean unlike other currencies?

> bitcoins are not stable

You mean unlike other currencies?

> being purely fiat they are built on trust alone

You mean unlike other currencies?

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Re: Currencies need...

"backed by armies" - well, seeing as The Congo has loads of gold and diamonds as well as other precious minerals, Nigeria has huge amounts of oil, but would you prefer your pension in it their local currencies, or GBP, USD, EUR? It's whoever ultimately controls those resources who has the stability (and who can send in the army if a deal is not honoured).

This is why guns and armies are pretty important for creating stability around the supply of those resources.

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Re: @Cliff - Currencies need...

Yes, I mean unlike other currencies. Not all other currencies, but ones I'd like my pension in.

Sterling - by consensus I can take 65p to the corner shop and buy a pint of milk. There is no current consensus that I can go with 0.000002 or whatever it is BTC and return with milk. Alternatively, I can use the coins as attractive jewellery and write memoirs on a banknote, still more tangible, accessible value than a BTC.

I mention Zimbabwean dollars in another post somewhere - not all other currencies are stable and I have a handful of 10 trillion dollar notes from there, worth slightly less than the ink it cost to print them. However if you stick with one of the biggies you have a stability we have not seen with BTC.

Yes, other fiat currencies are built on trust. It's easier to trust a country which aggressively defends the land and people who pay its taxes than believeing 'just because', much like people did with the dotcomboomandbust1.0, tulip bulbs and pork bellies.

I'm happy to leave my pension in GBP as opposed to BTC. If you're prepared to be paid in BTC and keep your pension in it, fair game to you, hope it works out. Personally I'm seeing another bubble here, but one with vested interests against it.

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Re: @Cliff - Currencies need...

cliff where do you buy milk at 65p for a pint?

£1 buys a large 2.27 lt or 4 pints I believe

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Re: @Cliff - Currencies need...

My local corner shop. A pint is 65p.

At the other corner shop, it's 79p.

But then seeing as some places charge more than a quid for 500ml of long shelf life water, it is still far better value!

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Ahem

So, what they are really asking is "how do we tax this stuff?" Imagine it, governments getting tax money from illegal activities, it's a taxmans wet dream.

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Not really interested in when

The real question is HOW?

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Re: Not really interested in when

How? I guess they would do it the same way that they prevent illegal downloading. IOW, by terrorizing and bullying as many people as possible so as to intimidate them. And it will work just about as well.

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Re: Not really interested in when

Easy. The same way they regulate sales and property taxes from businesses. And they've already got them under control. Well, except for the illegal ones. Which is part of why bitcoin have been adopted by the illegal ones as a medium of exchange.

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Re: Not really interested in when

Quite simple, for the moment, at least. BTC have little value until converted to a hard currency. Just regulate the portals to that and you gets your tax skim.

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Anonymous Coward

US Govt is thinking about using bitcoins?

"Their near anonymous and decentralized nature has also attracted criminals who value few things more than being allowed to operate in the shadows."

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Re: US Govt is thinking about using bitcoins?

> "Their near anonymous and decentralized nature has also attracted criminals who value few things more than being allowed to operate in the shadows."

Sounds like Lloyd Blankfein and Jamie Dimon.

Speaking of which, it was 42 years ago today that the USD, and by extension, all currencies, went from having real value, to just being worthless scraps of paper (or cotton, or electrons like bitcoins).

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Re: US Govt is thinking about using bitcoins?

"Speaking of which, it was 42 years ago today that the USD, and by extension, all currencies, went from having real value, to just being worthless scraps of paper (or cotton, or electrons like bitcoins"

The UK left the gold standard in 1931 as did the Scandinavian countries

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Merchant Network

So I just checked with four people's drug connections and asked about accepting BitCoins. They all told me "fuck no, cash only dumbass". One guy said "what the hell is a BitCoin" so I'm assuming that was a no as well.

I'll be back in D.C. tomorrow with a long afternoon break and I'll ask some prostitutes if they accept BitCoin. I'll report back with my findings but I'm guessing I won't have any luck.

I'm also going to ask my Congressional Representative if she will accept BitCoin donations. I'm betting 5:1 she will...

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Re: Merchant Network

I'll ask some prostitutes if they accept BitCoin

Tit for tat.

It sounds like you're building a pretty good case against US dollars, and why they should be outlawed since they're the currency of choice for illegal activity.

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Joke

Re: Merchant Network

Shirley that should be Tat for Tit?

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Welcome to the DCoded World. You do know of DCoding, yes, with rules and reigns and reins in C*?

"We're talking about the potential for a monumental shift in the power structure of the world," Roberts told Forbes. "The people now can control the flow and distribution of information and the flow of money. Sector by sector the State is being cut out of the equation and power is being returned to the individual."

Yeah, El Reg has that message, loud and NEUKlearer, and is leading with IT authoratively, whilst the spooks get their knickers in a twist and are entangled and left dangling in all manner of means and matters with memes, way beyond their apathetic pay grades ...... http://forums.theregister.co.uk/forum/1/2013/08/12/deutsche_telekom_secure_email/#c_1924187 ..... albeit it is oft shared in a somewhat more codedD phorm of alien language .........

Don't underestimate the both real and virtual possibility, and therefore eventual inevitable probability available to all who can/would think deeper both vertically and laterally, that you are become much smarter than of late and do not accept as true all the tales you be told and programmed with for the reality of others with an exclusive self-centred power control agenda, James 51, which you may discover is essentially and exclusively catastrophically predicated on the flow control, to Aspiring Sources Conspiring with Informed Intelligence Services, of flash fiat currency/QE cash transfers/magic paper trails to partnering Ponzi participants.

*Google "D" and have a ponder and a wonder.

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Happy

Re: Welcome to the DCoded World. You do know of DCoding, yes, with rules and reigns and reins in C*?

I got 'Square D' the company that makes the breakers and breaker boxes in my house...

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"[Virtual currencies] can be sent nearly anonymously, leaving little or no trail for regulators or enforcement agencies,"

A bit like cash then.

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They'll soon come to depend on the cryptographic currency economy

The genie is out of the bottle. Cryptographic currencies are being used and the amounts in circulation are already very significant and actually represent real life value. If the US government succeeds in imposing any regulations and enforcing them (the big if), it will merely result in the whole thing evolving to counter the ability to regulate.

As it spreads, more people will depend on it rather than officially backed currency. The officially backed currencies are constantly depreciating under the influence of governments printing money to cover their debts. Bitcoin doesn't suffer from that flaw (except for mining, which is a process that is algorithmically controlled and so-far tamper proof). That means, over time bitcoin will become more valuable and stable than real currency. When that happens, the interests of bitcoin users and governments will overlap to the point where the ability or need to regulate it will eventually become very impractical due to conflicts of interest.

It will be of interest to keep track of when the first oil drums paid in bitcoin will start shipping. The combination of capitalism and shady middle eastern regimes pretty much guarantee that that will happen at some point. When it happens, the dollar is history.

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Don't Hate The Player, Hate The Game

"Virtual currencies can be sent nearly anonymously, leaving little or no hope of us being to tax people", the committee's letter reads in part.

There, fixed it.

The European Central Bank had their knickers in a similar knot back in 2011.

Then, a few weeks ago, they change their mind and say that Linden Dollars or Bitcoin don't fulfill any of the three functions of money: Medium of Exchange, Unit of Account, or Store of Value.

http://globalforumljd.org/docs/events/061413/061413_ppt_ecb.pdf

Can't say I'd put my money into it, but I can see why people do...

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Re: Don't Hate The Player, Hate The Game

> Then, a few weeks ago, they change their mind and say that Linden Dollars or Bitcoin don't fulfill any of the three functions of money: Medium of Exchange, Unit of Account, or Store of Value.

Fiat currencies only fulfil the first two of those three.

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Holmes

Re: Don't Hate The Player, Hate The Game

Fiat currencies only fulfil the first two of those three.

Why don't you phone the European Central Bank and tell someone who gives a crap?

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Just supposin'

How long would it take a government with access to the world's most powerful hypercomputers to mine the remaining bitcoins? And once it had them, what would it do with them?

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They will be unable to regulate it for over 20 years.

Just download the latest ballast file then download the program and start churning out your own bitcoins.

Store your bitcoin info inside of a PGP file and no govt around the world can stop you unless they put you under house aresst and deny you internet for life.

The govts will just be jealous they are not getting a peice of the action.

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Hmmmm...

"Meanwhile, the US Securities and Exchange Commission has charged a Texas man with securities fraud after he allegedly bilked gullible investors out of millions of dollars' worth of Bitcoin"

If they consider Bitcoin to be illegal, then he can't be found guilty of securities fraud as nothing of value was stolen.

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illegal ≠ valueless

paulc, an illegal security is not necessarily a valueless security.

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Re: Hmmmm...

Yeah, that's what he thought too. Judge said differently. Probably after cackling like Yosemite Sam in a Bugs Bunny cartoon.

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WORDS OF WARNING FOR FOOLS AND THEIR TOOLS, BOTH USELESS AND USEFUL

What the Present and Current Establishment Systems, ..... with Media Led Drivers for Government Cloning of Remote Command and Control of Drones and Dumb Bots with Sub-Prime Support and an Analogous Uncertain Indefinite Future Supply Base/Corrupt and Stagnant MetaDataBase Store of Past Archaic and Anarchic Hierarchical Needs and Seeds to Feed, and their Intellectually and IT Challenged Executive Administrators [the Virtually Illiterate in CyberIntelAIgent World Match Plays who be as Practically Ignorant and Arrogant Pwned Pawn Pieces in Great IntelAIgent Games Theory ], have real good cause to fear most in a Crash Information for Flash Cash Rush Clash, is the Anonymous Cold War against Virtual Machines turns Hot and Personal against the Present and Current Establishment Systems Controllers.

And they know who they are, and there be no safe haven place to hide from the mob and summary prosecution of rough natural justice with immunity and impunity.

Renegade Hope Delivers AIRenaissance and Definite Vision for a Pleasant Change.

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Typical American politics... we didn't invent it, we don't know how it works, it is out of our jurisdiction but we want to control and tax it. Think about it It's for the 'childrens'

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