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back to article US Senator lobbies feds to BAN BITCOIN

A United States Senator is demanding that US regulators ban the Bitcoin cryptocurrency. West Virginia Democrat Joe Manchin said that the currency helps facilitate criminal activity and could harm the US economy if it is allowed to continue to circulate without regulation. Inthe letter addressed to, among others, the heads of …

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"I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency."

What a crock of shit. That's a nice way to scare people away from using Bitcoin, but it's not actual evidence.

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Surely the US Dollar is in fact the most commonly used currency for illegal activities?

Can we ban that too please!

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US$ cash is pretty much banned for transactions over about $15,000 for exactly that reason, but it doesn't stop criminals from using it.

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Facepalm

I'm sorry sir, I can't use this suitcase full of wads of $$$ to buy your suitcase full of cocaine, because the feds say it's illegal for me to make a transaction over $15,000.

Talk about aiming for the moon and shooting yourself in the foot...

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Trollface

Why?

Sounds like the good senator had a few bob in Mt Gox...

I rate this proposed law as 'G' (for 'Grandstanding' - proposals that are pointless and/or blatantly unconstitutional, but can be guaranteed to generate the proposer a fair bit of publicity, not all of it negative).

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FAIL

"the currency helps facilitate criminal activity"

And of course the good old green-back has NEVER been used for illicit purposes!

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Re: "the currency helps facilitate criminal activity"

Exactly: http://edition.cnn.com/2009/HEALTH/08/14/cocaine.traces.money/

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Re: "the currency helps facilitate criminal activity"

Obviously cash should be banned and only traceable credit cards and bank transfers should be allowed - then there would be no criminal activity, would there HSBC?

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Re: "the currency helps facilitate criminal activity"

The very features that make Bitcoin attractive to some also attract criminals who are able to disguise their actions from law enforcement.

Sounds like US cash.

Anonymity combined with Bitcoin’s ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.

Sounds like US cash.

I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.

Sounds like US cash.

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Re: "the currency helps facilitate criminal activity"

Uh, I guess you guys aren't from the US, and haven't seen the erosion over the years of the ease of using cash. The government would dearly love to ban the use of cash, and I wouldn't be surprised if they manage to do so in my lifetime (if that happens I'll go elsewhere, providing there is somewhere else to go where the same sort of thing isn't also happening)

Any deposit (or withdrawal?) of more than $10K in cash must be reported to the government, but supposedly the threshold is actually lower, but they don't want to say exactly where to avoid the problems they used to have with multiple $9900 deposits. You're required to report transporting more than a certain amount of currency (from any country) to/from the US when traveling. I could have a bank account with a billion dollars in it, but if I tried to bring $5000 cash into the country without declaring it I'll have a lot of trouble in customs.

The "Patriot Act" requires verified owners of bank accounts, so when I opened a simple HSA outside my normal bank recently I had to make a copy of my driver's license, sign a form and HAVE IT NOTARIZED so the bank can report to the feds who owns the account.

They don't like bitcoins because they can't trace them like they can all non-cash transactions. If criminals had taken up trading Van Goghs for payment they'd be wanting to pass a law that fine art transactions have to be reported to the government.

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Anonymous Coward

Re: "the currency helps facilitate criminal activity"

> Any deposit (or withdrawal?) of more than $10K in cash

UK: Banks must report any "suspicious" deposits (not just cash) and any cash deposits of more than £6500

> You're required to report transporting more than a certain amount of currency (from any country)

UK: You must declare when entering or leaving from non-EU country any cash of more than 10000 euros.

> The "Patriot Act" requires verified owners of bank accounts,

UK: By law, UK banks must verify the identity of everyone opening a bank account. This has been the case for about 30 years.

Since UK regulations are now dictated mostly by the EU this is probably the same for all EU countries.

> ban the use of cash ... if that happens I'll go elsewhere

The number of countries you can go to is remarkably small (and mostly unstable)

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Re: "the currency helps facilitate criminal activity"

@DougS

Yep - that's pretty much the size of it.

I wanted to add something because I love putting my 2c in but you've said all I wanted to. Dude, you have a achieved the near-impossible; I have nothing to add.

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Re: "the currency helps facilitate criminal activity"

True that there are controls on cash entering/leaving the banking system (and in the UK too, as per Condiment's comment) but presumably you can still have a fairly significant chunk of the ecomony operating as cash that never enters/leaves a bank account? I wonder what the figure is of actual physical cash as a fraction of total ammount of currency (if that is even measureable) and whether you can establish a figure representing what fraction of that circulates entirely physically?

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Anonymous Coward

Re: "the currency helps facilitate criminal activity"

There is about 1.25 trillion dollars in currency.

About 8.5 billion notes where printed last year with a face value of $360 billion and about 7.6 billion were shredded.

It costs about 9 cents for each bill so last year the US spent about $760,000,000 printing currency (this years budget is $826.7 million)

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Re: "the currency helps facilitate criminal activity"

Yes in the UK they do monitor large cash transactions, bankers get irate sometimes when depositing large amounts... I remember walking out of a bank to the neighbouring bank when I was depositing about £30k because the teller staff pissed me off, I have no problems answering their questions, and telling them where I got hte money, but take my damned money without problems! report it if you want, but I am putting it IN the banking system...

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Anonymous Coward

Re: "the currency helps facilitate criminal activity"

> bankers get irate sometimes when depositing large amounts

Not just bankers. I went to a small village post office to pay my tax bill. The post mistress was horrified and at first I thought it was because of the amount of tax the government was gouging me for. Turns out that she was horrified because the amount put her so far beyond her normal daily trading that it was going to cause a lot of extra paperwork for her.

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Pint

Re: "the currency helps facilitate criminal activity"

"There [are] about 1.25 trillion dollars in currency."

Many types of money supply. 'M0' is just one.

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Alert

Re: "the currency helps facilitate criminal activity"

"Obviously cash should be banned and only traceable credit cards and bank transfers should be allowed"

Ah, but pretty sure credit cards are used to divvy up the substances that rolled up notes subsequently hoover up

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Anonymous Coward

Re: "the currency helps facilitate criminal activity"

"traceable credit cards"

Are good for spending offshore funds....

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Re: "the currency helps facilitate criminal activity"

Criminals took up trading fine art and other high value-to-volume ratio goods ages ago to avoid handling cash and because they were more value-dense than cash. The talking cop's head (whichever one it happens to be) on Crimestoppers frequently trots out the line that some art heist was likely to have been for the express purpose of injecting more liquidity into this market.

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Re: "the currency helps facilitate criminal activity"

Only in the USA.

Mean while in Mexico; Argentina; Panama etal. the $ is the currency of drug smugglers choice – everything can be brought outside of USA with a suitcase of green backs.

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@AdamT

Having criminals exchange cash that never enters the banking system works only so long as that cash can be used by them to buy mansions and Ferraris, and pay goons to protect them (who only want cash if they can spend it on coke and hookers)

If the governments of the world make it too difficult to put large amounts of cash to use, big bales of $100 bills are only useful for keeping score, but you'd never be able to spend them. I'm pretty sure that's how many in the government see the "war on drugs" being useful, because it gives them an excuse to put more and more constraints on cash transactions.

Slowly but surely they keep closing up ways to launder cash, and society is closing up holes on its own. Bars/restaurants used to be a great way to launder drug money, but more and more people use debit/credit now instead of cash. I'm sure there's still a lot of cash flowing through clubs frequented by criminals, but having 90% of your receipts in cash probably just acts like a red flag for the feds these days - even if the owner is 100% legit.

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Re: "the currency helps facilitate criminal activity"

What if the criminals decide not to put their money in banks, but to carry the money in suite cases?

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Re: "the currency helps facilitate criminal activity"

The Code of Hammurabi has laws against financial crimes. It's probably safe to say criminals have used money as long as there has been money. New kinds of money means new kinds of financial crimes, but it's not as though bitcoin is the first place for this to happen.

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Lobbyism anyone?

And his words would carry a lot more weight, if JPMorgan didn't pay $30,550 for his campaign.

(JPMorgan being a big company that is very vocal against Bitcoin)

Nice to see you can still buy senators in the USA ;)

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Trollface

Re: Lobbyism anyone?

... not for cash though - the campaign money was wired through legal bank accounts!

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Coat

Re: Lobbyism anyone?

When were you ever not able to buy senators?

(Although this one you probably can't buy with Bitcoins...)

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Hypocrisy Inc.

U.S. banks (and financial groups) have FAR more involvement in illegal activity (in dollars) than BitCoin. For that matter, their own government 3-letter agencies have far more involvement in illegal activity - on the "wrong" side. Another flaming hypocrite from the US government.

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West Virginia?

I'd be surprised he can use an indoor toilet, much less understand anything to do with a computer.

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Re: West Virginia?

Who said he can?

After all, the US are the world leaders in ultra absorbent adult diapers. Now, if we could only convince them to wear them as headgear to stop all of the shit that dribbles out of their gobs.

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If you want to control something you...

...can try to regulate it. If you want make sure criminals use it to thrive you make it illegal.

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Isn't that factually incorrect as well?

I thought it often took an hour or more to finalise transactions as the block chain updates around the world, so much slower than cash or even BACS.

I also thought the block chain of a given coin can be analysed to discover the history of every wallet it's ever been in.

Is that right?

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Re: Isn't that factually incorrect as well?

That, too, is my understanding.

IIRC, most clients accept a transaction as confirmed after 6 confirmations by the network. Officially it is confirmed after 12, but under the hood, it is 20. Essentially, after each confirmation, it becomes exponentially harder for the block-chain to 'branch' and reverse the transaction, especially if those in control of the block-chain (every single miner, in a distributed network) are widely spread, and not in cahoots.

There is a theoretical vulnerability that if a single organisation controls more than 50% of the hashing power of the network, then they could use this to 'branch' the block-chain and control transactions. However, the largest pools (shared hashing of many individuals, with shared rewards, controlled by a single point) are some way off this, and if they were to reach the threshold, then people would notice, this would affect confidence in the network and the value of BTC woudl crash, so there is no incentive to do this.

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Re: Isn't that factually incorrect as well?

i think you are confusing the truth with the beliefs of a US senator

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Re: Isn't that factually incorrect as well?

Transactions are relayed across the network in a matter of seconds. Each node in the network checks the transaction for validity, including if the sender had enough funds to spend. They do this by looking at their own copy of the Block Chain to see what the balance was in the sender's account(s).

For buying a beer, this level of verification is sufficient - the bartender doesn't have to wait. Bitcoin "miners" take incoming transactions, like any other node, but also attempt to find special hashes (checksums) for a set of transactions. That's called a block. The block also includes the previous block's hash as data. If anyone tries to alter the contents of a block, it no longer will match it's hash. If more blocks have been produced since, you would not only have to find a matching hash for your altered block, but every one after it, because each hash is part of the data for the next block.

By design, the special hashes are so hard to find, that the entire network of miners takes 10 minutes on average to find one. Since they are all busy making new blocks to claim the block reward (worth $15,000 per block at the moment), there isn't enough computation power to generate falsified block data.

So, you can see transactions validated to a reasonable level arrive in seconds. But over time the accumulation of blocks makes the record of that transaction effectively immutable. The bigger and more important the transaction, the longer you might want to wait for more blocks (confirmations) to arrive. Six blocks (one hour) is considered good enough to buy a house with. Conversely, if you are selling a house, you might want to wait for 6 confirmations on the buyer's funds, to make sure his money is good before the purchase.

> I also thought the block chain of a given coin can be analysed to discover the history of every wallet it's ever been in.

The Block Chain is a public record of every bitcoin transaction, ever, from the creation of a given coin in a particular block, and where it's gone afterwards. But the transaction records only the amounts, and the addresses it come from and goes to. A wallet can hold multiple addresses, and most of them generate new addresses for new transactions. Wallets are just files that hold the private keys tied to an address, which allows you to sign transactions for the balance held in that address. One file can hold a lot of keys, they are only 32 bytes long each.

Which wallet controls a given address, and who owns the wallet and where the file is located is not part of the transaction, thus it cannot be deduced from the Block Chain itself. It has to be found from other data elsewhere. If I spend bitcoins with an online merchant, and give them a delivery address and name, then they know who I am. But since bitcoin addresses are not typically reused, them having my sending address is not useful, it's been emptied. I'll automatically generate a new one for the next transaction. That's much more secure than with bank credit cards, where the number stays fixed for the life of the card.

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Anonymous Coward

You missed the real story

A US Senator is actually AGAINST criminal activity! That's a sign of improvement, right?

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Headmaster

Re: You missed the real story

No.

A US Senator is _claiming_ something facilitates criminal activity on the orders of his corporate backers.

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Re: You missed the real story

No, a US senator is against personal financial freedom, preferring instead for everyone to be under the financial controls of large banks, of whom one of which is his sponsor.

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"West Virginia lawmaker says cryptocurrency mixed up in illegal activity"

Yeah, and greenbacks aren't??

Goddess give me strength!

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WTF?

But seriously folks ..

How can you ban a number ?

Wasn't there talk a while ago where somebody wanted to ban a prime number ? People ended up making T-Shirts with it on ?

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Joke

Re: But seriously folks ..

hash functions should be banned too, after all they make a foundation of all crypto currencies!

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Anonymous Coward

As mentioned in this august journal

http://theregister.co.uk/2001/03/19/dvd_descrambler_encoded_in_illegal/

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Re: But seriously folks ..

How can you ban a number ?

A DVD of child porn is also a number, albeit with a few billion digits.

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Re: But seriously folks ..

*collection of numbers, not one single number.

no clever for you!

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Interesting reading on the Senator

A quick search shows the good Senator has a degree in Information Management. So there may be some tech knowledge there. He's not up for re-election for a few more years so this isn't an election ploy. Maybe he did lose some spare change in Bitcoin... or knows someone who did. The JP Morgan campaign donation does seem to be a pointing finger.

His record indicates he doesn't always follow the party line.. so he's not necessarily one of those who thinks that if it's outlawed, no one will do it.. maybe. But I suspect it is a ploy that to regulate it and tax it which seems likely.

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Re: Interesting reading on the Senator

His degree is in 'Information Management' not actually in anything techy. For example, if I held a degree in something like 'Medical Practice Management', this would not make me a physician.

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Bitcoin requires regulation NOW!

No, not for the prevention of crime but to simple gain legitimacy.

So I'll correct the headline - any digital currency that really wants to become global and secure is going to need to find a way to prove its stability and security. That only happens in two ways:

1. through worldwide agreed regulation; or

2. through a historic (i.e. decades) proof of security and stability. So the quick way to be acceptable to the general population is through regulation.

The recent failures of exchanges and thefts don't help the public trust of digital currency. Nobody (sensible) is going to convert large sums of legitimate savings into a form that's got no guarantees.

So if you want Bitcoin to become widely accepted - an everyday currency - find some way to have it properly trusted and secured. Have it regulated.

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Anonymous Coward

I'll bet you're wrong on the bigger threat

I'll have a $1.9B bet that HSBC has laundered more money.

https://www.google.co.uk/search?q=hsbc+fine&hl=en&btnG=Google+Search&sourceid=Mozilla-search&start=0

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Pint

If bitcoins were made illegal...

How do I make mine go away? They're kinda sticky, in a legal sense.

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