OKPay suspends payment processing to all Bitcoin exchanges

Bitcoin is a reaction

to the immoral and unaccountable duopoly on online payments held by Visa and Mastercard. These two companies, who operate beyond any public accountability, get to decide who can make a living on the Internet or not. When they played their ace with Wikileaks, the world woke up to this fact and started looking for alternatives. On top of this, there then appeared the spectre of these companies wanting to sell account holders' purchase histories to advertisers, which brought payment tracking to the fore.

Bitcoin offered a way around these problems. With Bitcoin, anyone can get paid, whether the banking powerbrokers like it or not. With Bitcoin, you can keep your purchase history to yourself. And it is this that the big payment processors don't like - the loss of control, and the loss of access to market data.

Governments and LEAs would be less concerned because in the end, you still have to convert Bitcoins back into "real money" to realise its value. At which point your local revenue service or LEA can tap you on the shoulder and ask "Excuse me, where did you get all this money from?". They can hit you for tax on it as soon as you do so. And simply saying "I converted it from Bitcoins" won't cut it - you still need to have an audit trail. If you claim to have "mined" the Bitcoins, you might need to show you have the computing infrastructure to do this. If government agencies really want to dig, they can find out where the money ultimately came from if they really want to. Their only interest is enforcing taxation and money-laundering laws. It is the payment processors who are really being hurt by Bitcoin, and they thus have an incentive to lobby governments to do something about it.

So you can bet that it is more companies like Visa, Mastercard and Paypal behind this anti-Bitcoin push than any government tax department or LEA.

Oh dear

That's what I get for my "meh" reaction to Dwolla. I'm now hit by the OKPAY suspension. This is getting stupid. Can't they just not process US Citizens at all? And OKPAY, unlike Liberty Reserve, does ask for official ID.

Sheesh!

Where is Bitcoin?

I wonder if Bitcoin will find it's the opposite to normal internet businesses, where you can pick your legal jurisdiction? This is just a thought, I claim no legal knowledge.

But could the US courts not decide that some portion of all Bitcoin transactions take place in the USA because of the block-chain mechanism where all transactions are processed by the whole pool of computers that are busily mining away? In which case all countries could take the same attitude. Thus Bitcoin would be subject to regulation by everyone, rather than just picking somewhere with friendlier regulation and being sited there.

Although that may not matter, given there is no single person in charge - but you could have the bizarre situation where anyone in the world making Bitcoin transactions would be subject to the financial oversight of whichever governments chose to take an interest, and suddenly international travel could become quite complicated, without getting arrested every five minutes.

Otherwise the US government would have to resort to chasing the payment processors used by the Bitcoin exchanges, if they choose to try to have a go at it. Which is a bit like playing whack-a-mole.

My personal suspicion is that none of this will happen. Bitcoin will likely go back to being a tiny niche activity pursued only by enthusiasts, and most people will forget about it. Even if it was the best idea in the world, there's a lot of competition out there from other currencies, which are backed by inertia, governments, economies of scale, tradition, and expectation. As I think it's a pretty bad idea, subject to many problems, I suspect that a few more public oopses will destroy any credibility - now that the media are likely to notice them.

Republic credits?

Republic credits are no good out here. I need something more real.