Bitcoin soon to enter early adopter phase

[Adeptus]

Re: Bitcoin soon to enter early adopter phase

And it's crashing again today... down to $75 as of right now. Oh the MSM is going to have a field day with this. I hope we get enough technical damage to push the mainstream away from this another few months, so I can get my bitcoins while they are cheap

Meanwhile, over at Mt.Gox... it's amateur hour...

Mt.Gox twitter feed:
"Trading is suspended until 2013-04-12 02:00am UTC for market cooldown. Once back trading will be also faster."
"We are upgrading our database. Trading will resume afterwards. "
"Maintenance Over however we are now under a DDoS attack"

[astonas]

Re: Bitcoin soon to enter early adopter phase

I don’t see how bitcoin prevents or limits preference of one good over another. Perhaps the author didn’t go to a bitcoin shopping website and see that each good or service had a unique price, not unlike how things are priced in fiat. In fact, most places selling goods for Bitcoins first price things in their local currency, then covert it and place the price sticker in Bitcoins – as much as they may not like to admit this.

Bitcoin limits the expression of preference for one good over another simply by virtue of the fact that not every item can be exchanged directly for bitcoins. The dollar is good for, as it says, "all debts, public and private". It does not limit preference because it is acceptable as a means of exchange with every vendor in the United States, including the US government itself, which requires taxes to be paid in dollars.

One can debate about whether this is an abuse of government power, of course, and others have done so at length. But when comparing dollars to bitcoins, there is no doubt that I can spend dollars at more places than I can bitcoins, thus it is less limiting.

[Mn_Mark]

Re: Bitcoin soon to enter early adopter phase

The author is judging bitcoin as if the rule of law is enforceable upon its users – it is not, for those that want to masquerade themselves through the proper anonymity add-on tools. Once they are properly anonimized, traceability is nearly impossible!

What percentage of the population are capable of understanding what the phrase "proper anonymity add-on tools" even means, much less actually doing it? I doubt even 1% of the population is tech-savvy enough to do that.

Bitcoin is something that young techno-geeks get excited about. It is incomprehensible to the majority of people - many of whom don't even own a computer - and it is never going to get used by a majority of the population.

Unless you manage to piss off a large portion of your citizenery, and they choose to use Bitcoins anonymously, and say F’U to taxes all together! Paying no taxes, is much preferred to any other currency that imposes taxes by design.

You are living in a fantasy world if you think the government is going to allow Bitcoin users to avoid paying taxes. Remember the government is the one with the prisons and guns.

And that "large portion of [the] citizenry", again, is basically techno-geeks and a few get-rich-quick people looking to ride a new bubble to easy wealth. It's never going to be a "large part" of the citizenry.


All the government has to do is to announce that exchanging Bitcoins for dollars or vice-versa is a money-laundering activity subject to fine and imprisonment, and 99% of the people using it will panic out of it. The people left using it will be the same kind of people who hack for Anonymous - numbered in the dozens or hundreds at most.

The feasibility of Bitcoin relies entirely on being able to exchange them for dollars. All the governments of the world have to do is declare that Bitcoin exchanges are illegal money-laundering entities. I suspect that the people running the exchanges have no desire to risk prison in order to provide a way for techno geeks to exchange dollars for Bitcoins. And the governments of the world will find agreement that they don't want any meaningful part of the economy moving beyond their ability to tax and control it.

Adeptus, if the government declares it a federal crime to exchange Bitcoins for dollars, would you personally continue to do it? Would you take the risk of going to prison for it? Are you that certain you won't be caught at it? Very few people have the stomach to do that.

And the government WILL outlaw in one way or another. It is simply not going to sit by and watch its ability to milk and control the taxpaying population disappear.

If I were you I would cash out NOW. Get out while you can still get something for them.

[verdo]

Re: Bitcoin soon to enter early adopter phase

The problem I have with bitcoin is that it's way too volatile to be used as a currency. I mean, imagine if the dollar was up 50% against every currency one day, then down 60% against them just a few days later. Even with all the kiddy games that Japan is playing right now, it took a few months before they could bring the Yen down like 15% or so against the dollar. That bitcoin stuff is being pumped all over the place (well, all over the interweb at least) and there's pratically no way of putting a dollar value on them. I'm not a dollar bug by any means, but I feel much better holding my wealth in dollars over bitcoin, because I at least know where the dollars come from, and who creates it. Bitcoin is just 1's and 0's in cyberspace created by some hacker(s). Not to knock on people who like the stuff, or bought in early, but I just don't see its viability. The only area where I can see it being somewhat useful is if you are stuck in a country with extreme capital controls, (like Cyprus or something), you can leave the country with a good portion of your wealth on a flash drive and none of the border patrol would know the wiser. I just wouldn't keep it on there for too long

[don]

Re: Bitcoin soon to enter early adopter phase

[c1ue]

Re: Bitcoin soon to enter early adopter phase

The problem I have with bitcoin is that it's way too volatile to be used as a currency.

To be fair, this is what currencies used to be like before central banks. Which is why there was a gold standard.

Among the problems with bitcoin not listed above is that it is a small and relatively fixed supply. Someone with say, $10M could radically distort the market very easily simply because the vast majority of bitcoins don't circulate, and there is no way to stop someone with enough money to distort the short term value of bitcoins via outright pump and dump.

[don]

Re: Bitcoin soon to enter early adopter phase

from Zerohedge . . .



In an amusing development, one of the key alternative BitCoin exchanges, BitFloor, has just announced it is forced to shut down immediately. It is amusing, because one of the primary reasons attributed by the BTC pundits for the recent crash from $260 to $50 was errors and faults in the primary bitcoin exchange MtGox. Well, with alternative exchanges forced to shut down, this may mean the only "faulty" marketplace will sees it monopoly power increase further. It is also ironic because as BitFloor disclosed it "can no longer provide the same level of USD deposits and withdrawals as we have in the past." Whatever happened to decentralized, and unencumbered by legacy fiat currencies?



The Verge has some more:

Bitcoin exchange BitFloor is closing its doors, halting trading and announcing that it will return everyone’s funds. In an announcement on its main site, the company’s founder, Roman Shtylman, says that "due to circumstances outside [BitFloor’s] control" it "must cease all trading operations indefinitely." More specifically, BitFloor says that because its US bank account is closing it won’t be able to provide the same level of dollar deposits and withdrawals that it has been up to this point. The news comes after weeks of DDoS attacks and technical problems at leading exchange Mt. Gox and a roller coaster ride of price fluctuations that saw Bitcoin tank from a high of over $200 back down to a low below $70. The news was reported by The Next Web.

Back in September, BitFloor was hit with a $250,000 theft after an attacker got access to an unencrypted backup set of keys for the exchange’s wallet — the software through which people (and organizations) access and transfer their coins. The exchange managed to get back online within a few weeks, with Shtylman announcing his intention to repay the stolen funds.

Overall, BitFloor is tiny compared to Mt. Gox — it does less than four percent of that exchange’s trading volume — but it represented an important alternative in the highly concentrated market. At this point it’s still unclear what exactly happened with BitFloor’s US bank account that required such a speedy exit, but a Reddit user points out that the exchange is registered with FinCEN — the US Treasury Department’s Financial Crimes Enforcement Network — indicating that everything was seemingly above board with the US government. We’ve reached out to Bitfloor for comment on what precipitated the closure, and will update if and when we hear back.

In other news, and from the main, and apparently only remaining BitCoin exchange we get:

• Dear Mt. Gox customers. We are currently experiencing a downtime and will update ASAP. Apologies for the delay.

With the electronic market in limbo, at least demand for physical BitCoins appears to be quite solid... Oh wait.

[Milton Kuo]

Re: Bitcoin soon to enter early adopter phase

Here's a news story coming out of Canada where their tax collection agency is stating that any capital gains on Bitcoin are not tax-exempt. I see this as a first step by sovereign nations in deterring large numbers of people from conducting transactions in Bitcoins. They'll fight tooth and nail to keep their monopoly on currency.

http://www.cbc.ca/news/canada/story/...tcoin-tax.html

At this point, the only real benefit I see Bitcoin having over gold is that Bitcoin can be very difficult to confiscate and can be moved across borders much more easily than gold. Bitcoin's volatility also can be seen as a benefit for speculators.

[Adeptus]

Re: Bitcoin soon to enter early adopter phase

Bitcoins could only be easily taxed when they are converted in back into fiat - admittedly, I believe the vast majority of bitcoin users/speculators still do this, for now. However, good luck trying to tax somebody who moved their $ to bitcoin traded it/sold it at a higher value for other goods or other alternative crypto-currencies (i.e. doing forex equivalent trading but in crypto currencies - see BTC-E.COM - a popular Russian exchange or vircurex.com. FYI Mt.gox #1 exchange will soon support litecoins and possibly other crypto currencies. Note: I am not endorsing any of these exchanges). Not having to go back to fiat is not as ridiculous as it sounds. Bitspend.net allows you buy just about anything online with bitcoins, including all major ecommerce sites that don't support it (yet). We need more bitspends though, this ability is too concentrated right now, like mtgox for exchanges. So this option aside, bitcoin would have to be at least 100x more popular than it is now for people to really be able to never have to get out of and back into fiat. We may get there, but I think it's at least 2-5 years away at this point. I think what's needed is at least a few large online entities (i.e. ebay, amazon, bestbuy, etc) to adopt bitcoin, if this were to happen, we'd get a massive snowball effect of everybody else going into it. What's preventing this IMHO is clear government regulation. The Canadian Revenue Agency is acting a bit hypocritically here... 'Hey, we don't recognize bitcoin as a legit currency, but if you make money by investing in it, we're taxing you!' I view bitcoin as the napster of crypto currencies. It's not perfect, but it's a damn good start, and I am seeing people already working on alternative crypto-currencies in large part based on bitcoin (not a complete list) that may eventually address some or many of its shortcomings. Pandora's box has been opened, even if 'they' manage to crash/shutdown bitcoin, it's too late now, people have seen the light, and they will simply come out with an improved bitcoin version sooner or later... even without any shut down as per above, alternatives are being devised. After all, it's not like the global banking system is inspiring more confidence since 2008, quite the contrary (The World is 'Fixed' - Taibbi). I see a new crypto-currency pop up every few weeks now. Think about that for a minute. When was the last time that fiat currency rules were significantly reformed? Now compare that to crypto-currencies, where significant alternative options may pop-up every other month, and in a Darwin-like fashion, only the strongest will survive, but leaving us with an ongoing evolutionary trend of ever more desirable currencies.

[*T*]

Re: Bitcoin soon to enter early adopter phase

It is still amateur hour at the exchanges. Only bitstamp and Mt Gox really did the AML/KYC thing properly.

[*T*]

Re: Bitcoin soon to enter early adopter phase

Here's a news story coming out of Canada where their tax collection agency is stating that any capital gains on Bitcoin are not tax-exempt. I see this as a first step by sovereign nations in deterring large numbers of people from conducting transactions in Bitcoins. They'll fight tooth and nail to keep their monopoly on currency.

http://www.cbc.ca/news/canada/story/...tcoin-tax.html

At this point, the only real benefit I see Bitcoin having over gold is that Bitcoin can be very difficult to confiscate and can be moved across borders much more easily than gold. Bitcoin's volatility also can be seen as a benefit for speculators.

As with any other barter transaction, or trading gold for that matter, I see no special reason why bitcoin transactions would be tax exempt.

[Milton Kuo]

Re: Bitcoin soon to enter early adopter phase

As with any other barter transaction, or trading gold for that matter, I see no special reason why bitcoin transactions would be tax exempt.

Agreed. However, having to pay taxes takes away one of the stated advantages of Bitcoin: avoiding the inflation tax. If Bitcoin were a stable currency, the capital gain is nothing more than currency depreciation avoidance. By taxing this inflation avoidance, Bitcoin is not much better, if it even is better, than gold, silver, or any other currency against currency depreciation.

[*T*]

Re: Bitcoin soon to enter early adopter phase

Agreed. However, having to pay taxes takes away one of the stated advantages of Bitcoin: avoiding the inflation tax. If Bitcoin were a stable currency, the capital gain is nothing more than currency depreciation avoidance. By taxing this inflation avoidance, Bitcoin is not much better, if it even is better, than gold, silver, or any other currency against currency depreciation.

That's true of any asset in the UK (except your primary residence).

If it's as good as gold re. currency depreciation, but I can make backups, and send it over the internet, and it costs zero to store, I consider that pretty cool.

[c1ue]

Re: Bitcoin soon to enter early adopter phase

I think this is one issue which has yet to surface regarding gold: government warrants

Shot across the bow or feeble government motioning?

http://www.theregister.co.uk/2013/05..._gox_us_court/

The Department of Homeland Security has frozen an online trade route between US citizens and MtGox - the world's largest exchange of crypto-currency Bitcoin.

The move will be interpreted as an opening skirmish in a battle to control the electronic cash, which has exploded in popularity and so far avoided regulation by governments.

The feds confirmed an investigation is underway after it emerged a "seizure warrant" was filed against Dwolla, a US-only mobile payments service used by Bitcoin traders.

Netizens can exchange dollars and bitcoins on MtGox via a Dwolla account held by Mutum Sigillum LLC. The warrant against the Mutum account effectively halted transfers of money between the popular bitcoin exchange and Dwolla users.

Iowa startup Dwolla admitted yesterday it can no longer process cash payments to MtGox's intermediary Mutum Sigillum. Any cash awaiting transfer between Dwolla and bitcoin converter MtGox will be refunded.

This morning Mt Gox released this statement:

Like many who have contacted us, MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. We take this information seriously. However, as of this time we have not been provided with a copy of the court order and/or warrant, and do not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.

Nicole Navas, a spokesperson for the US Immigration and Customs Enforcement (ICE) department, today told CNET: "In order not to compromise this ongoing investigation being conducted by ICE Homeland Security Investigations Baltimore, we cannot comment beyond the information in the warrant, which was filed in the District of Maryland earlier today."

The implications of this action are not yet clear, but it could indicate the beginning of a long battle to bring Bitcoin under the rule of US law. Just last week, America's Commodity Futures Trading Commission confirmed it was looking into Bitcoin and deciding whether regulating the e-cash was possible - or necessary.

In March, the US Treasury said any firms dealing in the virtual currency would be considered "money services businesses" just like any other, which means they must hand over transaction information to the government and work to prevent money laundering.

A denial-of-service attack on MtGox in April followed a spectacular crash in the currency's value which saw over $100 wiped off the value of each crypto-coin.

More than $1bn worth of Bitcoin is currently in circulation, with well over half of all transactions passing through MtGox. ®

[*T*]

Re: Bitcoin soon to enter early adopter phase

Denninger...
(The guy is a genius.)

Not sure if you're serious?