Ask Slashdot: Should Bitcoin Be Regulated? 385
Nerval's Lobster writes "Federal regulators are starting to make noise about Bitcoin, the digital currency that's gained in recognition and value over the past few years: the Treasury Department's Financial Crimes Enforcement Network (FinCEN) is offering up 'guidance' for digital currency and those who use it as part of commerce. But the Bitcoin Foundation, which is devoted to standardizing and promoting the currency, doesn't like that idea; as Patric Murck, the organization's general counsel, wrote in a March 19 blog posting: '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.' If Bitcoin continues to gain in value, it could spark a rise in virtual currencies—and force some very interesting discussions over regulation. But here's the question: would regulation actually be good for Bitcoin, if it made organizations and businesses more comfortable with using it as a currency?"
White paper on EXACTLY what a bitcoin is, please? (Score:2, Interesting)
I've looked, didn't find it. I just found some vague mumbo about cryptography with a ton of loaded buzzwords.
I want specifics.
1.) What is a bitcoin, EXACTLY?
2.) How divisible is a single bitcoin?
3.) All the specifics of any relevant protocols.
Comment removed (Score:4, Interesting)
Bitcoin is not exempt from any law or regulation (Score:1, Interesting)
I'm not sure where people got the idea that bitcoin is not regulated. It is. And regulators will let everyone know that very soon, especially now that everyone is pulling their money from European banks in favor of bitcoin.
Not if based in the USA (Score:4, Interesting)
A more pertinent question? (Score:5, Interesting)
Perhaps a more pertinent question would be this - if an international currency is to be regulated, who should be in charge of the regulation? Who has jurisdiction?
In science fiction (at least, in games, not so sure about literature) we often see the term 'credit' used to refer to some vague internationally accepted currency. But if such a thing existed (and bitcoin might be heading that way), who sets the rules on it? if it's 'every country', then the concept breaks down and the currency becomes unworkable as you start having to track too much to use it. If it's the UN? I don't see the US ever accepting that.
So that leaves the only workable answer as the originators or the currency.
Regardless, different nations can tax transactions in the currency with the same rules they use for domestic currencies. If the currency is processed by a domestic bank or financial institution, they'd have to process it in much the same way as they would any other transaction. So it seems the simplest way to handle these things is just to make it clear in the law (if it isn't already) that all transactions, regardless of currency, must adhere to the same rules.
inevitably going to happen (Score:5, Interesting)
Exchanges have been compromised, customers have lost money, basic protections are absent. It is used freely for the silk road drug trade, hiding money from governments and evading taxes. Can anyone seriously make the argument that it won't be regulated?
I owe you (Score:5, Interesting)
Money is a "I owe you" As long as we play the game and use fiat money the governments can regulate but there are so many kinds of alternative currencies becoming more popular.
It is quite common to do a plumbing job for a mate and have the mate come around one weekend to build a fence. I owe you. Currencies can take so many forms and those that are trusted will become main stream.
After I have done a plumbing job for my mate he owes me building a fence. However, I don't need a fence but my neighbor who is a baker does. What I do need is bread. I can go to the baker and pass on my mates debt of building a fence to the baker in exchange for bread but if my mate has a bad reputation and the baker doesn't trust my mates promise then there can't be a deal.
Governments can only regulate through compulsion. Fiat money that may not be refused as a legal tender. But with bitcoin, they don't appear in the game at all. I like that.
Re:The bubble is bad (Score:5, Interesting)
Bitcoin will surely come down from current levels. That's because, there is a constant downward pressure on price, due to mining.
Energy spent on mining is probably the biggest part of total costs of running Bitcoin network. Also, this energy is easy to predict, because energy spent on mining is a simple function of Bitcoin price and average total block awards. This is because mining has very low barrier of entry, and this ensures that as long as it is profitable, new miners will join, until the most inefficient miners are at the break-even point. And the most profitable miners will try to expand their operation.
This makes it that each block costs somewhere around (0.5 * block award * price) to (0.75 * block award * price). And since awards are paid in Bitcoins and electricity is paid in local currencies, this makes the situation that all mining costs hit the exchanges every day, and push the price down.
This can currently be estimated to be $150.000 to $250.000 each day (using price of $90), and this amount of fresh money must enter the exchanges every day, or the price will go down. Currently, this money comes in from "suckers".
At this point we have a temporary delay in the "mining difficulty follows price" process , because of the change in technology and delays in deliveries of ASIC miners, so mining is very profitable at this point, and this reduces the selling pressure on exchanges. This, plus block award halving is why we have this current Bitcoin bubble.
And this bubble will end soon, because of the process described above.
Re:your missing the point (Score:5, Interesting)
No. Bitcoin was created as a plaything "fun with crypto" proof-of-concept and was never intended to be used for anything more. A bunch of people who wanted to get away from the current system (both those with hopes of striking it rich as a early adopter and those who needed a new currency for less-than-legal activities online after e-gold got shut down) latched on and that's where we are at now.
The bitcoin protocol is showing its weaknesses every day, particularly when it comes to scaling up to higher transaction volumes. The blockchain is getting bloated by SatoshiDice which is a nearly perfect transaction spamming system and the bugs in the older clients which nearly forked the blockchain a while ago mean there is presently a hard limit to the number of transactions registered every 10 minutes. Combined with the fact that some miners set the number of transactions they process if they hit a block to be very low in order to try and beat out others (smaller block propagate ever so slightly faster) and there is now a very real delay in transactions going through: more than enough to scuttle any chance to use bitcoin for anything other than a curiosity and which will only get worse.
Government doesn't need to regulate bitcoin: it will kill itself.
Re:Confused (Score:5, Interesting)
Who wants to have control over this are people like Chuck Schumer. They get off on telling people what to do. If some dumbass wants to get high on weed, Chuck Schumer wants to put him in jail. Chuck Schumer also foolishly asked the DOJ to seize the Silk Road's domain name. Chuck Schumer and his kind don't like bitcoin because they can't control it. They can and do control mastercard, visa, and paypal. If the US government doesn't like you enough, they'll make sure nobody in the world can pay money to you electronically, even if they aren't trading in US currency.
As for banks? Banks will always be around, period. Besides, I'd rather banks exist than not. In fact, I know this is going to be controversial, but those scam check advance and title loan agencies should be around too. Why? When stupid people get desperate, they make stupid moves, which includes stupid borrowing choices. It's either they go to these companies, or they go to loan sharks. Loan sharks answer to nobody but themselves, and if these stupid people borrow from them, things get much worse. Unlike loan sharks, scam companies can't rough up your wife, break your legs, or shoot up your house. They don't fund organized crime, and it actually is possible to pay them off. When you think you've paid off a loan shark, chances are he says you were a minute too late to the meeting and you owe him double interest. Repeat forever. Loan sharks are NOT subject to usury laws.
Not only that, but regular people make money off of banks. I do it all the time. If you ever need to start a business, often times banks are the best source of quick capital. Need to buy a home? Same thing. I rather like it that banks exist.
Re:Knock it off with that quote (Score:3, Interesting)
Simple: limit regulation to the strict protection of private property rights.
Unlimited liberty requires security of oneself and one's property. Government should simply be the collective use of force in defense of private property rights. Bastiat had it figured out over a hundred years ago: http://bastiat.org/en/the_law.html [bastiat.org]
as a bitcoin expert... (Score:3, Interesting)
Re:your missing the point (Score:5, Interesting)
there is now a very real delay in transactions going through: more than enough to scuttle any chance to use bitcoin for anything other than a curiosity and which will only get worse.
Nonatomicity of transactions (caused by delays in processing, for example) will result in you being able to pay for two products with the same bitcoin. Credit card transactions are atomic, and besides c/c does not transfer assets. BC transactions do that.
While an Internet seller may be able to detect the failure in time and refuse to ship, a brick-and-mortar store cannot do the same; so if several people walk in with copies of the same wallet and buy a $1,000 TV at the exact same time their transactions will be registered.
The official solution is to wait for several (six) confirmation blocks. But that can take 10 minutes on average - and more if BC sees more use. Do I want to wait 10 to 30 minutes at the store until my payment goes through? No way. Those [mythical?] BC users who buy coffee with their BCs, do they wait 10 minutes before they are given a cup?
hell no. (Score:4, Interesting)
Regulation doesn't stop corporate elite from robbing us blind and committing all sorts of fraud with our money.
Fuck regulation, all it gets us is smoke and mirrors reassurances that don't have any teeth.
I'd say that bitcoin is better off staying wild and untamed. At least that way people KNOW not to be stupid with who they trust.
With dollars, people get lulled into a false sense of security.
With bitcoins people are naturally paranoid and are much more careful.
Re:here we go again.... (Score:4, Interesting)