Feds shut down Bitcoin options and futures trading site

CFTC had previously told firms that they needed to register, comply with US law.

Read the whole story

 

[Big Wang]

Fair. There's a large amount of compliance related issues when it comes to trading financial derivatives (which this is). Just because it's bitcoin doesn't mean that related financial asset shouldn't be regulated by the government.

 

[The Ugly]

Bitcoin is unquestionably a fiat commodity. It has aspects of a currency but is definitely not a system of money. Bitcoin value changes often, and quickly, and the value is determined by a market (which includes extraction of new bitcoins via mining). Coal is a commodity, corn is a commodity, and gold is a commodity, but these have uses outside the value in people's minds. Bitcoin is inherently valueless unless people give it value, hence "fiat commodity." Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

This is a good step if you're a bitcoin proponent. We've seen many bitcoin exchanges go under, some regulation here will legitimize and add a degree of safety to this process. Regulation by the CFTC may be anathema to the crypto-anarchy crowd, but after all the high profile exchange collapses a degree of security is nice, and certainly would make me more willing to invest in bitcoin.

Additionally, derivatives trading always must be thought of in the context of incentives. Buying a derivative can be thought of like buying insurance. (Yes, insurance is a form of a derivative, but most are more familiar with insurance that most other financial derivatives). You're making a bet and that bet might pay out.

With insurance you aren't allowed to buy insurance that someone else's house will burn down, because obviously the incentives are very broken there. With derivates and other financial swaps, generally you are allowed to do this. So some regulation is needed to make sure that a bitcoin exchange doesn't, for example, collapse the value of the bitcoin temporarily to make money on their derivatives.

 

[Gilded.lady]

The writing has been on the wall and they ignored it to their detriment. Really, they were lucky to get any kind of hint at all. It's no surpise the CFTC struck them down when they didn't take it.

 

[allgood2386]

The Ugly[/url]":20lpwbwq] Bitcoin value changes often, and quickly

Super small nit picky thing but I don't think that is a fair point. At larger volumes you'd expect that to solve itself no? I can't imagine there are (and this is a TOTAL 100% guess, if anyone has actual data or a way to find out I'd love to hear it) more then a few tens of thousands people actually using the currency so when some rich twins come in and buy up 5% of the market or some silly number it's bound to cause fluctuation no?

 

[lomifeh]

A lot probably don't realize a big part of what the CFTC does is make sure that records exist for all transactions that occur in a tamper-proof manner. They are heavily focused on reporting of trades and making sure no shenanigans occur. It still boggles my mind why anyone would think they can avoid regulation while trading what is a financial instrument. The best they could hope for is that their customers are given informed investor status or the equivalent so they have less regulation.

All that said Books & Records will always apply for anyone regulated by the CFTC or SEC.

 

[Rindan]

I don't think this matters all that much in the grand scheme of things. In US jurisdictions it might mean that there is a bit more accountability if someone tries to flip a scam, but in the end Bitcoin is always going to be regulation resistant. Bitcoin doesn't care about national borders and the transactions are as close to anonymous as a currency transaction can get. If you want to do futures or options trading in Bitcoin, someone is going to be there to support it regardless of its legality in any particular jurisdiction.

It will actually kind of be interesting to see how markets develop. If there are well regulated companies under US jurisdiction to offer up Bitcoin financial services, utterly unregulated companies under other jurisdictions, and every Bitcoin user has the option of both, which do they choose? Do the regulations impose so much extra cost that people flee to the unregulated markets, or do people move towards the certainty and safety of US federal oversight? Normally folks have no choice as to the level of regulation they want to endure, but now they do. In the short term people are going to pick based upon their guts, but in the long term when both the regulated and unregulated markets have had a chance to play out and fail or not, it will be interesting to see where the market ends up on balance.

To me, the really interesting stuff to come out of Bitcoin is seeing people grapple with the idea of building trust (something essential for market transactions) in an anonymous and unregulated system. In the black market, Bitcoin has found answers that are arguably better than the physical world analogs, but that is competition between two forms of unregulated (and illegal) markets. Normal markets are an entirely different beast though, and it will be interesting if folks can devise methods for building trust outside of regulation, or if the trust built through regulation wins the day. I don't have any Bitcoins myself and have little interest in getting any, but I really do enjoy seeing how it deals with various challenges.

 

[sniii]

JerryLove[/url]":3eqham31]

Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Like a baseball card?

Are you saying that we should replace dollars with baseball cards? Or that it would be silly to replace dollars with baseball cards?

 

[lomifeh]

JerryLove[/url]":106tlrka]

The Ugly[/url]":106tlrka]Bitcoin is unquestionably a fiat commodity.

I don't think so.

"Commodity" - "a raw material or primary agricultural product that can be bought and sold, such as copper or coffee."

Doesn't seem to fit that at all.

And while "fiat" might fit, lets look at "fiat money" to understand how that might apply.

"Fiat money is currency which derives its value from government regulation or law."

So since bitcoin does not derive its value from regulation or law, it is not fiat; and since it is not a material or product, it's not a commodity.

Bitcoin value changes often, and quickly, and the value is determined by a market (which includes extraction of new bitcoins via mining).

Like a baseball card? Or money in a volatile currency.

Bitcoin is inherently valueless unless people give it value, hence "fiat commodity."

Dollars are inherently valueless... so are non-industrial diamonds. Though the latter is a commodity.

Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Like a baseball card?

With insurance you aren't allowed to buy insurance that someone else's house will burn down, because obviously the incentives are very broken there.

Sounds exactly like shorting a stock.

So some regulation is needed to make sure that a bitcoin exchange doesn't, for example, collapse the value of the bitcoin temporarily to make money on their derivatives.

Who regulates the regulators?

How does this actually prevent an exchange in Sudan from doing exactly that?

Commodities in terms of trading are not just agricultural products. Precious metals, oil, a lot of things are commodities beyond agriculture. The real defining nature is if they are fungible though. Bitcoin is handled closer to forex or foreign exchange which is basically currency trading.

To make it a little more confusing there is the concept of commodity money which I think the OP was going for. It's not a great fit though since commodity money is based on something like gold or another good. I'd not consider it fiat currency though.

 

[Buddha Buck]

I'm not sure it matters, in general, if Bitcoin represents a traditional commodity or not. Here, the issue wasn't they buying, selling, or transfer of Bitcoin, but rather the buying and selling of Bitcoin derivatives (options, futures).

The CFTC regulates FX derivatives as well, so if I wanted to buy a put option on GBP or a futures contract on JPY in the US I'd have to go through an exchange regulated by the CFTC. It is reasonable to me that if I wanted to do the same with XBC, I should go through a CFTC-regulated exchange.

It wouldn't surprise me if, as far as the CFTC was concerned, GBP meets their definition of a commodity.

 

[bb-15]

JerryLove[/url]":3vn24ooj]

The Ugly[/url]":3vn24ooj]Bitcoin is unquestionably a fiat commodity.

I don't think so.

"Commodity" - "a raw material or primary agricultural product that can be bought and sold, such as copper or coffee."

Doesn't seem to fit that at all.

What can be considered a commodity has been changing over time.

The term also describes financial products, such as currency or stock and bond indexes...

More recently, financial products such as foreign currencies and indexes have been called commodities.

http://financial-dictionary.thefreedict ... /Commodity

edit; to focus on the definition of a possible commodity

 

[cpast]

sniii[/url]":16a1h29r]

JerryLove[/url]":16a1h29r]

Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Like a baseball card?

Are you saying that we should replace dollars with baseball cards? Or that it would be silly to replace dollars with baseball cards?

I don't think he's saying either of those things. He's saying that "fiat" doesn't mean "backed only by people's belief in its value," it means "accepted by government order." Bitcoin isn't accepted by government order.

Just about everything is valuless unless people give it value. Bitcoins are, diamonds mostly are, gold mostly is, dollars are.

 

[Fatesrider]

lomifeh[/url]":18qqthzz]

JerryLove[/url]":18qqthzz]

The Ugly[/url]":18qqthzz]Bitcoin is unquestionably a fiat commodity.

I don't think so.

"Commodity" - "a raw material or primary agricultural product that can be bought and sold, such as copper or coffee."

Doesn't seem to fit that at all.

And while "fiat" might fit, lets look at "fiat money" to understand how that might apply.

"Fiat money is currency which derives its value from government regulation or law."

So since bitcoin does not derive its value from regulation or law, it is not fiat; and since it is not a material or product, it's not a commodity.

Bitcoin value changes often, and quickly, and the value is determined by a market (which includes extraction of new bitcoins via mining).

Like a baseball card? Or money in a volatile currency.

Bitcoin is inherently valueless unless people give it value, hence "fiat commodity."

Dollars are inherently valueless... so are non-industrial diamonds. Though the latter is a commodity.

Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Like a baseball card?

With insurance you aren't allowed to buy insurance that someone else's house will burn down, because obviously the incentives are very broken there.

Sounds exactly like shorting a stock.

So some regulation is needed to make sure that a bitcoin exchange doesn't, for example, collapse the value of the bitcoin temporarily to make money on their derivatives.

Who regulates the regulators?

How does this actually prevent an exchange in Sudan from doing exactly that?

Commodities in terms of trading are not just agricultural products. Precious metals, oil, a lot of things are commodities beyond agriculture. The real defining nature is if they are fungible though. Bitcoin is handled closer to forex or foreign exchange which is basically currency trading.

To make it a little more confusing there is the concept of commodity money which I think the OP was going for. It's not a great fit though since commodity money is based on something like gold or another good. I'd not consider it fiat currency though.

My question is less what bitcoins are than whether or not they will survive at all.

The whole point to Bitcoin seemed to be to get outside of the regulators. People could exchange them for goods and services completely off the grid. Is that still the case with regulation? And if so, will the fact that they are being regulated at all (even if there is no difference in all the stuff the crypto-currency do not track me types care about) cause them to be avoided anyhow because "NSA" or something?

TL;DR: Will legitimizing Bitcoins with (any amount of) governmental oversight and/or regulation cause them to loose their allure for the people who most want to use them?

Personally, I see Bitcoins more as a Forex investment commodity than a basis for direct currency exchange for goods and services. Buy and sell them as an investment, then use the money gained from their sale to buy things. Sort of like exchanging Dollars for Pesos before buying what costs Pesos. Using Bitcoins to buy something that costs Pesos seems risky to the seller unless they immediately sell them to recover their value at the time of sale. The way I see it, that's like using shares of Frozen Concentrated Orange Juice to buy something from Amazon.mx.

The frequent incidents of volatility in Bitcoin prices makes using them as a direct form of currency rather problematic for everyone, IMHO. But they're obviously well suited to be a commodity in which folks can invest if they so choose.

 

[edwardangle]

I've never been able to understand this attraction anarchists and don't tread on me types have to Bitcoin.

The blockchain lets not just the government but anyone who cares track your every monetary move.

It won't be hard over time for government and business to start putting names to wallets. The government could even force you to report this information.

Sooner or later there will be a public database.

"Oh look, John transfered 15 dollars worth of Bitcoin into the wallet of that porn site."

 

[Zergfest]

edwardangle[/url]":2o23os1s]I've never been able to understand this attraction anarchists and don't tread on me types have to Bitcoin.

The blockchain lets not just the government but anyone who cares track your every monetary move.

How does the wallet address get associated to a person, exactly? (That's aside from the idea of bitcoin tumblers etc.)

It won't be hard over time for government and business to start putting names to wallets.

How exactly? (Other than the NSA et al, but that's rather outside the domain of this discussion. Completely pervasive surveillance is difficult to defeat, but I suspect the pendulum is swinging back to improved privacy.)

The government could even force you to report this information.

Sure...like they force people to report tax related information. And we all know that everyone reports all their tax related info...right?

Sooner or later there will be a public database.

Sooner than that Dash (formerly Darkcoin) and other alternatives will be pervasive.

 

[edwardangle]

Zergfest[/url]":3qy9jn3n]

edwardangle[/url]":3qy9jn3n]I've never been able to understand this attraction anarchists and don't tread on me types have to Bitcoin.

The blockchain lets not just the government but anyone who cares track your every monetary move.

How does the wallet address get associated to a person, exactly? (That's aside from the idea of bitcoin tumblers etc.)

It won't be hard over time for government and business to start putting names to wallets.

How exactly? (Other than the NSA et al, but that's rather outside the domain of this discussion. Completely pervasive surveillance is difficult to defeat, but I suspect the pendulum is swinging back to improved privacy.)

The government could even force you to report this information.

Sure...like they force people to report tax related information. And we all know that everyone reports all their tax related info...right?

Sooner or later there will be a public database.

Sooner than that Dash (formerly Darkcoin) and other alternatives will be pervasive.

If you are an American and you're willing to cross the IRS you are a brave, brave man. Or daft. Probably that.

 

[JustQuestions]

Big Wang[/url]":jtq6fiuy]Fair. There's a large amount of compliance related issues when it comes to trading financial derivatives (which this is). Just because it's bitcoin doesn't mean that related financial asset shouldn't be regulated by the government.

I think we all need to be careful, here.

Bitcoins are essentially just data, so in a way the ruling can be used to set a precedent that any data can potentially be a commodity.

This sounds far fetched, but it's exactly the kind of logic the Feds use all the time. Find a legitimate problem case, and attack it using broad language. Use that as a precedent for expanding federal powers.

I could give less of a shit about bitcoins, but if "data = money" becomes the norm in our legal system, that just means the big government spying apparatus will be all the more "justified" in the wanton collection of all data, and "metadata."

 

[IcePikmin]

The Ugly[/url]":3tvcqcj0]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

 

[sttm]

IcePikmin[/url]":1ftf7kd5]

The Ugly[/url]":1ftf7kd5]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government. The Euro is backed by the EU...

Cash is backed up by the governments who create it. Bitcoin is backed up by no one.

 

[isparavanje]

bb-15[/url]":2z1gzk2n]

JerryLove[/url]":2z1gzk2n]

The Ugly[/url]":2z1gzk2n]Bitcoin is unquestionably a fiat commodity.

I don't think so.

"Commodity" - "a raw material or primary agricultural product that can be bought and sold, such as copper or coffee."

Doesn't seem to fit that at all.

What can be considered a commodity has been changing over time.

The term also describes financial products, such as currency or stock and bond indexes...

More recently, financial products such as foreign currencies and indexes have been called commodities.

http://financial-dictionary.thefreedict ... /Commodity

edit; to focus on the definition of a possible commodity

In economics, a commodity is anything which is always the same, in the way that every bar of gold of a certain mass is in principle the same value as any other of that mass (as long as it passes some standards for purity, etc.)

 

[isparavanje]

JustQuestions[/url]":3nmghsio]

Big Wang[/url]":3nmghsio]Fair. There's a large amount of compliance related issues when it comes to trading financial derivatives (which this is). Just because it's bitcoin doesn't mean that related financial asset shouldn't be regulated by the government.

I think we all need to be careful, here.

Bitcoins are essentially just data, so in a way the ruling can be used to set a precedent that any data can potentially be a commodity.

This sounds far fetched, but it's exactly the kind of logic the Feds use all the time. Find a legitimate problem case, and attack it using broad language. Use that as a precedent for expanding federal powers.

I could give less of a shit about bitcoins, but if "data = money" becomes the norm in our legal system, that just means the big government spying apparatus will be all the more "justified" in the wanton collection of all data, and "metadata."

That is so ridiculously far fetched I don't know how thick your tinfoil must be to even allow you to dream this up.

 

[3rdalbum]

Bitcoin is a commodity AND inherently valuable, although a lot of people haven't really realised the latter yet.

Oil is valuable primarily because it can be turned into fuel to transport people and cargo; quicker and cheaper and over a longer distance than the alternatives. Bitcoin can be used as the fuel to transport value/money; quicker and cheaper and over a longer distance than the alternatives. Bitcoin can make economic activity easier by sheer speed of transactions.

As a commodity and a financial instrument, its use needs to be regulated, although some aspects of Bitcoin cannot be altered by regulation. Every serious person in the Bitcoin community knows this, but often they get shouted down by the crypto-anarchists who go into a blinding fury at any mention of Government.

 

[3rdalbum]

edwardangle[/url]":29pwff2i]I've never been able to understand this attraction anarchists and don't tread on me types have to Bitcoin.

The blockchain lets not just the government but anyone who cares track your every monetary move.

It won't be hard over time for government and business to start putting names to wallets. The government could even force you to report this information.

Sooner or later there will be a public database.

"Oh look, John transfered 15 dollars worth of Bitcoin into the wallet of that porn site."

Dash would be far better for crypto-anarchists, but then you can't buy drugs with Dash, so they are not very interested yet. If all dark markets moved away from Bitcoin to some other cryptocurrency we'd probably see a lot of the extremists move too.

 

[danielravennest]

The Ugly[/url]":184de05z]Bitcoin is inherently valueless unless people give it value, hence "fiat commodity." Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

The Bitcoin Network has value because it is *useful* to some people, like hammers or automobiles. Not everyone assigns the same value though, that's determined by the market. Bitcoins (the currency tokens) are just access to the network. Without them, you can't move monetary value through the network, so they derive their value from the network's usefulness.

As an analogy, compare the Bitcoin Network to UPS or FedEx's shipping networks. Those networks move packages, which some people find useful. Their tokens (shipping labels) have value because that's how you use their respective networks. Without the network of trucks and airplanes, the shipping labels would have no value, because you could not do anything useful with them.

Instead of packages, the Bitcoin Network moves monetary value from place to place. Without it, the coins could not do anything useful, and would have no value.

 

[danielravennest]

edwardangle[/url]":3cw9twwu]
If you are an American and you're willing to cross the IRS you are a brave, brave man. Or daft. Probably that.

About 20% of the US economy is "underground" (not reported to the IRS). That can be broken up into the "black market", stuff that's illegal, like drugs and prostitution, and the "off the books/under the table" sector. The latter is legal activity, but done in cash or otherwise hidden.

The IRS has been turned into a "paper tiger" (pun intended), because for years they have been starved of funding by Congress. They do catch some people, but they miss a lot of others because they simply don't have the staff to chase everyone. Then there's the whole category of people and businesses who do file their taxes, but have smarter accountants than the IRS does, and pay much less as a result.

 

[danielravennest]

IcePikmin[/url]":1a6tvs9b]

Cash isn't backed by anything either.

The US dollar is backed by debt. The Federal Reserve holds government bonds and agency mortgage securities to back the currency it issues. Then banks make loans, and by the magic of fractional reserve banking, multiply the money supply. Your checking and savings account balances are backed by loans the bank has made.

Paper money and debit cards are just more convenient ways to pay for things than fractions of a car loan or Treasury bond, but ultimately that's what you are doing.

 

[danielravennest]

3rdalbum[/url]":2ae8fwvq]

Oil is valuable primarily because it can be turned into fuel to transport people and cargo; quicker and cheaper and over a longer distance than the alternatives. Bitcoin can be used as the fuel to transport value/money; quicker and cheaper and over a longer distance than the alternatives. Bitcoin can make economic activity easier by sheer speed of transactions.

It's the Bitcoin Network that actually does the transport. The currency token is just how you get access to the Network. Many people confuse the network and the tokens because they have the same name, but they are different. One is a collection of custom hardware, software, and users. The other are entries in the distributed database that the software and hardware maintain. The tokens derive their value from the usefulness of the Network, because you need some of the tokens to access it.

 

[carcharoth]

Big Wang[/url]":1fjyn0py]Fair. There's a large amount of compliance related issues when it comes to trading financial derivatives (which this is). Just because it's bitcoin doesn't mean that related financial asset shouldn't be regulated by the government.

wait, why should it be regulated by the government?

 

[3rdalbum]

danielravennest[/url]":3g56v2hz]

3rdalbum[/url]":3g56v2hz]

Oil is valuable primarily because it can be turned into fuel to transport people and cargo; quicker and cheaper and over a longer distance than the alternatives. Bitcoin can be used as the fuel to transport value/money; quicker and cheaper and over a longer distance than the alternatives. Bitcoin can make economic activity easier by sheer speed of transactions.

It's the Bitcoin Network that actually does the transport. The currency token is just how you get access to the Network. Many people confuse the network and the tokens because they have the same name, but they are different. One is a collection of custom hardware, software, and users. The other are entries in the distributed database that the software and hardware maintain. The tokens derive their value from the usefulness of the Network, because you need some of the tokens to access it.

True - I should have said that Bitcoins are the fuel and the Bitcoin Network is the vehicle.

In either case, Bitcoins themselves are like oil. Digital oil.

 

[cpast]

edwardangle[/url]":2gv8qctl]

Zergfest[/url]":2gv8qctl]

edwardangle[/url]":2gv8qctl]I've never been able to understand this attraction anarchists and don't tread on me types have to Bitcoin.

The blockchain lets not just the government but anyone who cares track your every monetary move.

How does the wallet address get associated to a person, exactly? (That's aside from the idea of bitcoin tumblers etc.)

It won't be hard over time for government and business to start putting names to wallets.

How exactly? (Other than the NSA et al, but that's rather outside the domain of this discussion. Completely pervasive surveillance is difficult to defeat, but I suspect the pendulum is swinging back to improved privacy.)

The government could even force you to report this information.

Sure...like they force people to report tax related information. And we all know that everyone reports all their tax related info...right?

Sooner or later there will be a public database.

Sooner than that Dash (formerly Darkcoin) and other alternatives will be pervasive.

If you are an American and you're willing to cross the IRS you are a brave, brave man. Or daft. Probably that.

Even the Joker won't take on the IRS: http://www.youtube.com/watch?v=22HcvlmfRZY

 

[JustQuestions]

isparavanje[/url]":1oul8ww8]

JustQuestions[/url]":1oul8ww8]

Big Wang[/url]":1oul8ww8]Fair. There's a large amount of compliance related issues when it comes to trading financial derivatives (which this is). Just because it's bitcoin doesn't mean that related financial asset shouldn't be regulated by the government.

I think we all need to be careful, here.

Bitcoins are essentially just data, so in a way the ruling can be used to set a precedent that any data can potentially be a commodity.

This sounds far fetched, but it's exactly the kind of logic the Feds use all the time. Find a legitimate problem case, and attack it using broad language. Use that as a precedent for expanding federal powers.

I could give less of a shit about bitcoins, but if "data = money" becomes the norm in our legal system, that just means the big government spying apparatus will be all the more "justified" in the wanton collection of all data, and "metadata."

That is so ridiculously far fetched I don't know how thick your tinfoil must be to even allow you to dream this up.

Wait a second. You need to explain yourself.

Which part of this is far fetched? Data having a monetary value?

Google and Facebook (as examples) became worth shitloads because of the data they collect. That's their entire business. The collection and sale of data. In a lot of ways, I would say the way big businesses use and buy/sell user data is a lot more similar to commodities than say, bitcoins.

Or are you saying the federal government continuously trying to expand their powers is "far fetched." Is that your claim?

Be clear.

 

[Zergfest]

sttm[/url]":3ii5xu5i]

IcePikmin[/url]":3ii5xu5i]

The Ugly[/url]":3ii5xu5i]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government.

Please define exactly what is meant by the "full faith and credit of the US government". Dollars are not a credit instrument, so it's not meant in that sense.

Sounds exactly equivalent to fairy dust to me - in terms of "intrinsic value" at least.

 

[JustQuestions]

Zergfest[/url]":ezhacpoe]

sttm[/url]":ezhacpoe]

IcePikmin[/url]":ezhacpoe]

The Ugly[/url]":ezhacpoe]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government.

Please define exactly what is meant by the "full faith and credit of the US government". Dollars are not a credit instrument, so it's not meant in that sense.

Sounds exactly equivalent to fairy dust to me - in terms of "intrinsic value" at least.

Nothing has value unless people give it value. Everybody on the planet gives a large value to the US dollar. That's the only reason it has any value.

There's no such thing as "intrinsic value" anyways. Gold has zero intrinsic value, but people give it value.

 

[Zergfest]

edwardangle[/url]":3br7awk8]

Zergfest[/url]":3br7awk8]

edwardangle[/url]":3br7awk8]I've never been able to understand this attraction anarchists and don't tread on me types have to Bitcoin.

The blockchain lets not just the government but anyone who cares track your every monetary move.

How does the wallet address get associated to a person, exactly? (That's aside from the idea of bitcoin tumblers etc.)

It won't be hard over time for government and business to start putting names to wallets.

How exactly? (Other than the NSA et al, but that's rather outside the domain of this discussion. Completely pervasive surveillance is difficult to defeat, but I suspect the pendulum is swinging back to improved privacy.)

The government could even force you to report this information.

Sure...like they force people to report tax related information. And we all know that everyone reports all their tax related info...right?

Sooner or later there will be a public database.

Sooner than that Dash (formerly Darkcoin) and other alternatives will be pervasive.

If you are an American and you're willing to cross the IRS you are a brave, brave man. Or daft. Probably that.

I responded to several other points, care to address any of them?

Another poster made a good reply on the IRS, I will only add that a very substantial percentage of those who actually pay tax (around 50% of the population right now, which is a travesty) game the system to some extent, largely by not reporting income. Cash-based businesses are particularly prone to this, since there is no effective way for the government to track transactions. Exact statistics are of course difficult to come by. ;-)

edit: clarity

 

[Zergfest]

JustQuestions[/url]":ghrg1c84]

Zergfest[/url]":ghrg1c84]

sttm[/url]":ghrg1c84]

IcePikmin[/url]":ghrg1c84]

The Ugly[/url]":ghrg1c84]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government.

Please define exactly what is meant by the "full faith and credit of the US government". Dollars are not a credit instrument, so it's not meant in that sense.

Sounds exactly equivalent to fairy dust to me - in terms of "intrinsic value" at least.

Nothing has value unless people give it value. Everybody on the planet gives a large value to the US dollar. That's the only reason it has any value.

It is true that everything is worth only what someone else will give you for it. As to the US dollar having a "large value" it certainly doesn't compared with, say, an ounce of gold...or a bitcoin for that matter.

There's no such thing as "intrinsic value" anyways. Gold has zero intrinsic value, but people give it value.

That's not really true. Gold requires effort to mine. If it is worth less than it costs to mine, mines will close and the supply of gold will dwindle...eventually raising prices back to where it's profitable to mine again. Further items like gold are useful in the real world, for things like jewelry, fillings and electronics. This also contributes to an "intrinsic value".

Bitcoins also have a cost to mine, and are useful for rapidly transmitting value to distant locations - conveniently, cheaply and relatively anonymously.

 

[JustQuestions]

Zergfest[/url]":3ivdydda]

JustQuestions[/url]":3ivdydda]

Zergfest[/url]":3ivdydda]

sttm[/url]":3ivdydda]

IcePikmin[/url]":3ivdydda]

The Ugly[/url]":3ivdydda]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government.

Please define exactly what is meant by the "full faith and credit of the US government". Dollars are not a credit instrument, so it's not meant in that sense.

Sounds exactly equivalent to fairy dust to me - in terms of "intrinsic value" at least.

Nothing has value unless people give it value. Everybody on the planet gives a large value to the US dollar. That's the only reason it has any value.

It is true that everything is worth only what someone else will give you for it. As to the US dollar having a "large value" it certainly doesn't compared with, say, an ounce of gold...or a bitcoin for that matter.

Obviously it's true that something is only worth what people are willing to pay for it. That's a basic premise of economic theory.

Zergfest[/url]":3ivdydda]That's not really true. Gold requires effort to mine. If it is worth less than it costs to mine, mines will close and the supply of gold will dwindle...eventually raising prices back to where it's profitable to mine again. Further items like gold are useful in the real world, for things like jewelry, fillings and electronics. This also contributes to an "intrinsic value".

It's irrelevant that gold requires effort to mine. People mine gold because there are people who give gold value and want to buy it. Simple as that.

You could spend years working on some gigantic ugly painting, that doesn't mean your gigantic ugly painting is going to have any intrinsic value. Maybe everybody decides it's worthless and nobody wants it.

"Value" is an invented thing by humans. It's not a "real" thing like say energy or mass. It's just an arbitrary invention.

All monetary value is by definition extrinsic because the value is defined by the sum total of the human demand for it and the human willingness to trade for it.

"Intrinsic value" is a meaningless term, at least in economic contexts.

 

[infected]

JustQuestions[/url]":1kh8d9wy]

Zergfest[/url]":1kh8d9wy]

sttm[/url]":1kh8d9wy]

IcePikmin[/url]":1kh8d9wy]

The Ugly[/url]":1kh8d9wy]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government.

Please define exactly what is meant by the "full faith and credit of the US government". Dollars are not a credit instrument, so it's not meant in that sense.

Sounds exactly equivalent to fairy dust to me - in terms of "intrinsic value" at least.

Nothing has value unless people give it value. Everybody on the planet gives a large value to the US dollar. That's the only reason it has any value.

There's no such thing as "intrinsic value" anyways. Gold has zero intrinsic value, but people give it value.

I think you need to google the words you type before you type them.

 

[IcePikmin]

sttm[/url]":7ocvmve9]

IcePikmin[/url]":7ocvmve9]

The Ugly[/url]":7ocvmve9]Bitcoin is not backed by anything except the belief of its users in the blockchain and the value of that blockchain.

Cash isn't backed by anything either.

Here in the US cash is backed by the full faith and credit of the US government. The Euro is backed by the EU...

Which in turn is back by what? Oh, that's right... Nothing.