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  This week is a big hoopla on the Capital Hill where Congress is holding several hearings on Bitcoin -- so called "virtual currency". But even ahead of this hearing that supposed to establish or reject legitimacy of "virtual currency",  Federal Election Commission was marching ahead of progress - holding a hearing whether to allow candidates and PACKs to accept donations in Bitcoin. Apparently there is not enough money in our election system! So what is this Bitcoin? The best explanation could be found on Bloomberg - Are Bitcoins the Criminal's Best Friend? Apparently, they are judging just by two most recent cases - Bitcoin Savings & Trust and Liberty Trust. Yet, remaining Bitcoin exchanges, including Bitcoin Foundation that sent her general counsel to testify on the Hill, hail it as a great financial innovation. Strange, but after success of another recent "successful" innovation - dismantling Glass–Steagall Act that was in the way of CDO and mortgage backed securities - we should expect that our wise representatives in Congress and Government would be a bit more cautious. However, they apparently are either in state of euphoric delusion or hypnotic coma. They have no more real problems to discuss and only other solution than repeal Obamacare to save American economy is Bitcoin economy. Of course, if we are to switch to Bitcoin economy that immediately will erase American National Debt since Bitcoin exchange rate skyrocketed above $500 simply because of the hearing (imagine what it will be if Congress to approve Bitcoin as a legal tender!) and solve all the problem. Listening to all this talk of financial innovations and promises of huge money to be made one can only wonder how much drugs have been purchased on the Silk Road website before it was shutdown and distributed for free by Bitcoin's supporters. I guess including the output of drugs (consider how much legalizing of pot will do for the country!) into the Gross Domestic Product will certainly justify all this excitement!!
   Interestingly enough all this promises of great benefits such as instant payments, and easiness and eliminations of bank fees and ... instant payment do not make any sense. So far there were not so many complaints about speed of transactions with credit card payments or PayPal or Google. And as far as the bank fees concerned -- get real, are all this Bitcoin exchanges will function for free, no fees? Doubt that, because as they say - big money will be made. Of course, there is one issue that credit cards and PayPal or Google cannot provide - anonymity. Bitcoin does provide that (to a some degree because you should be certain that NSA can trace Intenet transactions, even it might take sometime). However, who might need that?... Obviously corrupt politicians, tax cheats (like filthy rich who lost some of tax heavens) and, of course, drug dealers, contract killers and anyone else who needs to launder the money. On another hand, Bitcoins salesmen conveniently forget about Internet scams and hacking and simply what to do if the power or Internet connection is down and you cannot have access. Also pay attention in the video how Bitcoins are made - you should not have any doubt that they are impossible to counterfeit!

Most of us know the history of money - that Indians used sea shells, and such metals as gold, silver and copper coins. Some of us know that during tulip Dutch craze in 17th century tulip bulbs were used as money as well. Now, 300 years later, in the digital age some people are trying to convince us that Bitcoin -- something which is completely intangible, not linked to anything real like amount good and services available even not perfectly measurable, should be better as means of exchange. I can understand these theorists - after all if Madoff was able to convince quite a few sophisticated people that he found a Holy Grail of investment and bankers convinced Greenspan and other regulators that securitized mortgages and CDO are safe financial instruments, they cannot argue that Bitcoins are better than US dollars!

As Woody Allen said it is all "a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham".

Poll

Should Bitcoin be accepted as ligitimate payment system in US?

17%3 votes
23%4 votes
0%0 votes
5%1 votes
52%9 votes

| 17 votes | Vote | Results

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Comment Preferences

  •  huh? (3+ / 0-)
    Recommended by:
    petral, ballerina X, wilderness voice

    The FEC advisory opinion requester has stated that they will require and report the full info on a Bitcoin contributor (name, address, etc) just as they would any other contributor.

    •  please explain why FEC does not allow accept euros (1+ / 0-)
      Recommended by:
      wilderness voice

      Before to go into the discussion of using name, address, etc of the donor let me ask why would we need Bitcoin? Are US dollars no good? And if we need "international" currency why not to allow euros, pounds, etc? As far as fast processing concerned donors already have ability to accept credit cards and PayPal and other forms of electronic payments so there is no gain in speed. What other reason might be to allow use of Bitcoin? Why not pot, gold, or other commodity? We also were under impression that everyone said that there is too much money flowing into politics already -- so why do we need it easier for more money flowing in? Anyone - please, explain this as we are 3 yearolds...

      As far as contributor name, address, etc. -- how this information can be verified with the "virtual currency"? Unless FEC allows "virtual donors" to do "virtual donations" that does not make much sense. There are millions of Mr and Mrs Lee in China as well as Mr. and Mr. Smith all over the world. On another hand you should be sure that Al-Qaeda does not require personal verification of the donations. Also we do not understand why Nigerians and Russian (with the exception of Liberty Trust) did not figure out how can they use Bitcoins for effective Internet scams to siphon money from trusted and stupid Westerners?
      Finally. there are hackers - did you read $1.2M Hack Shows Why You Should Never Store Bitcoins on the Internet article from Wired (Internet scams and hacking in the blog post)?  
      We rest our case!

      •  It does allow Euros. (0+ / 0-)

        11 CFR 110.4(c):

        (c) Cash contributions.
        (1) With respect to any campaign for nomination for election or election to Federal office, no person shall make contributions to a candidate or political committee of currency of the United States, or of any foreign country, which in the aggregate exceed $100.

        (2) A candidate or committee receiving a cash contribution in excess of $100 shall promptly return the amount over $100 to the contributor.

        (3) A candidate or committee receiving an anonymous cash contribution in excess of $50 shall promptly dispose of the amount over $50. The amount over $50 may be used for any lawful purpose unrelated to any Federal election, campaign, or candidate.

        And you can give gold, too, as an in-kind.
  •  I don't get all this - Bitcoin is (0+ / 0-)

    totally tracked (if you use it), it's really probably the stupidest form of currency for criminals to use.

    •  it is not exactly what it has been so far (0+ / 0-)

      I agree with you that Bitcoin is not 100% secure, but it is not easily traceable either. People can use various computers (including public computers) and many transactions to hide the path of the money. Since there is no one in particular enforcing the legitimacy of transactions and there is no Central Bank or Treasury so to speak to prevent counterfeiting and/or laundering and some parties involved into transactions are anonymous there cannot be any assurance that the transactions are legitimate. There is a lot of risk involved. However, even mafia despite being a criminal organization has its honor code. The point is that many people who are using Bitcoin could be honorable as far as the currency goes, but prefer this form because of its pseudo anonymity or not so easy traceability. As the practice shown it has most widely used for illegal transactions. All this talk about businesses accepting it does not make much sense because the same businesses did not stop accepting US dollars or other currencies. They accept Bitcoins probably for 2 reasons - increase their customer base and have some of their business hidden, i.e. less taxable. Pure and simple. There is no other reason why credit cards or other forms of electronic payments, PayPal or Google or similar, cannot be used. Every country (or group of countries in case of Euro zone) traditionally had their own currency and they in most cases did not allow to use a foreign currencies on their territories. Banks were clearing houses to convert currencies. Why would now this be changed? It simply does not make any sense. All this talk about innovation is BS - because innovations are usually patented, trademarked or otherwise protected as an intellectual property. Not so much in this case. The "inventor" is not known by his real name or as a person.
      And the "technology" was appropriated by a bunch of "entrepreneurs" of Madoff's type who want to make a lot of money, but professing that this is a "better" and less costly financial "innovation". Anyone with a bit of common sense and logical skills will understand that it is an oxymoron.

  •  Errrr, apparently you are not aware of the (2+ / 0-)
    Recommended by:
    wilderness voice, Adam B

    recent FinCEN regulations put into place in regards to virtual currency. As we happen to deal in our own currency for our business, that can be cashed out by our customers, we have to adhere to the FinCEN regulations imposed by the IRS. The biggest opponent to the FinCEN regulations (and the direct target of these new regulations) are BitCoin.

    Believe it or not, these regulations are pretty strong, and while they don't really mean much to us, it is the first step in the IRS having a better idea of BitCoin and it's use in the US and the validity of tracing it back and forth. If you want to get a hold of something, follow the money, and that's exactly what the IRS is doing. If they start allowing BitCoin donations, do not think for a moment that they won't start regulating it further.

    It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

    by LeftieIndie on Tue Nov 19, 2013 at 08:45:43 AM PST

    •  did you read the article links in the post? (0+ / 0-)

      We are aware of all these proposed regulations and opinions.... but as you stated they are not Bitcoin specific.
      Furthermore, no singe government agency yet made a stake claim regarding regulating Bitcoin - not like US dollars that is regulated by Treasury and policed by many other agencies. There are as many as 9 agencies that have interest in Bitcoin and in case if it is legitimized will be involved in its regulation. Finally, if FinCen or IRS already regulating Bitcoin what then legislator discussing at the Congress hearings?
      At the moment it seems to me Bitcoin is violating a bunch  of laws regulating currency tender in US. If merchants accepting Bitcoin, why they not accepting directly euros, pounds or any other currency (except of Duty Free shops in airports and elsewhere)? What prevent anyone else to setup tomorrow a Bytecoin as another "virtual currency"?
      Always cut through BS to the point. Bitcoin is convenient for a substantial group of people who would like to make money of it one way (selling illegal drugs, guns, and other forbidden products or evading taxes) or another(charging fees for converting from "virtual currency" into real one).
      We just went through similar financial invention -- securitized mortgages (even they had something more legitimate behind them) and look how well that turned out....

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