Bitcoin does not pose a threat to law and order • Hacker News Board

Re: Bitcoin does not pose a threat to law and order

#11

Post by pemulis » Thu, May 12, 2011, 1:52 PM UTC

maurice wrote: post #9

pemulis wrote: post #5

Earlier quoted context omitted.

Actually, bitcoins being classified as securities might make it easier for governments to crack down on them: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 Securities are more closely regulated than commodities in the US. I'm not sure what the laws are in Japan, where Mt. Gox is located, but I expect they could find some legal pretense to raid the exchange. There may be more exchanges popping up all the…

Hm, what do you mean by 'main server'?

Wherever Mt. Gox is storing people's bitcoins (the exchange's wallet.dat) and their deposits in USD and EUR, as well as wherever trades, deposits, and - especially - withdrawals are processed. Lots of people have large non-bitcoin deposits in the exchange, and if a raid on a small number of locations in Japan can prevent them from withdrawing or result in their money being seized, that's a serious issue for the bitcoin project as a whole.

Edit: Also, it looks like Mutum Sigillum LLC, the company that processes Mt. Gox's deposits and withdrawals through Dwolla, is incorporated in Delaware. I wonder if they process those transactions in the US?

Re: Bitcoin does not pose a threat to law and order

#12

Post by daoudc » Thu, May 12, 2011, 1:52 PM UTC

Duff wrote: post #7

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. Until the Bitcoin PR campaign graduates from hacker news, it's at best an academic discussion At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke…

At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke around with it.

Like any currency without intrinsic value (like paper money) it only has value when people believe it has value.

Re: Bitcoin does not pose a threat to law and order

#13

Post by motters » Thu, May 12, 2011, 2:00 PM UTC

Presently I don't hold any Bitcoins, but I think that cryptocurrencies are an interesting development, and are quite likely to be the future of money - especially for micropayment transactions. It's entirely possible that Bitcoin may not succeed, or be subjected to various kinds of political nonsense. In general though I think cryptocurrencies are a phenomena which will persist, at least so long as their cryptographic basis remains valid.

Re: Bitcoin does not pose a threat to law and order

#14

Post by anamax » Thu, May 12, 2011, 2:28 PM UTC

eof wrote: post #3

throwaway32 wrote: post #2

However bitcoin does pose a threat to the banking elite and their congressional lapdogs. A crackdown is comming soon unfortunately.

>A crackdown is comming soon unfortunately. Is that just conjecture or do you have some evidence? I hold bitcoin and expect it to prosper in time; I also expect a crackdown if it does succeed, but I would be very surprised to see anything soon. It's hard for them to touch: the existing currency laws certainly don't apply. The more-likely scenario of them becoming stores of value and/or securities (legally speaking) g…

> It's hard for them to touch: the existing currency laws certainly don't apply. The more-likely scenario of them becoming stores of value and/or securities (legally speaking) gives them little room for enforcement as there is no central issuing party to go after.

The lack of a central issuing party isn't a problem - they can go after any point that converts them to get "real money" or provides goods subject to control.

Physical goods are a subset of the latter.

If you can't buy food or pay rent with Bitcoin, how much can it catch on?

Re: Bitcoin does not pose a threat to law and order

#15

Post by Duff » Thu, May 12, 2011, 2:41 PM UTC

daoudc wrote: post #12

Duff wrote: post #7

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. Until the Bitcoin PR campaign graduates from hacker news, it's at best an academic discussion At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke…

At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke around with it. Like any currency without intrinsic value (like paper money) it only has value when people believe it has value.

Intrinsic value is alot more complex than it seems.

Many people attributed the skyrocketing price of silver as testimony to the declining value of the currency, etc. That's partially true, but the events of the last few weeks have established that about 25% of silver's valuation was linked to the ability to buy it on margin. Tighten the margin, and speculative demand vaporizes.

The difference between, say BitCoin and the Euro is that there isn't a mature market to establish the value of BitCoin. What there is a small amount of demand and a small number of people who control lots of BitCoin.

Re: Bitcoin does not pose a threat to law and order

#16

Post by weavejester » Thu, May 12, 2011, 2:42 PM UTC

pemulis wrote: post #8

Duff wrote: post #7

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. Until the Bitcoin PR campaign graduates from hacker news, it's at best an academic discussion At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke…

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dra…

The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants.

Well, not necessarily. You set the cost of your products to a price in dollars multiplied by the current Mt. Gox exchange rate. You could then immediately exchange your Bitcoins for dollars upon receipt of payment. Mt. Gox has an API for getting the current buy rate, and for placing a sell order, so this wouldn't be hard to automate.

The only problem with this is that getting dollars out of Mt. Gox involves messing about with Liberty Reserve.

Re: Bitcoin does not pose a threat to law and order

#17

Post by [deleted] » Thu, May 12, 2011, 2:58 PM UTC

weavejester wrote: post #16

pemulis wrote: post #8

Earlier quoted context omitted.

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dra…

The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Well, not necessarily. You set the cost of your products to a price in dollars multiplied by the current Mt. Gox exchange rate. You could then immediately exchange your Bitcoins for dollars upon receipt of payment. Mt. Gox has an API for getting the current buy rate, and for placing a sell order, so this wouldn't be…

[deleted]

Re: Bitcoin does not pose a threat to law and order

#18

Post by jerguismi » Thu, May 12, 2011, 2:58 PM UTC

weavejester wrote: post #16

pemulis wrote: post #8

Earlier quoted context omitted.

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dra…

The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Well, not necessarily. You set the cost of your products to a price in dollars multiplied by the current Mt. Gox exchange rate. You could then immediately exchange your Bitcoins for dollars upon receipt of payment. Mt. Gox has an API for getting the current buy rate, and for placing a sell order, so this wouldn't be…

This. As a merchant, there is no risk accepting bitcoins - you can automate automatical sell order on mtgox everytime someone makes a purchase. So you can do riskless short-term business with bitcoins currently even if you don't believe in it long-term.

In the eurozone getting money out from mtgox is even pretty cheap + fully automated, as are deposits. yay.

Re: Bitcoin does not pose a threat to law and order

#19

Post by [deleted] » Thu, May 12, 2011, 3:11 PM UTC

pemulis wrote: post #8

Duff wrote: post #7

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. Until the Bitcoin PR campaign graduates from hacker news, it's at best an academic discussion At worst, BitCoin at this point is a scam where people who got involved with it early who are sitting on lots of BitCoin need to keep up a level of interest to cash out BitCoin for coin, as the curious poke…

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dra…

[deleted]

Re: Bitcoin does not pose a threat to law and order

#20

Post by pemulis » Thu, May 12, 2011, 3:12 PM UTC

weavejester wrote: post #16

pemulis wrote: post #8

Earlier quoted context omitted.

The only thing Bitcoin poses a threat to is the t-shirt vendors and hosting providers who are accepting it as payment. This. The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Bitcoins have - on multiple occasions - dropped or risen by 25%+ in the course of a few minutes. If you accept bitcoins as payment, when should you cash them out? There's a chance that they dra…

The volatility that makes bitcoins so attractive to speculators makes them a nightmare for merchants. Well, not necessarily. You set the cost of your products to a price in dollars multiplied by the current Mt. Gox exchange rate. You could then immediately exchange your Bitcoins for dollars upon receipt of payment. Mt. Gox has an API for getting the current buy rate, and for placing a sell order, so this wouldn't be…

As of a day ago you can get dollars out of Mt. Gox using Dwolla, which has been excellent in my experience and only charges 25 cents per transaction. I withdrew money today and it was in my Dwolla account in less than an hour.

As far as using the API goes, there are still a few problems. My understanding from the #bitcoin-otc IRC channel is that there is a 30-second delay on trades on the Mt. Gox exchange. This contributes to weirdly huge sub-minute swings in the exchange rate. Two nights ago, there was a point where the rate went from $5 up to $6 and then back down to $5 within the space of a few seconds. This means that in the time it takes for the merchant to process the transaction, upload the bitcoins to the Mt. Gox exchange, and put in a sell order for the highest buy rate, the price may have changed dramatically.

Another problem is that the gap between the highest bid and the lowest asking price is often very large. There is no 'market rate' as of yet. So depending on when the merchant places a sell order, they may be getting a bad rate.

And it opens up another way for someone to manipulate the market to rip off the merchant. The highest buy order is usually placed by a bot that takes the highest non-bot buy order and increases it by something like .0001 bitcoins. The bots update their bids every minute or so. Since there are only a small number of traders in the exchange, a single large trader or group of medium-size traders could manipulate the market by placing a series of strategically high buy orders. This will drive up the overall rate, as the bots respond to the change in price by increasing their bids. (Edit: There are also bots programmed to make bids at somewhat less than the highest buy order, which would contribute to the illusion of a legitimate upward movement in the price, as all of those bots chase after the highest price.) Within just a few minutes, they can increase the highest bid by a significant amount (say $1 USD), and then place a bitcoin order for real goods and services with the merchant, knowing that they use an automatic system to exchange bitcoins for USD at the inflated market price. But during the time it takes the merchant to get their bitcoins into Mt. Gox's system and sell them, the price will have dropped back down as the fraudsters stop making inflated buy orders.