US Senators Seek to Crackdown on Bitcoin

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srbelnap

June 09, 2011 at 10:06pm

"Here's what the law says: The Coinage Act of 1965, specifically Section 31 U.S.C. 5103, states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."

All this means is that the US Federal Reserve system must honor all US currency. As the US Treasury points out, there's nothing in the law that says that private businesses have to accept it for all transactions. If a merchant wants to sell her products in exchange for gold bullion, nothing but dimes minted before 1946, Swedish fish, or Monopoly money, that's her right under the law.

The absence of such a law is how bus lines can legally refuse to accept your dollar bills, gas station clerks can turn their noses up at your $100s, and panhandlers near the Monitor's newsroom can yell at you after you drop a Sacagawea dollar coin in their cup, even though you were just trying to be nice." Source

You can use any medium to transfer value in a private transaction, including invisible and virtually untraceable ones.

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LWA

June 09, 2011 at 12:34pm

If you try to buy these things you'll find the market moves really fast, so my advise is to use this Exchange: https://www.tradehill.com/?r=TH-R1815 

 

(note that is my refferal code at the end).

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glassman326

June 09, 2011 at 8:03am

If one looks back at our history in the US... It was the same thing with the British crown and the colonies. The Crown could not tax the newly formed currency in the new world...That was a significant reason for the American Revolution.  

I have never heard of bitcoin, but that doesnt mean it wont catch fire and spread overnight like a facebook or google. These two Senators sound like elitists. Remeber, there is NO law that says you must trade in dollars.....its all about the control.

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DJSPIN80

June 09, 2011 at 7:23am

Gotta love how the Government wants to waste my tax dollars to crack down on something like this.

Then again, I think what they want to do is shutdown BitCoin altogether - this drug thing is just a front.

Do you know why people are trading with BitCoin?  Because real currency is worthless, this is the same thing as buying gold - even the Government wants to crack down on gold buyers.

Why can't the Gov't just stay the heck out of our lives?

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Danthrax66

June 09, 2011 at 6:16am

You know what else is annonymous and used to buy money?

 

 

Cash.

 

Another waste of our tax dollars to imprison people that have a substance problem and thus waste more tax dollars. Fucking stupidity.

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TerribleToaster

June 09, 2011 at 5:34am

 

You'd think something like this would get more press (but then again, with how badly this could impact the financial world, maybe not ). This is truly a hydra of a problem. And the only way I can think of dealing with it, at the moment, is for very strict government controls on P2P clients and internet pathways to sniff out these bitcoins. Which is never going to happen (not in the USA anyway) and still wouldn't be a perfect solution.

 

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Holly Golightly

June 08, 2011 at 9:44pm

Hey, if both parties are willing to accept something as currency... The government should not get in the way of that. For example, in jail, prisoners use cigarettes as currency. Both parties accept them as currency, and nothing should be done to interfere. So if I want to use toasters or bitcoins, I should be fully entitled to use any "currency" I want. Next they are going to tell small villages they are not allow to barter because it is untraceable, and could potentially be used to exchange drugs. Sometimes the government does things that just don't make any damn sense. And here I thought I live in a free market economy. As long as I do not deny USA dollars, what difference does it make to them? I have seen a few stores that already accept the Euro here in New York. Sometimes I wonder if they truly believe in freedom these days.

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bling581

June 09, 2011 at 9:46am

Bottlecaps, the currency of the future.

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Gezzer

June 08, 2011 at 11:46pm

They shouldn't but they really try any way.

They call the barter system the "grey market" it's not as bad as the black market but it's outside of the established monetary system. By law your supposed to pay sales tax on alot of things we don't, barter being one of them. The reason we don't it's just too hard for them to police, so they don't bother. But see what happens when the barter deals with really large ticket items. That's why you have to register the exchange of land/housing or vehicles, so they can decide if you have to pay for the exchange.

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tony2tonez

June 09, 2011 at 6:00am

You can make your own currency, its not illegal. Problem is geting other to accept it as cash. During the recent recession many towns across the South were 'printing' their own form of money. Using to exchange it as goods and services (such as labor). Like i said the problem is getting other to accept it like USD. Most people use real cash to buy 'currency' in MMORPG's, why because cash cant be used there. Now it seems its gone cyber and Senator Problem is that people are buying illegal drugs untraceable. Think about how many drug dealers could essentially go this route. Make a ton of money without ever being caught. You no longer need to sit on a street corner and risk getting caught. You can sit home and work off your computer. 

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supercourier

June 09, 2011 at 5:07pm

You'd better believe you CAN'T make your own currency generally convertible for goods and services in the U.S.  Only the federal reserve has the ability to issue this, defined as "legal tender."  There's a solid reason individual states haven't issued their own scrip or tender since the 19th century.

And and those involved with gifted or bartered goods and services must indeed come up  with legal tender...the greenback kind.  Private funny money won't close the loop.  Ask your friendly neighborhood IRS agent.

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fellowleo

June 08, 2011 at 8:30pm

This things scares the crap out of me. Maybe because I have yet to understand it fully.

Let me see if I get this straight. When you buy something with bit coin, your bitcoin software hooks up to someone elses bitcoin software and transfers an agreed amount of bitcoin from one to the other and both systems keep tally of how much they have.

Now what if I am a really good hacker and I figure out how the bitcoin software and reprogram it to give me a million bitcoins? Something to the effect of couterfeitting bitcoins. How can the bitcoin system be able to identify whether the bitcoins tallys being transfered was gained legitimately?

You can make the same argument behind all electronic payment systems. In the end it's just numbers on a screen. But with all other systems, there are paper and electronic records of every transaction that shows where all the money came from and where it all went. And the regulations that enforces these record demand that the trail be auditable. That is how people have faith in the system and faith is the basis of all money.

I don't currently see how anyone can prove their bitcoins are the real thing. There doens't seem to be a confirmation system. At least not one that I can see.

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niemivh

June 09, 2011 at 11:07am

 

Actually the system transactions and storage of currency are all based on the functions of the cryptography.  Instead of writing a generalized spew of ignorant nonsense maybe you should go learn about this system, at least you wouldn't be saying such embarrassing things.

Go to Bitcoin.org and read the FAQ or Satoshi's whitepaper on it.  You have to understand the details of this system to realize it is unlike anything else in existence and is truly revolutionary.

 

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smartguy05

June 09, 2011 at 7:11am

This can't be done because all clients hold a database of all transactions. So if your client shows a different transaction log as someone else the transaction can't be done.

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Gezzer

June 08, 2011 at 10:07pm

You could be right. From what I read the system is designed to slowly reduce the amount of bitcoins till it reaches a set amount. Then the worth of the coins will be based solely on supply and demand. Say the limit is 1,000,000 coins for example. well no one will buy anything that costs 1,000,000 coins even if they had them all. So an item will eventually reach a point where it's an attractive buy for users, say .000001 of a bitcoin. So there is no inflation or deflation, just S&D mechanics.

Problem is anything can be hacked with enough time and determination. Once the bitcoin system reaches a certain point of user adoption it'll be too tempting a target not to try and compromise. If we've learned anything about security by now it's that once the less savory users get wind of a target they go at it with all they have and don't stop till the've done their worst, such as Apple's current problems.

So the system isn't really based on anything but users belief in the system, which isn't really that different then our current system. The real problem I see is there's really no way to know when and if the system has been compromised. Even if the system keeps track of all the bitcoins in circulation, it shouldn't be too hard to siphon off some if you do it right.

Yeah if this ever reaches a critical mass of adoption it could be very scary. I wonder if it will reach that point, and if our current system would be willing to seed that much of the monetary control to it.

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dmurph

June 08, 2011 at 8:19pm

Wow, good luck to them haha.  Taking down a distributed system designed with no central point of failure, no small task.

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JohnP

June 08, 2011 at 6:04pm

Never heard of this at all. How on earth (literally) do you stop peer to peer funding? If this catches on, it will just the first crack in the worldwide banking system. Imagine buying goods online and not paying any VAT, any tax, and it could be anything as long as both parties agree to it (mind you, I am talking green lasers here- for now).

https://www.mtgox.com/

https://en.bitcoin.it/wiki/FAQ

That'll teach the government to help spread the word about stuff...

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Ghok

June 08, 2011 at 4:59pm

So it can't be traced... just like cash... can't have that.

I read about Silk Road recently. Sounded interesting, but a huge target.

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RUSENSITIVESWEETNESS

June 08, 2011 at 4:49pm

Hey, maybe I can fund my MP3Sparks (AllOfMP3/AllTunes) account again....

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Gezzer

June 08, 2011 at 3:19pm

Wow, never heard of this before.

It might be a transaction vector for drug dealing, but it has the potential to destroy the taxation system. If they have any brains that's why the're trying to kill it.

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