Here is my take on this:
{All quotes from Karl Denninger, Market-ticker.org, 2013-03-30}
... I want to first demolish the argument for using it that is going around in various circles and media these days -- the idea that it is stateless (that is, without a State Sponsor) and this is somehow good, in that it allows the user to evade the tentacles of the State.
This is utterly false and, if you're foolish enough to believe it and are big enough to be worth making an example of you will eventually wind up in prison -- with certainty.
While the intent to refute the stateless argument is good. The argument itself is a claim like: "Trust me, I know this will happen".
I hope atleast more than half of the people using Bitcoin are here to make money in a legitimate way.
All currencies require some means of validation... dollar bills are reasonably self-validating. I can observe ... a dollar bill, feels correct and has the security features
Here he really means
legal tender, such as coins and notes. Bitcoin can never be legal tender (unless US repeals the dollar as legal tender and Congress adopts Bitcoin as the legal tender. That will be the day
). Those two paragraphs from KD are wasted.
Now consider the typical clandestine transaction --
Why would executing clandestine transactions be a marketable "feature" of real currency?
Therefore, the very act of trying to split up transactions or use of "throw-away" wallets in and of itself is likely to be ruled a crime..
I highly doubt that likelihood. I'm not a lawyer, but shouldn't the prosecution be able to prove intent to commit crime?
In particular if there is a tax evasion issue that arises you're in big trouble because there is no statute of limitations on willful non-reporting of taxes in the United States...
Factually incorrect. US Statute of limitations is 6 years from the last violation. See
26 USC § 6531 or the IRS Tax Crimes Handbook. Again, why would you try to evade taxes with Bitcoin?
Third, because Bitcoin is not state-linked and thus fluctuates in value there is an FX tax issue...
At the time of the sale you have a tax liability too, and I'm willing to bet you didn't keep track of it or report it...
Solution is to keep track of it. I'm sure the wallet services are good for that.
Those who are using Bitcoin as a means to try to foil currency controls or state prohibitions on certain transactions are asking for a criminal indictment
A crime is a crime. The solution is to not engage in criminal activity with Bitcoin or otherwise.
Here is my naive view : tying a transaction in Bitcoin chain to an actual act such as "Joe bought a sandwich from Jenny for X bitcoins" has the same difficulty level as doing finding the transaction itself. If you found the real world transaction, you most likely should have more compelling evidence than a Bitcoin transaction record.
Here the fundamental problem of wide acceptance comes into view...
To the extent that the popularity of the currency is driven by a desire to "escape" state control promotion of that currency on those grounds when in fact you are more likely to get caught...
I think he misunderstands "state control" here. Bitcoin escapes "state control" in the sense that there is no central state mandated authority that can print or create Bitcoins. That, I think is one of the factors that gives value to Bitcoin. Its not to escape into the darkness (hopefully).
Cryptocurrencies have a secondary problem in that because they are not self-validating...
Self validation applies to legal tender. He does have a valid point:
but quite a bit longer (an hour or so) to know with reasonable certainty that it is good. This is important too when number of transactions increase. How does Bitcoin community solve this?
If that sounds kind of like a pyramid scheme, it's because it is very similar to to how the "early adopters" in all pyramid schemes get a return...
True. Anyone have point on this?
My cheesy take is yes, its a gold rush, now.
A coin that is "lost", ... can never be recovered.
True. When Bitcoin becomes more valuable, then becomes worth trying to break the cryptographic depth. Just like gold lost at sea. We just waited n-years for HD cameras and robotic deep sea diving submarines to retrieve them. Quantum Computers are up next.
the benefit of seigniorage comes with the responsibility for it as well, and it is supposed to be bi-directional.
Response from Jon Matonis, sums it up:
Control of the monetary system serves one and only one interest the unlimited expansion of the sovereigns spending activity to the detriment of the unfortunate users of that monetary unit. Decentralized Bitcoin obliterates this sad state of affairs.
My take is: "We've always used the Abacus. That
cal-cuu-laatar is blasphemy!"
Thanks to all contributors for keeping this discussion intelligent.
Edit: props to hawkeye, who responded on my 'pyramid scheme' question before I submitted. Any other views?
