by Mike Masnick
Thu, Jun 19th 2014 8:33pm
by Mike Masnick
Fri, May 9th 2014 3:37am
from the converted-into-dollars dept
There's also some confusion over what this all means. Rather than issuing a full ruling, the FEC released an "advisory opinion" based on a specific request from the Make Your Laws PAC, which specifically asked for the ability to accept bitcoin donations up to $100. What's not clear is if the FEC is just agreeing to that level of donations or if it's okaying larger donations as well. In fact, it appears that the FEC commissioners don't even agree with each other as to whether there's a limit on donation sizes:
That low sum assuaged the concerns of several commissioners about the risks of the virtual currency, said Commissioner Ellen Weintraub, a Democratic appointee.So that's likely to create some sort of mess somewhere down the road.
"The $100 limit was really important to us," she said. "We have to balance a desire to accommodate innovation, which is a good thing, with a concern that we continue to protect transparency in the system and ensure that foreign money doesn't seep in."
[....] But FEC Chairman Lee Goodman, a Republican appointee to the panel, disagreed. He said that the advisory opinion treats bitcoin donations as in-kind contributions -- not official currency -- meaning that the only limits that apply are the federal caps on all forms of accepted donations. Those limit individuals to giving $2,600 to a candidate per election and $5,000 to a political action committee. Individuals and corporations can give unlimited sums to super PACs.
"To me, the opinion that the commission approved today supports the right of bitcoin users to contribute as they would all other kind things of value," he said, such as silver dollars and works of art.
In the meantime, it's notable that well-known techie -- and one of the small group of clued-in Congressional Representatives -- Jared Polis also just happened to announce today that you can donate to his campaign via bitcoin. Looking at that page, I note that the highest amount allowed is... $100. It would appear he's taking no chances with the disagreement over amounts allowed by the FEC. Polis claims to be the first Congressional rep to accept bitcoin, though others have pointed out that Rep. Steve Stockman has been accepting bitcoin for his Senate campaign for a few months now.
Either way, it's yet another step forward in making bitcoin somewhat more mainstream.
by Mike Masnick
Wed, May 7th 2014 3:34pm
from the because-moneychanging-is-a-new-concept? dept
There are many different types of alternative currencies (herein also “alternative forms of value” or simply “alternative value”), each currency representing what the community holds valuable (e.g. time, labor/skill, goods/services, etc.). Alternative currencies currently in use include: “LindenDollars”—Second Life; Amazon.com's “Quest Gold”; World of Warcraft's (WoW) virtual “Gold”; Ithaca Hours (Ithaca, N.Y.); Carbon credits; regional currencies in Germany; “Dotz” (Brazil); Tradebank “Credits” (Construction-centric barter network); “Lassobucks” (Time/Skillset currency); Maha Vitaran—Indian power utility barters with other utilities for power; “Bartercard”—Loaded with goods & services (not cash), used in exchange for other goods & services. Many others are planned or currently in development.But here's the problem: exchanging currencies is not a particularly new idea. In fact, it's a very, very old idea. If you read the actual claims of the patent, they're basically describing the same abstract idea of any currency exchange platform -- having people offer to exchange currency, determining the values of the different currencies, and determining at what "price" to do the exchange.
It's unclear exactly what Western Union will do with the patent -- the company itself has mocked Bitcoin -- but it does remind us that there's likely to be a growing number of patent battles in the Bitcoin space before too long. eBay has also received some attention for seeking a patent on a Bitcoin currency exchanger -- but that's still an application that has yet to be approved. Still, there are a lot of others rushing in to patent aspects of Bitcoin, and I imagine it's only a matter of time until some entity, having nothing to do with Bitcoin, seeks to claim key aspects of Bitcoin as its "intellectual property."
by Mike Masnick
Wed, Mar 5th 2014 2:21pm
from the you-win dept
So, in response to a totally technologically clueless elected official, up steps Rep. Jared Polis, perhaps the most technologically knowledgeable elected official out there, with a counterproposal. He basically rewrote Manchin's letter, but replaced Bitcoin with the dollar bill, highlighting the sheer absurdity of Manchin's request.
This is, to put it mildly, absolutely hilarious. I imagine that we'll see some traditionalists bitch about a Congressional rep using satire to mock a colleague, but that's just silly. This makes the point better than any boring letter or speech would ever do. And, considering that Rep. Polis has no problem wearing this on the House floor, I get the feeling he really doesn't care at all what "traditionalists" think of his actions around Congress.
I write today to express my concerns about United States dollar bills. The exchange of dollar bills, including high denomination bills, is currently unregulated and has allowed users to participate in illicit activity, while also being highly subject to forgery, theft, and loss. For the reasons outlined below, I urge regulators to take immediate and appropriate action to limit the use of dollar bills.
By way of background, a physical dollar bill is a printed version of a dollar note issued by the Federal Reserve and backed by the ephemeral “full faith and credit” of the United States. Dollar bills have gained notoriety in relation to illegal transactions; suitcases full of dollars used for illegal transactions were recently featured in popular movies such as American Hustle and Dallas Buyers Club, as well as the gangster classic, Scarface, among others. Dollar bills are present in nearly all major drug busts in the United States and many abroad. According to the U.S. Department of Justice study, “Crime in the United States,” more than $1 billion in cash was stolen in 2012, of which less than 3% was recovered. The United States’ Dollar was present by the truck load in Saddam Hussein’s compound, by the carload when Noriega was arrested for drug trafficking, and by the suitcase full in the Watergate case.
Unlike digital currencies, which are carbon neutral allowing us to breathe cleaner air, each dollar bill is manufactured from virgin materials like cotton and linen, which go through extensive treatment and processing. Last year, the Federal Reserve had to destroy $3 billion worth of $100 bills after a “printing error.” Certainly this cannot be the greenest currency.
Printed pieces of paper can fit in a person’s pocket and can be given to another person without any government oversight. Dollar bills are not only a store of value but also a method for transferring that value. This also means that dollar bills allow for anonymous and irreversible transactions.
The very features of dollar bills, such as anonymous transactions, have created ubiquitous uses from drug purchases, to hit men, to prostitutes, as dollar bills are attractive to criminals who are able to disguise their actions from law enforcement. Due to the dollar bills’ anonymity, the dollar bill market has been extremely susceptible to forgers, tax fraud, criminal cartels, and armed robbers stealing millions of dollars from their legitimate owners. Anonymity, combined with a dollar bills’ ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.
Many of our foreign counterparts already understand the wide range of problems that physical currencies can have. Many physical currencies have enormous price fluctuations, and even experience deflation. 20 years ago Brazil had an inflation rate of 6281%. In 4 years (2001 to 2005), the Turkish Lira went from 1,650,000: $1 to 1.29 to $1. In 2009, Zimbabwe discontinued it’s dollar. Before it was eliminated, the Zimbabwe dollar was the least valuable currency in the world and their central bank even issued a $100 trillion dollar banknote. A person would starve on a billion Zimbabwe dollars and it took an entire wheelbarrow full of $100 billion dollars in notes to purchase a loaf of bread.
The clear use of dollar bills for transacting in illegal goods, anonymous transactions, tax fraud, and services or speculative gambling make me wary of their use. Before the United States gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.
Member of Congress
by Mike Masnick
Wed, Feb 26th 2014 2:35pm
from the because-you're-an-idiot dept
To do the honors, I present Senator Joe Manchin, who (like plenty of Senators) does appear to get a fair bit of campaign money from financial services and banking institutions. He's now calling for Bitcoin to be banned in the US with a letter to Treasury Secretary Jack Lew and Fed Chair Janet Yellen. But what's incredible in his letter is how... simply wrong he is about nearly everything regarding the cryptocurrency.
I write today to express my concerns about Bitcoin. This virtual currency is currently unregulated and has allowed users to participate in illicit activity, while also being highly unstable and disruptive to our economy. For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.First off, Bitcoin is not unregulated. Today's regulations concerning currency still apply to Bitcoin. Yes, there are elements that appear to be less regulated (or make it easier to skirt regulations) but to say it's "unregulated" is simply wrong. The fact that it has allowed people to participate in illicit activity could easily apply to just about any financial instrument from cash to debt to equity to whatever the hell Wall Street is cooking up. The idea that it's "disruptive to our economy" also seems... wrong. It has the potential to be disruptive in a good way (providing all sorts of benefits to today's payment systems) but Bitcoin is still tiny. It has no real impact on the economy today.
Due to Bitcoin's anonymity, the virtual market has been extremely susceptible to hackers and scam artists stealing millions from Bitcoins users.Not even close to true. The "susceptible to hackers and scam artists" has nothing to do with the anonymity bit. For the most part, it's had to do with very poorly run businesses (like Mt.Gox) that appeared to be somewhat clueless about how to securely handle Bitcoin. This has been detailed repeatedly. In fact, the death of Mt. Gox should actually be quite a good thing for the Bitcoin community and ecosystem, because getting rid of the weak players will increase the safety and confidence in Bitcoin.
Anonymity combined with Bitcoin's ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.Replace Bitcoin with cash and... well, there you go.
Bitcoin has also become a haven for individuals to buy black market items.The amount of US cash used to buy black market items makes Bitcoin barely a blip on the radar. But we don't ban cash.
I am most concerned that as Bitcoin is inevitably banned in other countries, Americans will be left holding the bag on a valueless currency.First of all, if this is a risk that believers in Bitcoin want to take, why should the US block that? Besides there are plenty of investments that turn out to be valueless. Does Senator Manchin wish to ban all of those as well? Does he want to ban companies going bankrupt? Sometimes investments don't work out.
Two days ago, this exchange took its website down and is no longer even accessible. This was not a unique event; news of plummeting or skyrocketing Bitcoin prices is almost a weekly occurrence.Actually, no, it's not. Let's look at the market price of Bitcoin for the past year or so, from Blockchain.info:
In addition, its deflationary trends ensure that only speculators, such as so-called “Bitcoin miners,” will benefit from possessing the virtual currency.This is a key point often raised against Bitcoin, but it seems to assume that pricing can't compensate for that, and it's not clear that's the case. Yes, when something is volatile, speculators are going to prevail, but that doesn't always need to be the case.
There is no doubt average American consumers stand to lose by transacting in Bitcoin. As of December 2013, the Consumer Price Index (CPI) shows 1.3% inflation, while a recent media report indicated Bitcoin CPI has 98% deflation. In other words, spending Bitcoin now will cost you many orders of wealth in the future. This flaw makes Bitcoin’s value to the U.S. economy suspect, if not outright detrimental.Where to start? Again, I'm sure we could find a stock or other investment opportunity that has dropped in value over the last month. But picking a arbitrarily (and ridiculously short) time frame in which to make this argument is just... well, stupid. It makes no sense. We could easily point to the inflation of Bitcoin over the past year and suggest that based on Mahcnin's own logic that Bitcoin is a good investment. Both arguments are equally stupid.
Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.I'm curious. When Wall Street put the economy in real threat, including putting tons of "hard working Americans" at risk thanks to leveraging up the money supply to insane rates, did Joe Manchin (then a Governor) ask the US government to fix these issues and ban questionable banking practices? Hell no. Instead, he supported bailing out the banks. Yet, now, suddenly, he's worried about this tiny little corner of a currency he doesn't even understand?
Even more ridiculous, he's now claiming that he's only focused on Bitcoin, and his calls for regulation don't even apply to other cryptocurrencies, despite having many of the same features which Manchin doesn't even seem to understand in the first place.
This is nothing more than grandstanding anyway, but these issues are going to keep coming up, and it's important to point out when the people making these claims appear to not even remotely understand what they're talking about. Manchin's full letter is posted below in case you want to dig in deeper on the nuttiness.
by Mike Masnick
Thu, Feb 6th 2014 7:42am
New Jersey's Attorney General Freaks Out About Proof-Of-Concept Bitcoin Mining App; Issues Ridiculous Subpoena
from the overreach dept
Apparently, at a hackathon back in November, some MIT students hacked together a proof-of-concept version of this kind of thing called Tidbit. As the EFF explains:
Tidbit uses a client's computer to mine for Bitcoins as an alternative to website advertising: in exchange for removing ads from a website, a user would give some CPU cycles to mine for Bitcoins instead. Tidbit was clearly presented as a proof of concept, with the developers making clear the code was configured not to mine for Bitcoins. That's because in addition to refining the code, they needed to work out the legal details, like drafting a terms of service, and the ethical details, like making sure there was a way for users to opt-in to the service so their computers weren't being used to mine Bitcoins without their knowledge. Tidbit won the Node Knockout award for innovation and the students thought they were on their way to continuing with their project.Again: it was a proof of concept that couldn't actually mine Bitcoin, and the developers were working on ways to make sure that it was only useful for legitimate purposes before releasing the software. But, it appears that New Jersey's grandstanding acting Attorney General John Hoffman (who has gone after some app makers who had installed secret Bitcoin miners with apps), along with Deputy Attorney General Glenn Graham, suddenly decided that this proof-of-concept software must be illegal as well, and sent over a ridiculously overbroad subpoena. EFF is now helping the developers fight that subpoena.
As EFF explained in a letter to Graham, the whole effort was ridiculous. Not only do the developers have nothing at all to do with New Jersey, but the code is just a proof of concept and isn't being used for any actual Bitcoin mining -- and the whole point was to use it with consent for legal purposes. New Jersey sent back a somewhat obnoxious letter, basically saying, "screw you, we're New Jersey, you must respond to the subpoena."
Tidbit, with the help of EFF, has now filed a motion to quash the subpoena. Yes, Bitcoin is an emerging field right now, and the regulations around it are a bit up in the air. But there's no way to look at this other than as a massive overreach by politicians in New Jersey who have suddenly decided that any Bitcoin mining app must be up to no good. Hopefully the courts recognize that this is just a massive overreach on several different levels.
by Michael Ho
Thu, Jan 30th 2014 5:00pm
from the urls-we-dig-up dept
- Marc Andreessen has written up his opinion on why Bitcoin matters, stating that it's the first practical solution for the Byzantine Generals Problem -- allowing (digital) information to be transferred securely in an insecure environment (the internetz). Andreessen isn't an unbiased source, though, as he has invested nearly $50 million in Bitcoin startups and is looking for more Bitcoin-related investments. [url]
- Glenn Fleishman has a rebuttal to Andreessen's opinion, pointing out the less rosy features of using Bitcoins such as the "buyer beware" aspect of having no chargebacks and no recourse for disputed transactions. Fleishman agrees that Bitcoin has value as a secure payment and transaction system, but not as a new currency that could displace existing government-backed money. [url]
- Focusing on Bitcoin as just a payment system or a currency may be looking at it too narrowly. The Bitcoin protocol can be re-used for other purposes that have nothing to do with money, such as building a secure P2P microblogging platform (eg. Twister). [url]
- Overstock.com is now accepting Bitcoin payments, making it one of the first online retailers that you've probably heard of to do so (besides the Techdirt store, of course). So far, Overstock users have bought over $500,000 worth of stuff using Bitcoin -- with sheets and cellphone accessories as the top items purchased (???). [url]
by Mike Masnick
Thu, Dec 5th 2013 11:11am
from the seems-a-bit-questionable dept
All together, the pledges and grant applications amount to more than $200,000, approaching Vicco's annual budget of about $300,000, Cummings said. Still, the town has only a tiny fraction of that money in hand.However, both Cummings and Vaughn have talked about "capitalizing" on the attention, including appearing on a reality TV show:
The town may even become the setting for a reality-based television show. Cummings said he expects to review a contract proposal soon from a production company, but doesn't know which network might be interested.A reality TV show where they show off how "unusual" they are? Suddenly the idea of a wacky police chief who gets his salary paid in Bitcoin seems like yet another "hook".
He said he wants the show to focus on revitalizing the town.
"I don't see us being that entertaining, but somebody else seems to think we're a little unusual," he said.
Also, Cummings and Vaughn seem to recognize that staying in the news -- and potentially getting more donations -- is part of the plan:
"I'm excited about it; it's a first for Vicco again," Vaughn said, referring to the city's fairness ordinance passed in January that prohibits discrimination based on sexual orientation. The city was the first in the region to approve such a law, and at the time only the third in Kentucky.That's not to say that the plan isn't real, but it seems reasonable to ask if this isn't just another way to get a small town extra attention after its recent attention (and donations) started to die out. Vaughn's salary is still being based in dollars and just converted to Bitcoin, so his "salary" isn't in Bitcoin, he's just "paid in Bitcoin." And given the fact that the town itself is doing this at the same time that it's seeking donations and has set itself up to accept Bitcoin, it appears that this may just be a somewhat silly way to keep this small town in the news... and trying to get donations.
But Cummings added that publicity isn't necessarily the only reason for the city to take such a step. Since the city's passage of its fairness ordinance and a subsequent appearance on Comedy Central's "The Colbert Report," officials have received several donations, including several pieces of playground equipment for a new park near City Hall. And now the city's upcoming website will be set up to accept Bitcoin donations, something Cummings said could help the small town of 300 people better afford projects to improve local infrastructure.
by Leigh Beadon
Fri, Nov 29th 2013 9:00am
from the reason-to-buy dept
It's that time of year again — we've got a bunch of treats for readers who want to support Techdirt while getting some new gear and perks for the holidays. Today we're happy to make three big announcements about the Techdirt Insider Shop.
First, the shop is accepting Bitcoins! You can now use the internet's native currency for any purchase — just fill your cart as usual and select the Bitpay option at checkout.
Second, in celebration of that upgrade and as part of the Bitcoin Black Friday event happening today, we've put a bunch of items on sale. There are savings on a bunch of Insider gear, plus big discounts on our offerings for serious fans: Lunch with Mike and an awesome day with Techdirt.
Last but not least, it's time for the return of the Holiday Bundle!
This year's bundle includes a pullover hoodie, your choice of a coffee mug or water bottle, and the classic logo tee in your choice of light or dark gray. On top of that, the bundle includes a Watercooler Special: one full year of access to the Crystal Ball and the Insider Chat, plus a monthly cache of First Word/Last Word credits and an exclusive group video chat with Mike. All together this package would normally cost up to $152, but for a limited time it's available at $99!
If you're ordering gear from the Insider Shop to give as a gift, please do it soon to ensure it ships in time! Unfortunately we are unable to guarantee Christmas shipping, but orders placed by December 14th (in the US) or December 9th (internationally) should arrive on time with all shipping options. Depending on your location, there may be express shipping options available as well.
Happy holidays and happy shopping!
by Mike Masnick
Sat, Nov 9th 2013 9:00am
from the sometimes-it's-good-to-be-in-the-dark dept
- Last week, we were the first to report that Ladar Levison was planning to release Lavabit's code as open source (including dark mail capabilities Levison is working on with Silent Circle) and to put up a Kickstarter campaign. That campaign is now live. It's worth pointing out that respected security guru Moxie Marlinspike wrote an interesting criticism of Lavabit, but also that Levison provided a detailed response.
- Moving on from dark mail, we've got Dark Wallet, an interesting IndieGoGo project to create a simple and easy-to-use, but secure, Bitcoin wallet. The folks behind it are hoping to build a series of useful Bitcoin tools down the road.