Bitcoin's Busy Year

On Wednesday, BitPay, the world's leading Bitcoin payment processor, introduced a new WordPress tool integrating its services with Fulfillment by Amazon which stores, packs, ships and provides customer service to those using the Amazon marketplace, is available to merchants who do not sell their products through Amazon but who still want to provide the same quality services.  Less than a week ago Mt. Gox — the world's leading Bitcoin exchange—announced their exclusive partner in the US and Canada. Just a few days earlier the first Bitcoin ATM, was unveiled. 

It's been a busy two weeks for the cryptocurrency and its loyal followers, especially here in the United States. The first Bitcoin ATM graced the world on Feb. 23, thanks to Zach Harvey and Matt Whitlock of Lammasu Bitcoin Advisors in New Hampshire. 

Credit: Zcopley/Foter.com

Mt. Gox, based in Japan, joined forces with Coinlab — the world's first US-venture backed Bitcoin company — to cater to their customer base in the US and Canada.

The idea that WordPress users can accept Bitcoin might not sound new, and that's because it isn't. WooCommerce, the predecessor to BitPay WooCommerce, was released in November of last year. Now the partnership between BitPay, based in Atlanta Ga., and Amazon allows for merchants using WordPress to accept Bitcoin with ease while providing their customers with all of the benefits Fulfillment by Amazon has to offer.

BitPay has made accepting Bitcoin easier, verifying transactions, converting Bitcoin into the merchants desired currency and offering direct deposit for those payments. Adding the benefits of a Fulfillment by Amazon allows merchants to store their products in Fulfillment centers, where Amazon packages and ships the items and provides customer service in place of the individual seller.

Bitcoin has only been around since 2009 and since then it has been haunted by a shady past involving online gambling and illicit drug purchases.

But how exactly does that differ from the way any other currency is used?

Comments

[InlineSkate]

Anyone here actively use Bitcoin? I've been considering it for a while, but i'm leery on it's stability.

[Jam]

i bought $100 USD a few months back to play on the silkroad. it's not easy to get in and out but getting easier.

this or something like it has be end of nation-states as we know them. they regulate the transaction b/c in dollars or euros. if the transaction is untraceable how can they prosecute.

[yonemoto]

You're kidding, right? You know it's traceable.

[Jam]

it doesn't go through a bank, they would have to physically confiscate your computer.

governments rely on peer pressure to make people 'voluntarily' pay. once that goes away, the state goes away.

[yonemoto]

yes, you're correct. It's harder to confiscate, but that is not the same as "untraceable". With enough computational power, breaking a single SHA-256 instance, by brute force if necessary, is doable (say, within a week) and that unlocks the chain of possession.

[jaydubya]

That is an incredible over-simplification. Identifying the correct block chain of a specific transaction and decrypting a hash for one function in that block chain are two entirely different matters.
Traceability isn't the issue. The issue is it does not require banks to function, and cannot be centrally managed by a Federal Reserve system.
Breaking control of the money supply is what would threaten the modern state. And yes, bitcoin is very threatening to the modern state.

[neonvirus]

With enough computational power, breaking a single SHA-256 instance, by brute force if necessary, is doable (say, within a week) and that unlocks the chain of possession.

You're incorrect by orders of trillions.

Please read the below by noted cryptographer Bruce Schneier. It helps to illustrate the huge namespace taken up by a 256-bit encryption scheme and why Bitcoin is safer than any fiat currency. Note: Schneier didn't write this about Bitcoin, just about 256-bit bruteforcing in general.

"These numbers have nothing to do with the technology of the devices; they are the maximums that thermodynamics will allow. And they strongly imply that brute-force attacks against 256-bit keys will be infeasible until computers are built from something other than matter and occupy something other than space."

-Bruce Schneier
http://www.schneier.com/blog/a.....se_cr.html

[34lbs]

I've been considering it as well just to score some bud off of the silkroad.. but i am not sure how trusty wusty they are, can they scam you, what kind of securities does the silk road have, overall Bitcoin seems pretty secure what with the double peer to peer and universally accesible logs n stuff, and i am not afraid of trading with that, just afraid of trading 4 da stuff...

[Hyperion]

Well, this whole idea sounds just a tad shady to me. I mean, who would need some alternate currency, other than a drug dealer or terrorist. Anyone suspected of using this should be immediately visited by DHS to see just what they are up to, and it's no good, I can assure you. We have to nip this one in the bud.

People thinking they can just make their own currency, hmm, next thing you know people will be thinking they can grow their own food, or make their own beer, crazy anarchists.

[robc]

Does anyone else think DHL every time they see DHS. I have to figure out from context that it isnt the delivery company being talked about.

[Paul.]

Every time reason does a post on BitCoin, they include a picture of minted Bit Coins...

Irony?

[LTC(ret) John]

"Irony?"

No, I think they make them from an alloy.

[Paul.]

I'm considering a golf clap... considering it.

[phandaal]

They could show what it actually looks like:

[Paul.]

01101000101001010010010011100101010

[Almanian!]

I REJECT YOUR BINARY VIEW OF THE WORLD!

[yonemoto]

2

[Generic Stranger]

I had this horrible dream; there were ones and zeros everywhere, and once, I thought I saw a two...

[LTC(ret) John]

BINARY SOLO!

[robc]

http://www.youtube.com/watch?v=WGoi1MSGu64

[34lbs]

They make minted bitcoins, a company called casascius does... pretty useful imo

[Paul.]

But how exactly does that differ from the way any other currency is used?

Income tax. The purpose of an income tax allows the government to know when, how and where you get your money. People think the income tax is popular with governments because it secures revenue. It doesn't any more than any other form of tax. An income tax lets the government look at Paul and say, "So, Paul, how DO you make your money, what do you do during the day, what industry are you in, and if everything you're telling us is the Truth(tm), why is there this other $10,000 in this account over here? Care to tell us where that came from?"

[yonemoto]

Come on. The purpose of the income tax is to collect revenue. The government will ALWAYS have ways to surveil its citizenry in exactly the fashion you describe, income tax or no. If you think states with no personal income tax are any less capable of surveiling their citizenry than states with onerous income taxes, like california, or massachussetts, you've got another one coming.

[Paul.]

My state isn't as interested in my terrorist activity as the federal government.

The income tax is designed for setting policy, addmitted as much by the Sec of Treasury during the Clinton years.

During a discussion back in the 90s about income tax reform, I remember he blew off the idea of changing from an income tax to any other form of tax because the usefulness of the income tax for policy goals.

And I live in one of those states with no income tax. Now ask me, "How happy is the state government about not having an income tax, and how badly do they want to implement one"? Ask me, I dare you.

[yonemoto]

oh don't get me wrong. I might be moving to such a state (texas), probably for california. But I'm not certain that the primary impetus for an income tax in california is to "track the citizens". Trust me, the legislators here are not that smart. They really are like, "oh hey, this is a way for us to confiscate more money, everyone else does it, so clearly it's morally acceptable...

[yonemoto]

I jacked up that second sentence, should read, "I might be moving to such a state (texas), from california"

[Paul.]

The purpose of the income tax is to collect revenue.

And yes, just to be clear, it helps the government collect revenue. But an income tax has a ton of side benefits beyond collecting revenue, which is why policy makers love it so much.

[Tim]

But how exactly does that differ from the way any other currency is used?

I'm guessing you can't snort coke with bitcoin.

[Hyperion]

There will be bills in congress to shut this down, sooner than later.

[Jam]

it can't be shut down, it's peer to peer, no central server. Napstar was a server. BitTorrent operates in the open.

[Paul.]

Never underestimate the government's ability to ban or regulate something through sheer force of will.

[Almanian!]

This. It will be like any other prohibition - just making it such a pain in the ass, and with the risk of PENALTAX or jail...yeah, a lot of people will opt out just to avoid the hassle.

Now, if Bitcoin can truly operate effectively outside of the long, heavy, dead arm of the law...I'm very interested!

[Jam]

the state would have to force it's way into every home computer.

there will come a day when employers, who always want to give employees tax free benefits, will start transacting in something like this.

and companies could easily beat the competition on the sales side once the US enacts a VAT.

[Paul.]

there will come a day when employers, who always want to give employees tax free benefits, will start transacting in something like this.

See above. Income tax. Just because your employer gives you a non-cash benefit doesn't mean it isn't taxable.

Again, despite yonemoto's protestations, the evil of an income tax is precisely because the government gets to define income.

That cell phone your employer gives you? Yeah, income.

http://www.zdnet.com/blog/btl/.....hone/19675

The government can define ANYTHING it wants as income. That painting on the wall? Income. Those tools your neighbor bought you because you helped him work on his deck? Income. And the government wants that tax in real cash money, printed by Uncle Sam.

Or shorter: fuck you, pay me.

[Jam]

but who reports that? a cell phone bill on an expense account is tax free employer benefit.

a day bowling with employees is tax free income.

a Cadillac health care plan, lunch, beer in the fridge, etc.

here's some bitcoins to buy some music online slowly turns into here's some bitcoin to convert to dollars to pay bills during hyperinflation.

[Hyperion]

Like I said, sooner than later, we'll see a LOT of attention on this by the feds, if they think they are losing one dime of revenue because of it, or that anyone is engaging in any activity that they can't monitor.

They are desperate for more revenue. They have already proven beyond any doubt that they will NEVER cut spending. They won't even decrease the increase in spending without dire prediction of apocalypse.

If there is one thing you can count on from our feds, it's that they are not going to ignore anything that has to do with their subjects escaping paying their 'fair share'.

I am sure that there are lots of self proclaimed liberals out there that like this bit coin idea and the idea of 3D printers. Wonder what their reaction is going to be when the full weight of the federal gov is brought down hard on those 2 fronts.

[phandaal]

Oh yes. The 3D printing movement is a liberal fap-fest right now.

Not that I blame them for thinking it's awesome. 3D printing is freaking sweet.

[Paul.]

Generally speaking, the feds don't like a currency they can't trace:

This week, an internal FBI report was leaked, detailing the Bureau's concern about the virtual currency Bitcoin and its potential to be exploited by criminals for money laundering and other scams.

And by "trace" we mean through income. We see you spent $40,000 last month, Paul, but you're but a mere IT professional, it's not like you're a school teacher... where you getting this kind of scratch"?

The income tax is used as the Big Brother bludgeon to see if your spending matches your income... if it doesn't, probable cause, warrants all around.

Bitcoin circumvents that and the feds are jumpy about it.

http://gizmodo.com/5909115/lea.....coin-crime

[Paul.]

The anonymous transfer of virtual currency Bitcoin's payment network allows means two people can complete an exchange of goods without ever having to know anything more about each other than a 36-character string of numbers and letters, a Bitcoin address or account.

See, here's the real-world problem with this and why Bitcoin is 'untracable'... ie, how in the Feds' view, it is different than regular money.

The exchange of goods listed above is a laboratory example. Even criminals engage in purhcase of goods through legitimate retailers, big box stores etc. If I'm a major drug dealer, I'm buying big screen TVs at Best Buy, Lexus sedans from the local dealer... it's not really an "exchange between two people". It's an exchange between me and a large organization.

Even if I'm paying cash for these items, without an income to back those purchases up, the Feds now have something to look for. But with bitcoin, the income stream becomes indirect or non-existent.

Don't ever forget the number of criminals who have been caught because their lifestyle outflashed their income.

If this gets truly popular, the government will take an interest and it won't be pretty.

[yonemoto]

Paul I agree with all of this, but I would contend that if there were never an income tax, the federal government would still find an excuse to declare bitcoin shady and make it illegal. That's all I'm saying.

[Hyperion]

The peasants are getting out of control. 3D printing, voting to legalize illegal narcotics, alternate currencies. What will these piss ants think of next to try and circumvent the divine will of their masters?

Now we know why DHS needs a billion rounds of high powered ammunition and 3000 armored vehicles. Time to put the peasants back in their place.

We're heading warp speed right into a world with a lot more freedom, or a world in which there are no personal freedoms, unless you are an elite.

[Paul.]

We're heading warp speed right into a world with a lot more freedom, or a world in which there are no personal freedoms, unless you are an elite.

I vote B.

[Sigivald]

Now we know why DHS needs a billion rounds of high powered ammunition and 3000 armored vehicles

1) Off by several orders of magnitude, sorry. Someone couldn't tell "lots of 1000" from "single" when reading the bids.

2) Surplus'd and "can't not use that budget" explains it far better.

(Plus, well, I think the Coast Guard and Border Patrol and Secret Service and maybe even every paranoid's favorite, FEMA might well legitimately need a few armored vehicles here and there.)

[BTCM]

Bitcoin adoption is increasing and reaching new businesses every day. The more people who get into this virtual currency, the more difficult it will be for traditional banks to continue ignoring it. For those who'd like to start using Bitcoins, I found this place with tutorials: http://thebitcoinmaster.blogspot.com

[stateless]

Great set of videos from CBT Nuggets on Bitcoin, for anyone that is interested but wants to know more.

http://bitcoin.cbtnuggets.com/#

[Sigivald]

Just what I've always wanted: A permanently deflationary currency!

No, thanks.

Seriously.

No. Not a chance.