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This really should not be a surprise to anyone. If Bitcoin is not already illegal (and I have reason to believe it is due to most states' money transmitter laws

This really should not be a surprise to anyone. If Bitcoin is not already illegal (and I have reason to believe it is due to most states' money transmitter laws), it's almost guaranteed that it will be soon.

jnhnum1 15y ago
If this is illegal, then I think there's a freedom of speech issue here given that essentially the protocol is just sending messages (with no copyright infringement or anything like that) to peers... Edit: of course, you could say the same about other digital transmission of currency, but it seems different due to bitcoin not being tied directly to any "real currency". Then again, IANAL.
- sirlancer 15y ago
  When does money start to become "real currency"? Numbers on an ATM machine are only representative of the physical currency that I can extract from a bank. A message on an IM window could essentially mean the same thing: "Thanks for helping me move my couch, I'll get that $20 over to you by tomorrow". So at what point does the rubber meet the asphalt and how will Apple enforce this down the road?
  - fleitz 15y ago
    We don't have 'money' anymore, we have currency. USD is not money, it's currency and fiat currency at that. US Dollars are backed by an obligation to give you more US Dollars in the future. If you had liberty dollars then you'd have money. To directly answer your question, money becomes currency when you transfer representations of value instead of value. (eg. A piece of paper obliging the barer to receive something of value) Pennies, especially pre-2000 pennies would be considered money as the store of value is the metal not the face value.
    - nhaehnle 15y ago
      Wikipedia defines money as: "Money is any object or record, that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context." This is in line with most actual usage of the word. Bottom line, you're just playing silly semantic games. It is useful to understand the differences between different types of money, but claiming that something is "not really money" based on your own private definition of money does not add to the discussion.
      - fleitz 15y ago
        Actually I juxtaposed the definition of money and currency. The distinction is important. Money is a superset of currency and I got that wrong. Most people think that playing the lottery is an investment strategy for retirement, I would not trust what most people think when it comes to economics. Little semantic games are hugely important to people. Look how pissed everyone gets when MS describe the MSPL as 'open source'. Actually, my own private definition does add to the discussion, when enough people connote a word to have a different meaning it changes the definition of a word, all based on their own little private definitions of words. Your views on semantic contexts are 'fantastic'. I'd suggest you look that one up on the OED if you want to understand the definition I'm using, most people would get it wrong.
    - eropple 15y ago
      Liberty dollars again? Man, if they hadn't gotten raided I'd be suspicious of affiliate link scams.
- jerf 15y ago
  "just sending messages" With this message, I hereby transfer to jnhnum the sum of $12.54 out of my checking account. (Translation, since that's probably a bit subtle to just throw out there: In the process of abstracting money transfers as "just sending messages" your abstraction has leaked critically important details. There's more to money transfers than "just messages", and it is precisely those differences that are why you will not be finding $12.54 from my bank account in your account as a result of this "message" that I have just sent. Your abstraction is not a good one for any purpose, practical or rhetorical.)
  - hammock 15y ago
    Citizens United (the decision that allowed corporations to make unlimited monetary contributions to political organizations) was justified by the first amendment. A check or promissory note is a message, transferring money, and is a form of speech. Where you spend your money is protected free speech.
    - jerf 15y ago
      Your criticism is logically backwards. Transfer of money is not just a message. It is a message, plus some other things that make it also a transfer of money. You can't reduce it to just a message being passed. It is a message, it is not just a message.
      - hammock 15y ago
        It wasn't a criticism, it was a support of bitcoins. The point is that the Supreme Court supports the notion of money transactions as free speech.
- trotsky 15y ago
  Also, conspiracy is just two dudes talking.
fleitz 15y ago
Nothing could be better for bitcoin than the gov't asserting that it's money in court.
BinaryAcid 15y ago
Illegal like bittorrent and file sharing? We have seen how effective that is.
weavejester 15y ago
I doubt Bitcoin will be made illegal. By itself, the Bitcoin network is just a mechanism for passing around signed messages and calculating hash values. It would be difficult to outlaw that without running into constitutional free speech issues. Where Bitcoin might run into trouble is the trading of bitcoins for dollars or commodities. Depending on how bitcoins are classified legally, there may be additional regulations that sellers or buyers of bitcoins need to adhere to. However, because bitcoins are so different to any existing currency or commodity, I think we'll need to wait for a court to decide whether they fall under any existing regulation, if at all.
- joe_the_user 15y ago
  There is no doubt that bitcoins will fall under one or another regulations. One argument would be that bitcoin is an illegal pyramid scheme. Another would be that bitcoin is means circumvent the tax system (all barter and local currency systems, for example, have to pay taxes). I'm sure many other arguments could be found.
  - webXL 15y ago
    I'm sure many other arguments could be found. Like, "Bitcoin is anti-American" or "Bitcoin will be used by heroin dealers who will sell your daughters into prostitution" If bitcoin is a means to circumvent the tax system, then we'd have to apply whatever tax regulation that results to all other forms of currency. Social Security is an illegal pyramid scheme because it wasn't sold to the American public that way. Let's start applying the law equitably before we stomp on innovation.
    - nandemo 15y ago
      Well, it is already being used by drug dealers (see Silk Road). In fact, if you have bitcoins it's probably easier to exchange it for illegal drugs than for food.
      - cristoperb 15y ago
jarin 15y ago
By that argument, EVE Online's PLEX should be illegal as well, as it is transferrable and exchangeable for something of monetary value (a subscription).
- hugh3 15y ago
  Again we're running into the geeks-trying-to-understand-the-law problem -- they always expect the law to be as sensible and self-consistent as geometry. But the law has no patience with reducito ad absurdum, and judges and lawmakers are quite happy to declare that X is legal and Y is illegal even if in some sense Y is really analogous to X. As far as alternative currencies go, my understanding is that they're illegal under US law but you can get away with them on a small scale. The moment they reach a large scale or start getting used for money laundering, though, expect to start having legal problems, because the US Federal Government has reserved to itself the right to print currency. Apple is wise to stay out of it, with the potential for legal trouble outweighing the potential profit from app sales.
  - jarin 15y ago
    "Again we're running into the geeks-trying-to-understand-the-law problem -- they always expect the law to be as sensible and self-consistent as geometry." Well, there's only one solution then—we need to get more geeks in office. Edit: Real geeks, not the "I own an iPad" that passes for geekery in Washington.
    - hugh3 15y ago
      It's not a problem requiring a solution, it's merely an observation. If a bunch of over-logical geeks were to sit down and try to draft a new set of laws which were completely unambiguous and free of arbitrary cutoffs and nonequivalent treatment of equivalent situations then they'd never even get past questions like "Precisely how far from the end of my nose does your right to swing a fist end?"
      - Natsu 15y ago
wmf 15y ago
Rather than reinventing this discussion poorly, I encourage everyone to read the paper first: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857
olalonde 15y ago
Unless Ron Paul gets elected in 2012... He is in favor of abolishing the federal reserve and a champion of liberty.
narrator 15y ago
Why would it be illegal if bitcoins are never exchanged for dollars? I know it's totally utterly contrary to human nature, but if everyone got up tomorrow and left their wallets at home and took things from stores with the consent of the owner and went to work, but received no pay, and stood in line at the soup kitchen and did not take from stores if they felt they had not contributed to the society, would that be illegal too? Think about it for a while. Sometimes we lose sight of what money actually is.
- nicpottier 15y ago
  this! Not sure why you were downvoted, but you nail it. It's all an illusion.
- Tichy 15y ago
  It could actually be illegal if it would turn out to be a scheme for evading tax payments. For example I think you can not simply start exchanging goods for services and quit paying taxes because you don't make money - somehow you have to make a statement to the tax office.
  - patio11 15y ago
    Try this on for size: if someone offers to trade me a week of their time for a week of my time (do NOT do this, please, as it makes little sense for me and even less for you), and I say yes, then I have a legal obligation to a) declare the fair market value of your time as income I received for services and b) file a form with the IRS saying that I paid you something of value equivalent to my usual consulting rate for the week. You then get taxed at your usual rate on that implied income, despite no dollar changing hands. (That would almost certainly be several thousand dollars in taxes.)
PsyVisions 15y ago
And do you have any solid reason for why that will happen or are you just throwing the mud to the wall and see if it sticks there?

jnhnum1 15y ago

If this is illegal, then I think there's a freedom of speech issue here given that essentially the protocol is just sending messages (with no copyright infringement or anything like that) to peers... Edit: of course, you could say the same about other digital transmission of currency, but it seems different due to bitcoin not being tied directly to any "real currency". Then again, IANAL.

sirlancer 15y ago
When does money start to become "real currency"? Numbers on an ATM machine are only representative of the physical currency that I can extract from a bank. A message on an IM window could essentially mean the same thing: "Thanks for helping me move my couch, I'll get that $20 over to you by tomorrow". So at what point does the rubber meet the asphalt and how will Apple enforce this down the road?
- fleitz 15y ago
  We don't have 'money' anymore, we have currency. USD is not money, it's currency and fiat currency at that. US Dollars are backed by an obligation to give you more US Dollars in the future. If you had liberty dollars then you'd have money. To directly answer your question, money becomes currency when you transfer representations of value instead of value. (eg. A piece of paper obliging the barer to receive something of value) Pennies, especially pre-2000 pennies would be considered money as the store of value is the metal not the face value.
  - nhaehnle 15y ago
    Wikipedia defines money as: "Money is any object or record, that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context." This is in line with most actual usage of the word. Bottom line, you're just playing silly semantic games. It is useful to understand the differences between different types of money, but claiming that something is "not really money" based on your own private definition of money does not add to the discussion.
    - fleitz 15y ago
      Actually I juxtaposed the definition of money and currency. The distinction is important. Money is a superset of currency and I got that wrong. Most people think that playing the lottery is an investment strategy for retirement, I would not trust what most people think when it comes to economics. Little semantic games are hugely important to people. Look how pissed everyone gets when MS describe the MSPL as 'open source'. Actually, my own private definition does add to the discussion, when enough people connote a word to have a different meaning it changes the definition of a word, all based on their own little private definitions of words. Your views on semantic contexts are 'fantastic'. I'd suggest you look that one up on the OED if you want to understand the definition I'm using, most people would get it wrong.
  - eropple 15y ago
    Liberty dollars again? Man, if they hadn't gotten raided I'd be suspicious of affiliate link scams.
jerf 15y ago
"just sending messages" With this message, I hereby transfer to jnhnum the sum of $12.54 out of my checking account. (Translation, since that's probably a bit subtle to just throw out there: In the process of abstracting money transfers as "just sending messages" your abstraction has leaked critically important details. There's more to money transfers than "just messages", and it is precisely those differences that are why you will not be finding $12.54 from my bank account in your account as a result of this "message" that I have just sent. Your abstraction is not a good one for any purpose, practical or rhetorical.)
- hammock 15y ago
  Citizens United (the decision that allowed corporations to make unlimited monetary contributions to political organizations) was justified by the first amendment. A check or promissory note is a message, transferring money, and is a form of speech. Where you spend your money is protected free speech.
  - jerf 15y ago
    Your criticism is logically backwards. Transfer of money is not just a message. It is a message, plus some other things that make it also a transfer of money. You can't reduce it to just a message being passed. It is a message, it is not just a message.
    - hammock 15y ago
      It wasn't a criticism, it was a support of bitcoins. The point is that the Supreme Court supports the notion of money transactions as free speech.
trotsky 15y ago
Also, conspiracy is just two dudes talking.

fleitz 15y ago

Nothing could be better for bitcoin than the gov't asserting that it's money in court.

BinaryAcid 15y ago

Illegal like bittorrent and file sharing? We have seen how effective that is.

weavejester 15y ago

I doubt Bitcoin will be made illegal. By itself, the Bitcoin network is just a mechanism for passing around signed messages and calculating hash values. It would be difficult to outlaw that without running into constitutional free speech issues. Where Bitcoin might run into trouble is the trading of bitcoins for dollars or commodities. Depending on how bitcoins are classified legally, there may be additional regulations that sellers or buyers of bitcoins need to adhere to. However, because bitcoins are so different to any existing currency or commodity, I think we'll need to wait for a court to decide whether they fall under any existing regulation, if at all.

joe_the_user 15y ago
There is no doubt that bitcoins will fall under one or another regulations. One argument would be that bitcoin is an illegal pyramid scheme. Another would be that bitcoin is means circumvent the tax system (all barter and local currency systems, for example, have to pay taxes). I'm sure many other arguments could be found.
- webXL 15y ago
  I'm sure many other arguments could be found. Like, "Bitcoin is anti-American" or "Bitcoin will be used by heroin dealers who will sell your daughters into prostitution" If bitcoin is a means to circumvent the tax system, then we'd have to apply whatever tax regulation that results to all other forms of currency. Social Security is an illegal pyramid scheme because it wasn't sold to the American public that way. Let's start applying the law equitably before we stomp on innovation.
  - nandemo 15y ago
    Well, it is already being used by drug dealers (see Silk Road). In fact, if you have bitcoins it's probably easier to exchange it for illegal drugs than for food.
    - cristoperb 15y ago

jarin 15y ago

By that argument, EVE Online's PLEX should be illegal as well, as it is transferrable and exchangeable for something of monetary value (a subscription).

hugh3 15y ago
Again we're running into the geeks-trying-to-understand-the-law problem -- they always expect the law to be as sensible and self-consistent as geometry. But the law has no patience with reducito ad absurdum, and judges and lawmakers are quite happy to declare that X is legal and Y is illegal even if in some sense Y is really analogous to X. As far as alternative currencies go, my understanding is that they're illegal under US law but you can get away with them on a small scale. The moment they reach a large scale or start getting used for money laundering, though, expect to start having legal problems, because the US Federal Government has reserved to itself the right to print currency. Apple is wise to stay out of it, with the potential for legal trouble outweighing the potential profit from app sales.
- jarin 15y ago
  "Again we're running into the geeks-trying-to-understand-the-law problem -- they always expect the law to be as sensible and self-consistent as geometry." Well, there's only one solution then—we need to get more geeks in office. Edit: Real geeks, not the "I own an iPad" that passes for geekery in Washington.
  - hugh3 15y ago
    It's not a problem requiring a solution, it's merely an observation. If a bunch of over-logical geeks were to sit down and try to draft a new set of laws which were completely unambiguous and free of arbitrary cutoffs and nonequivalent treatment of equivalent situations then they'd never even get past questions like "Precisely how far from the end of my nose does your right to swing a fist end?"
    - Natsu 15y ago

wmf 15y ago

Rather than reinventing this discussion poorly, I encourage everyone to read the paper first: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857

olalonde 15y ago

Unless Ron Paul gets elected in 2012... He is in favor of abolishing the federal reserve and a champion of liberty.

narrator 15y ago

Why would it be illegal if bitcoins are never exchanged for dollars? I know it's totally utterly contrary to human nature, but if everyone got up tomorrow and left their wallets at home and took things from stores with the consent of the owner and went to work, but received no pay, and stood in line at the soup kitchen and did not take from stores if they felt they had not contributed to the society, would that be illegal too? Think about it for a while. Sometimes we lose sight of what money actually is.

nicpottier 15y ago
this! Not sure why you were downvoted, but you nail it. It's all an illusion.
Tichy 15y ago
It could actually be illegal if it would turn out to be a scheme for evading tax payments. For example I think you can not simply start exchanging goods for services and quit paying taxes because you don't make money - somehow you have to make a statement to the tax office.
- patio11 15y ago
  Try this on for size: if someone offers to trade me a week of their time for a week of my time (do NOT do this, please, as it makes little sense for me and even less for you), and I say yes, then I have a legal obligation to a) declare the fair market value of your time as income I received for services and b) file a form with the IRS saying that I paid you something of value equivalent to my usual consulting rate for the week. You then get taxed at your usual rate on that implied income, despite no dollar changing hands. (That would almost certainly be several thousand dollars in taxes.)

PsyVisions 15y ago

And do you have any solid reason for why that will happen or are you just throwing the mud to the wall and see if it sticks there?