7 ms·

More Bitcoin Regulation Is Inevitable

33 points by siavosh 13y ago

shmerl 13y ago
Regulation where it's necessary (like exchanges) is understandable. Regulation of transactions between individuals and vendors for example is not reasonable. And virtual currency should prevent such regulations by its own design - i.e. there simply should be no technical way to regulate that.
- 1qaz2wsx3edc 13y ago
  Seeing as the ledger is public, regulation of transactions through aggregate means is inevitable. It's just a waiting game right now.
  - DennisP 13y ago
    Worth noting there are several projects working on making crytocurrencies much more private. Matthew Green's zerocoin and zerocash are the strongest, providing provable anonymity. In principle, zerocoin could be added to bitcoin, but the bitcoin devs aren't up for it yet. Zerocash is so different it pretty much has to be an altchain.
  - SilasX 13y ago
    Great idea: "Oh, yes, I totally agree with the need for Bitcoin regulation. In fact, every transaction should be required to be made available to the public ..."
- melarina 13y ago
  > Regulation of transactions between individuals and vendors for example is not reasonable. I'm not so sure. I think some regulation to catch tax cheats is inevitable. Whether that's desirable or not depends on one's political point of view.
  - shmerl 13y ago
    Well, if digital currency should be equal to cash, it should not be regulated just because someone left a technical door to do that. I.e. it has to be made equal to cash in practice and be unregulated by design.
300bps 13y ago
As long as there is cash, there will be a way to get bitcoins outside of an exchange and outside of any regulation. Even if this were not the case, the more regulation added to bitcoins, the more people move to alternative crypto currencies. I don't see people seeking to regulate litecoin, dogecoin, coinye, etc.
- kamkazemoose 13y ago
  I imagine most regulation to bitcoin would be more vague and instead be written to apply to all cryptocurrencies. People aren't calling for the regulation of other cryptocurrencies mostly because they don't have the same kind of usage and economy surrounding them that bitcoin has. If people start trading coinye in the same way and it reaches similar volumes as bitcoin, you'll see the same sort of talk. It just makes more sense to treat cryptocurrencies the same under the law, unless there is something about a particular one that made it most different than all the other current variations.
- smtddr 13y ago
  When I hear the general media talk about "bitcoin", I assume they actually mean all crypto-coins unless they cleary indicate they're talking about a particular coin. Like when my parents refer to all videogames as "Nintendo".
TrainedMonkey 13y ago
I agree. I think every bitcoin transaction should be reviewed by finely trained employees of Finance Security Agency (FSA). Amongst other things they should make sure: 1. Correct amount of bitcoins were withdrawn from source bitcoin wallet. 2. Correct amount of bitcoins were deposited into target wallet. 3. Both target and source wallets are valid. 4. Etc. AFAIK, bitcoin is currency and FX market is in generally way less regulated compared to securities market. Thus any regulation introduced would be targeting money transfers between individuals, rather than exchanges[1]. [1] We probably should regulate exchanges, as of right now it is super simple for exchanges to make profit on their customers. Consider following strategy, whenever bitcoin order comes in that moves market exchange would execute small order in same direction before customer order, reverse order as soon as larger order moved market. Instant profit.
- sln 13y ago
  I really want to believe this comment is a joke... Everything that you mention that needs to be "regulated" is already regulated by the bitcoin protocol itself. In fact, the whole point is to replace regulation with strong cryptographic proof.
  - dllthomas 13y ago
    3 might not be enforced by the protocol if we're using a broader definition of "valid".
  - TrainedMonkey 13y ago
    Good sir, surely you jest, how else we will maintain security of this nation if FSA will not monitor and double check every single transaction? What if some bitcoins will go missing in transit from source to target wallet? First part of the post is indeed a joke, I am pretty sure comments on FX markets and strategy that exchanges could use to game the customers are accurate.
  - kudu 13y ago
    I think the first part /is/ a joke.
civilian 13y ago
> Bitcoin has fluctuated wildly in value, highlighted by a chart from Coinbase showing that it increased over 400 percent in November and then lost nearly half its value in December. That type of volatility is an invitation to unscrupulous dealers and merchants to overcharge or underpay. > To protect consumers who want to use Bitcoin for legitimate transactions, the government may adopt reporting requirements on virtual currency exchanges so that there is a public repository of information about prices. Although the government cannot control the value of a virtual currency, it can make the currency more transparent to users so that they are not defrauded. --- Ehhh, really? In one paragraph they point out the price history of Coinbase, and then in the next paragraph they say "the government outta do it". And yeah-- the government is technically unable to control the prices of virtual currencies but government also _should not_ be in the business of controlling prices anyway. That leads to a distortion of market prices and a bad deal for one side or the other.
higherpurpose 13y ago
I'm not surprised to see this "threat" angle approached by NYT. Most of their articles on Bitcoin have been negative so far, and about how awful Bitcoin is whether from an economic point of view or from an "enabling crime" point of view. Normally, you would see "real journalists" try to balance the views, and insert opposite views and quotes in their articles. But not here, it seems.
- bcoates 13y ago
  One of the things you can say in favor of the NYT is that they never bought into the TV news balance fad.
programminggeek 13y ago
Any business opportunity, currency, financial instrument, etc. that makes enough money is absolutely 100% going to be regulated for two reasons: 1. Consumer Behavior Requires It 2. Large Companies Thrive On Regulation To point one, if you have anything that is making people a lot of money one way or another, there will be scams and fraud. Once there are scams and fraud, the government gets involved and has to clean up the mess. Then laws are made to stop the problems from happening in the first place. Eventually you need business licenses, certification, etc. to transact business because too many people got ripped off. To point two, regulation and rules actually end up favoring the entrenched companies. Usually regulation creates barriers that reduce competition. For example, to trade securities, sell insurance, or sell real estate you need to get a license. To get a license you need to take exams and pay money to be certified. Most people won't go through that effort and so the larger companies make a lot of money from the lack of competition. Rules and regulations might be annoying, but they are a sign of maturity and growth in many cases so it's not all bad.
- baddox 13y ago
  That's an interesting way to put it. You're basically saying that Bitcoin will be regulated, either because the regulations will be good for society (in which case society will advocate for them) or bad for society (in which case society may not advocate for them, but those with political power will).
  - programminggeek 13y ago
    Yep, pretty much.
  - joe_the_user 13y ago
    Bitcoin will be regulated because the power of the state demands it, and aside from the state's vast power, the regulators actually have the reasonable argument that while they may corrupt, venal and malicious at times, giving their power to completely random-ass anonymous people wouldn't be an improvement. IE, The power of unregulated bitcoin is not "power to the people" but power to Silkroad founder and from there one would guess the Zetas and so-forth.
fiatmoney 13y ago
There's an important distinction between the "regulation of bitcoin" and "regulation of businesses's or people's use of bitcoin". You could, for instance, say "use of an unregistered wallet is a crime", but it would be very difficult within the protocol to prevent bitcoins from flowing to unregistered wallets.
kudu 13y ago
> The idea that Bitcoin could be an alternative to traditional money that would allow users to conduct transactions anonymously beyond the pale of intrusive government regulators has proved to be little more than a pipe dream That statement is incredibly ignorant. Regardless of what any government decides to do, people will always be able to conduct unregulated transactions. The subject at hand is the regulation of money transmitters, such as exchanges.
- deleted 13y ago
  [deleted]
DennisP 13y ago
"FinCen went a step further in its guidance by including any person who puts into circulation a virtual currency, which means that the so-called Bitcoin miners are also subject to the regulations." This is out of date. FinCen issued vague guidance months ago suggesting miners might be regulated, but recently clarified that they are not. http://www.coindesk.com/fincen-bitcoin-miners-investors-money-transmitters/ http://www.coindesk.com/fincen-bitcoin-miners-investors-mone...

33 points by siavosh 13y ago

Regulation where it's necessary (like exchanges) is understandable. Regulation of transactions between individuals and vendors for example is not reasonable. And virtual currency should prevent such regulations by its own design - i.e. there simply should be no technical way to regulate that.

1qaz2wsx3edc 13y ago
Seeing as the ledger is public, regulation of transactions through aggregate means is inevitable. It's just a waiting game right now.
- DennisP 13y ago
  Worth noting there are several projects working on making crytocurrencies much more private. Matthew Green's zerocoin and zerocash are the strongest, providing provable anonymity. In principle, zerocoin could be added to bitcoin, but the bitcoin devs aren't up for it yet. Zerocash is so different it pretty much has to be an altchain.
- SilasX 13y ago
  Great idea: "Oh, yes, I totally agree with the need for Bitcoin regulation. In fact, every transaction should be required to be made available to the public ..."
melarina 13y ago
> Regulation of transactions between individuals and vendors for example is not reasonable. I'm not so sure. I think some regulation to catch tax cheats is inevitable. Whether that's desirable or not depends on one's political point of view.
- shmerl 13y ago
  Well, if digital currency should be equal to cash, it should not be regulated just because someone left a technical door to do that. I.e. it has to be made equal to cash in practice and be unregulated by design.

300bps 13y ago

As long as there is cash, there will be a way to get bitcoins outside of an exchange and outside of any regulation. Even if this were not the case, the more regulation added to bitcoins, the more people move to alternative crypto currencies. I don't see people seeking to regulate litecoin, dogecoin, coinye, etc.

kamkazemoose 13y ago
I imagine most regulation to bitcoin would be more vague and instead be written to apply to all cryptocurrencies. People aren't calling for the regulation of other cryptocurrencies mostly because they don't have the same kind of usage and economy surrounding them that bitcoin has. If people start trading coinye in the same way and it reaches similar volumes as bitcoin, you'll see the same sort of talk. It just makes more sense to treat cryptocurrencies the same under the law, unless there is something about a particular one that made it most different than all the other current variations.
smtddr 13y ago
When I hear the general media talk about "bitcoin", I assume they actually mean all crypto-coins unless they cleary indicate they're talking about a particular coin. Like when my parents refer to all videogames as "Nintendo".

TrainedMonkey 13y ago

I agree. I think every bitcoin transaction should be reviewed by finely trained employees of Finance Security Agency (FSA). Amongst other things they should make sure: 1. Correct amount of bitcoins were withdrawn from source bitcoin wallet. 2. Correct amount of bitcoins were deposited into target wallet. 3. Both target and source wallets are valid. 4. Etc. AFAIK, bitcoin is currency and FX market is in generally way less regulated compared to securities market. Thus any regulation introduced would be targeting money transfers between individuals, rather than exchanges[1]. [1] We probably should regulate exchanges, as of right now it is super simple for exchanges to make profit on their customers. Consider following strategy, whenever bitcoin order comes in that moves market exchange would execute small order in same direction before customer order, reverse order as soon as larger order moved market. Instant profit.

sln 13y ago
I really want to believe this comment is a joke... Everything that you mention that needs to be "regulated" is already regulated by the bitcoin protocol itself. In fact, the whole point is to replace regulation with strong cryptographic proof.
- dllthomas 13y ago
  3 might not be enforced by the protocol if we're using a broader definition of "valid".
- TrainedMonkey 13y ago
  Good sir, surely you jest, how else we will maintain security of this nation if FSA will not monitor and double check every single transaction? What if some bitcoins will go missing in transit from source to target wallet? First part of the post is indeed a joke, I am pretty sure comments on FX markets and strategy that exchanges could use to game the customers are accurate.
- kudu 13y ago
  I think the first part /is/ a joke.

civilian 13y ago

> Bitcoin has fluctuated wildly in value, highlighted by a chart from Coinbase showing that it increased over 400 percent in November and then lost nearly half its value in December. That type of volatility is an invitation to unscrupulous dealers and merchants to overcharge or underpay. > To protect consumers who want to use Bitcoin for legitimate transactions, the government may adopt reporting requirements on virtual currency exchanges so that there is a public repository of information about prices. Although the government cannot control the value of a virtual currency, it can make the currency more transparent to users so that they are not defrauded. --- Ehhh, really? In one paragraph they point out the price history of Coinbase, and then in the next paragraph they say "the government outta do it". And yeah-- the government is technically unable to control the prices of virtual currencies but government also _should not_ be in the business of controlling prices anyway. That leads to a distortion of market prices and a bad deal for one side or the other.

higherpurpose 13y ago

I'm not surprised to see this "threat" angle approached by NYT. Most of their articles on Bitcoin have been negative so far, and about how awful Bitcoin is whether from an economic point of view or from an "enabling crime" point of view. Normally, you would see "real journalists" try to balance the views, and insert opposite views and quotes in their articles. But not here, it seems.

bcoates 13y ago
One of the things you can say in favor of the NYT is that they never bought into the TV news balance fad.

programminggeek 13y ago

Any business opportunity, currency, financial instrument, etc. that makes enough money is absolutely 100% going to be regulated for two reasons: 1. Consumer Behavior Requires It 2. Large Companies Thrive On Regulation To point one, if you have anything that is making people a lot of money one way or another, there will be scams and fraud. Once there are scams and fraud, the government gets involved and has to clean up the mess. Then laws are made to stop the problems from happening in the first place. Eventually you need business licenses, certification, etc. to transact business because too many people got ripped off. To point two, regulation and rules actually end up favoring the entrenched companies. Usually regulation creates barriers that reduce competition. For example, to trade securities, sell insurance, or sell real estate you need to get a license. To get a license you need to take exams and pay money to be certified. Most people won't go through that effort and so the larger companies make a lot of money from the lack of competition. Rules and regulations might be annoying, but they are a sign of maturity and growth in many cases so it's not all bad.

baddox 13y ago
That's an interesting way to put it. You're basically saying that Bitcoin will be regulated, either because the regulations will be good for society (in which case society will advocate for them) or bad for society (in which case society may not advocate for them, but those with political power will).
- programminggeek 13y ago
  Yep, pretty much.
- joe_the_user 13y ago
  Bitcoin will be regulated because the power of the state demands it, and aside from the state's vast power, the regulators actually have the reasonable argument that while they may corrupt, venal and malicious at times, giving their power to completely random-ass anonymous people wouldn't be an improvement. IE, The power of unregulated bitcoin is not "power to the people" but power to Silkroad founder and from there one would guess the Zetas and so-forth.

fiatmoney 13y ago

There's an important distinction between the "regulation of bitcoin" and "regulation of businesses's or people's use of bitcoin". You could, for instance, say "use of an unregistered wallet is a crime", but it would be very difficult within the protocol to prevent bitcoins from flowing to unregistered wallets.

kudu 13y ago

> The idea that Bitcoin could be an alternative to traditional money that would allow users to conduct transactions anonymously beyond the pale of intrusive government regulators has proved to be little more than a pipe dream That statement is incredibly ignorant. Regardless of what any government decides to do, people will always be able to conduct unregulated transactions. The subject at hand is the regulation of money transmitters, such as exchanges.

deleted 13y ago
[deleted]

DennisP 13y ago

"FinCen went a step further in its guidance by including any person who puts into circulation a virtual currency, which means that the so-called Bitcoin miners are also subject to the regulations." This is out of date. FinCen issued vague guidance months ago suggesting miners might be regulated, but recently clarified that they are not. http://www.coindesk.com/fincen-bitcoin-miners-investors-money-transmitters/ http://www.coindesk.com/fincen-bitcoin-miners-investors-mone...