
The Bitcoin Community Disagrees on What Happens Next - adventured
http://www.bloomberg.com/news/articles/2015-09-18/the-bitcoin-community-disagrees-on-what-happens-next
======
calgoo
"It’s an OK commodity but it’s the equivalent of selling real estate on the
moon. There’s no inherent value. I applaud the ability of speculators to make
money from selling it to other people, but I don’t think even calling it a
commodity is enough. It’s a kind of shadow asset."

I love when people who are in finances say that bitcoin has no vale; when
actual money today is so complex in determining its value that you could
basically say its a virtual coin as well.

~~~
rwmj
It's also obviously not true with even the tiniest amount of research. If you
want to buy something online anonymously, then you use Bitcoin. There's the
value.

~~~
amalcon
The problem with this is that Bitcoin is just about the _least_ anonymous
thing ever. It only seems anonymous because nobody's built the infrastructure
to track it yet.

~~~
adrianmacneil
This statement is a bit hyperbolic. Bitcoin isn't as anonymous as say cash,
but it's a lot more anonymous than most online payment methods (excluding a
few altcoins which can really just be seen as innovations in the
bitcoin/blockchain space).

------
brighton36
I'm pretty sure the value of Bitcoin is circumventing regulations. Similarly,
I'm guessing the Bitcoin community doesn't care very much about whether a
government agency classifies it as a currency, a commodity, or a potato. Note
that most of the quoted people rarely if ever engage in commerce with Bitcoin
- so I'm not sure why their opinion on regulation is terribly relevant.

~~~
facepalm
The issue is in the way it is being taxed. For example in Germany,
theoretically you have to collect VAT if you trade Bitcoin (at least if you do
it professionally). I didn't know that before, but apparently only gold is
exempt from that (and currencies). If you trade silver or some other stuff,
you are liable for VAT.

So it would be nice if Bitcoin would also be exempt from VAT, like gold or
currencies.

~~~
jsprogrammer
The only tax in Bitcoin is the voluntary mining fee. If governments want to
collect tax on Bitcoin transactions, they will need to run a mining farm.

~~~
vidarh
This is only true if you are prepared to commit tax fraud, or if Bitcoin is
not considered a taxable asset class in your jurisdiction.

The chances of getting away with it may be decent depending on how you obtain
and sell your BTC, but that does not make it any more legal than avoiding
taxes on cash transactions you do that there's tax liabilities on.

~~~
jsprogrammer
If you are making taxable transactions, that is for you to deal with the
appropriate authorities.

Putting entries in the block chain is not a taxable transaction anywhere that
I am aware of, except that you may need to add an allotment for the miner to
process your transaction.

~~~
icebraining
That's like saying "signing a paper is not a taxable transaction" \- if that
paper is a transfer of property, it probably is a taxable event, and so would
the entry in the blockchain probably be, if it's between address owned by
different people.

~~~
jsprogrammer
Yes, _if_ , _probably_.

I never made that assumption, but many people here seem to have.

~~~
icebraining
You made a categorical statement - "putting entries in the block chain is not
a taxable transaction. As far as we can tell, that's wrong. It'd be different
had you written "putting entries in the block chain _isn 't always_ a taxable
transaction".

~~~
jsprogrammer
What, specifically, is wrong about it? Taxes may apply to actual exchanges of
goods and/or services, but there is no tax, save the "optional" miner fee, on
making an entry in the blockchain.

------
adrianmacneil
These recent articles make it sound like there has been a recent revelation by
the "U.S. Government" that bitcoin has _actually_ been a commodity all along.

The reality is much more complicated. The federal government is made up of
many different agencies, and each one is trying to figure out whether they
should be regulating it, in case they may take the fall for not preventing the
next big Mt. Gox style collapse or scam.

While CFTC have recently decided that they should regulate bitcoin options as
a commodity, the IRS have deemed bitcoin as property for capital gains tax
purposes, but their FinCEN division (along with NYDFS and most other states)
are regulating it very much as a currency under money transmission laws.

In the end this doesn't really matter. The power of bitcoin is that it is
decentralized, and, like the internet itself, if an individual is able to
connect to the network, then they are able to make transactions with others,
regardless of how liberal or oppressive their government is.

TL;DR: Regulations will continue to make it increasingly difficult to run
bitcoin businesses in the U.S., but that doesn't matter. Bitcoin's power will
always come from the fact that it is a completely open network for
individuals.

------
Animats
From the title, it looked like this was going to be about the block size
controversy, where there is serious disagreement about what happens next. The
article is more like "can anybody find a use case for this thing?"

Bitcoin has had two runups driven by use cases - Silk Road I (drugs), and
getting around China's exchange controls. Both were shut down. For most of
2015, Bitcoin has been around $225 ± 25. There were brief bubbles outside that
range, and one big drop, but it came back to that trading range. So it's not
interesting to speculators any more. Until someone finds a new use case, it's
not likely to do much.

There's been progress. Mark Karpeles, who ran Mt. Gox and apparently stole its
funds, is in jail in Japan.

~~~
adrianmacneil
Actually, bitcoin is still being used to get around China's exchange controls.
That is why there is so much investment in mining in China - mining equipment
is treated as capital investment, and it's trivial to then sell the proceeds
for USD.

I would also guess that there are far more people using bitcoin on dark net
marketplaces now than there ever were using Silk Road (mostly due to all the
publicity), but I don't have any sources to back this up.

I do agree that we are unlikely to see any significant changes in the price of
bitcoin in the medium term though. In the long run, the price of bitcoin is
mostly irrelevant when bitcoin is being used as a payment network anyway.

~~~
Animats
_" I would also guess that there are far more people using bitcoin on dark net
marketplaces now than there ever were using Silk Road (mostly due to all the
publicity), but I don't have any sources to back this up."_

Bitcoin transaction volume in dollars hasn't increased in 18 months. See this
graph.[1] The two big spikes were in November 2013 and March 2014. Since then,
not much. Bitcoin usage is not increasing.

[1] [https://blockchain.info/charts/estimated-transaction-
volume-...](https://blockchain.info/charts/estimated-transaction-volume-
usd?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=)

------
LAMike
The way I view Bitcoin and money is like the OS wars of the past few decades.
Up until this point the big OS's (Microsoft == USD, Apple == Yuan) have been
copyrighted by the government.

They control the updates, what is allowed on their platform, and the way
developers make apps for that platform.

Bitcoin is the Linux of the money system. An Open Source OS for money, where
developers can build apps without asking permission, and the community
actually has a say in the progress of the OS, whether that's a good or bad
thing we'll find out.

------
JesperRavn
The economics professor stated _As money, Bitcoin is terrible – a deeply
deflationary currency that’s within a bubble._ I'd like to expand on this a
bit.

The deflation issue is complex. It's hard to imagine a stable situation where
money has a fixed supply. The simplest steady state one can imagine is
constant economic growth r, which is also the real interest rate. If we
further assume a constant velocity of money (so the total value of all money
is a fixed percentage of GDP), then any currency where the total supply of
currency was fixed, would have a _deflation_ rate equal to the real interest
rate. Therefore holding currency or zero interest bonds would be equivalent.
But money has some transaction value that makes it more valuable than zero
interest bonds, so this situation could not be an equilibrium.

Most economists think that in practice there is no way to have a stable
currency except by forcing inflation by printing money (which in the current
implementation is injected into the economy by buying bonds). I don't think it
is possible to create an inflationary currency except through central banks.
So I really think that bitcoin faces long term problems.

~~~
dllthomas
_" I don't think it is possible to create an inflationary currency except
through central banks."_

I don't see why that would be the case. Would not "Bitcoin, but the mining
rewards don't decrease" be an inflationary currency?

~~~
Dylan16807
Constant rewards would mean the inflation tends to zero in the long term. But
that's easy to fix by making the rewards increase over time in proportion to
how many coins exist.

The harder problem is that without a central bank you can't track changes in
the size of the economy. The more you want to avoid deflationary periods, the
more you have to inflate "just in case". And high constant inflation has its
own problems.

So it's better to say that it's extremely hard to create a mildly-inflationary
currency without a central authority.

~~~
icebraining
_The harder problem is that without a central bank you can 't track changes in
the size of the economy._

Why not, if you have the total list of transactions being made - ie., the
blockchain? Seems to me like it wouldn't be hard to measure the "Bitcoin GDP"
and adjust accordingly.

~~~
dllthomas
You can, quite trivially, measure the total amount of BTC that moved from
wallet to wallet. You can't tell what actually moved from entity to entity (at
least, not without a lot of work, and probably not without some non-blockchain
information). I'm not sure how good the former would serve as a proxy for the
latter in your envisioned use case.

Really, if we wanted to stabilize a coin, I think we'd want to be measuring
how it's moving relative to other things, which is definitely external info.
It would be a challenge to come up with a means of folding these observations
into the system in a secure (and ideally trustless) way.

------
jron
bitcoin is a 256-bit number. Today, governments would like to regulate the
usage of approximately 33,437,921 of these magic numbers. I'm guessing most of
community can at least find humor in this.

~~~
Dylan16807
That's not really how they divide...

And they don't care about the numbers in general, unlike certain other cases
where people have tried to restrict numbers entirely.

They just regulate transfers of control of value. You can communicate
transfers of control of value with anything. Rocks, flags, numbers, dance.
Doesn't mean governments want to regulate "magic rocks".

~~~
jron
Sure, you can represent private keys in many different formats and the
keyspace is effectively 160-bit when brute forcing known addresses. I'm just
making the point that unlike rocks and flags, bitcoin is intangible and more
like speech.

If I posted a number which happened to have a value of $14,001 USD in this
post, I would be breaking the law. If I sold t-shirts with bitcoin private
keys printed on them, I would be considered an unlicensed money transmitter by
FinCEN.

~~~
Dylan16807
Same thing could happen if you point out a safety deposit box you're giving
away with a pin of 00000000. It's not really about the number, because I can
say 0 all day.

~~~
jron
Unlike bitcoin, nothing I say in this comment can change the ownership of a
safety deposit box. A few more things:

1\. Ownership of the deposit box is not define by pin holders

2\. Deposit boxes are tangible

3\. Deposit boxes and contents have intrinsic value

3\. Forgetting a pin doesn't effectively destroy the box and contents

4\. The security of a deposit box is not defined by only math

I'm not trying to be pedantic, I'm just saying it is more complicated than
that.

------
1ris
>That means the regulator can now bring charges against any wrongdoers trading
cryptocurrency futures and options.

I didn't know there are options for Bitcoins. Does anybody know more about
this?

~~~
icebraining
The reason we are discussing this aspect of Bitcoin is because the regulator
of derivatives and futures (CFTC) recently ruled against a company (Coinflip,
aka Derivabit) which was an exchange for those kinds of financial instruments
for BTC.

They made a Show HN some time ago:
[https://news.ycombinator.com/item?id=7461343](https://news.ycombinator.com/item?id=7461343)

------
wired_devil
It's a distibuted computer program. Now they want to charge it? Why? Because
money.

------
jokoon
"Community" ? You mean a horde of tech speculators who would gladly get an
opportunity benefit from having some insight about bitcoin just to benefit
from it.

I don't understand how there could really be a community that revolves around
a crypto currency. It's just some people with a libertarian agenda, who don't
like banks or government, and want to make money.

I would gladly hear about the community of programmers who actually write code
and try to design new decentralized technology. The "bitcoin community" is not
that. I don't think you can find many expert on how bitcoin works.

I would rather call those people finance tech entrepreneurs.

~~~
aianus
> It's just some people with a libertarian agenda, who don't like banks or
> government

Sounds like a community to me.

~~~
wpietri
It depends. It takes more to form a community than a common descriptor. For
example, consider "atheist". There isn't really an "atheist community", in
that there's very little in common between atheist Buddhists, atheist Jews,
former Catholics, apostate Muslims, atheist skeptics, atheist Unitarians, etc,
etc.

There are many communities that are accidentally or intentionally atheistic,
of course. But that doesn't mean there's a community of atheists.

Given both the Bitcoin and libertarian tendencies against centrality, I'd be
really surprised to discover that there was really a single Bitcoin or
libertarian community. I'd expect a number of relatively distinct communities
that interact around common resources or interests.

As an example, consider the Great Lakes. There isn't really a Great Lakes
community; people in Toronto and Chicago don't have much sense of shared
identity. But the shared resource demands joint action, so you see things like
this:

[https://en.wikipedia.org/wiki/Great_Lakes_Compact](https://en.wikipedia.org/wiki/Great_Lakes_Compact)

[https://en.wikipedia.org/wiki/Great_Lakes%E2%80%93Saint_Lawr...](https://en.wikipedia.org/wiki/Great_Lakes%E2%80%93Saint_Lawrence_River_Basin_Sustainable_Water_Resources_Agreement)

