
The Slow Criminalization of Peer-To-Peer Transfers - petethomas
https://news.bitcoin.com/the-slow-criminalization-of-peer-to-peer-transfers/
======
roguecoder
If we want to draw the connection to cash, companies that trade in large
amounts of cash are also subject to regulation and reporting. For example,
U.S. financial institutions are required to file Currency Transaction Reports
for deposit, withdrawal, exchange of currency, or other payment or transfer
that involves more than $10,000.

Any organization that is facilitating those trades is subject to financial
regulation, even if the trade is in cash. Indeed, if the transaction crosses
the border even individuals carrying cash have to report it for sufficiently
large amounts:
[https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_035....](https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_035.htm)

If anything this enforcement is treating bitcoin more like cash, not less.

~~~
wfunction
Regarding how awesome Bitcoin must be, can I just take a moment to point out
that only _half_ the reason crap like randomware exists (and hits places like
hospitals, etc.) is suboptimal security. The other half is untraceable digital
payments. Food for thought.

~~~
phil21
Ransomware existed before Bitcoin, generally using something like Western
Union.

Bitcoin just became preferred is all. In no way did it "enable" ransomware to
exist, it simply lowered the bar.

~~~
wfunction
> Bitcoin just became preferred is all. In no way did it "enable" ransomware
> to exist, it simply lowered the bar

Would love to know where the heck you pulled the quoted "enable" from, because
it certainly wasn't from my post.

And you say "it simply lowered the bar" as if that's somehow insignificant.
Actually, it's the _entire freaking point_. There's _orders of magnitude_
difference between the two. We're not proving undecidability here...

------
oska
A little bit of background about this site (bitcoin.com). This site is owned
by a _very_ controversial figure in the bitcoin world (Roger Ver). Many people
feel his use of the domain is unethical, as the URL looks like an official
voice for bitcoin when it is far from it.

Satoshi Nakamoto (bitcoin's creator) registered the bitcoin.org site to
present information on bitcoin, with the .org domain reflecting the open
source, community engaged spirit of early bitcoin development. Roger Ver
purchased bitcoin.com from a domain squatter and uses the site to frequently
attack core developers of bitcoin and to hype altcoins. From the submission
title this article doesn't appear to fall in either of those categories but I
think it is still worth pointing out the dubious background of this site to
anyone just becoming interested in bitcoin.

~~~
dwaltrip
Roger Ver isn't an angel, but the core developers are far from deserving
uncritical respect. They've failed for 3+ years to implement _any_ of the
dozens of proposed scaling improvements.

~~~
csomar
This is a very political comment. The Core developers are free to do what they
want. The software is open source and running it is the choice of the users.
The Core developers are not compelled by any means to do any implementation
even if the majority of users, exchanges and investors want it.

~~~
dwaltrip
The parent comment implied that saying anything negative about core developers
is a terrible thing, which is a view that many people don't share. My comment
was intended to provide some insight into that aspect.

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isubkhankulov
In all of these cases, the bitcoin vendors did not register on FinCEN's
website. Registering is simple but by doing so the person/company is required
to check ID's of their customers and make sure there is no money laundering
involved. Including filing reports with the gov't for any suspicious activity
and large cash transactions amongst other things.

~~~
cgb223
How would one launder money with bitcoin?

What would that look like?

~~~
dllthomas
Buy bitcoin, put in mixer, use it to pay for accounts from your "legitimate"
SaaS product.

~~~
csomar
Through virtual credit card numbers you charged from crypto.

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runeks
> At first, the purchase of bitcoin was apparently conducted through digital
> currency exchanges such as Coinbase and Bitstamp, with the sale occurring on
> Localbitcoins.

That's not really peer-to-peer, is it? It's just acting as a middleman between
a peer and a trusted, central exchange.

Peer-to-peer, in my opinion, would be Joe Sixpack selling bitcoins, that he
earned by mowing someone's lawn, to someone else who wants to pay for a
service sold for bitcoins.

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b1daly
The author belies the libertarian quirk of mind that conflates something being
regulated with something being made illegal. Quite different things!

This strikes me as a cousin to the libertarian intuition that if it is
possible to craft an activity that is literally impossible for the government
to discover, such an activity simply can't be illegal. (I'm sympathetic to
this intuition, but it doesn't take long to see the illogic behind it.)

~~~
humanrebar
> The author belies the libertarian quirk of mind that conflates something
> being regulated with something being made illegal. Quite different things!

You're understating how blurred the line is. A Texas regulation on abortion
clinics was struck down last year for being too close to a ban on abortion.
Regulations on tobacco products are introduced and strengthened over time with
the goal of eliminating the use of tobacco. Gun control lobbyists commonly
push regulations on gun form factors, bullets, magazine bans, and all sorts of
other things since a ban on handguns has been consistently ruled
unconstitutional.

~~~
b1daly
I disagree. The practice of medicine in general is one of the most highly
regulated professions. It does not follow that such regulation is a slippery
slope to the practice of medicine being made illegal.

The contrary argument is easier to make: when an activity is regulated, by the
government, it has been officially sanctioned as a legal activity.

There is no logical reason that an activity such as trading bitcoin should be
able to be conducted outside of the legal framework of the state the trader
does business in.

------
ouid
The value of bitcoin was always to evade taxes and launder money, both of
which are criminal enterprises, the only thing that is changing is
enforcement.

~~~
Mendenhall
While I am sure those reasons play a part I think thats not even close to all
of what makes it valuable. Ease of use is a huge one. I can set up a wallet in
less than a minute and someone from across the world can send me bitcoin in
the time it takes for it to clear the block, other cryptos even faster.

One can post their wallet address and make jokes on social media and receive
bitcoin just because people like the content and are happy to support it. (yes
that works)

You can receive bitcoin without giving anyone your name,address,etc,same with
sending it to someone and do so for legal purposes.

Try to do any of those 3 above with dollar bills and its just not even in the
same realm. I see great value in that.

~~~
Analemma_
> Ease of use is a huge one.

Bitcoin is very complicated to use, doubly so to use securely. I've lost count
of the number of stories I've read of someone losing everything, and then
being chided by the community because "you deserved it, you weren't doing it
the ~right way~", and of course there are a thousand mutually incompatible
explanations as to what the right way is. This happens so often there's an
entire subreddit for it.

(EDIT: For example, 12 hours ago an Ethereum startup burned $13 million
because of a typo:
[https://www.reddit.com/r/ethereum/comments/6ettq5/statement_...](https://www.reddit.com/r/ethereum/comments/6ettq5/statement_on_quadrigacx_ether_contract_error/).
The top comment, of course, is "you deserved it, validate your inputs". I'm
not kidding when I say this happens every day)

> I can set up a wallet in less than a minute and someone from across the
> world can send me bitcoin in the time it takes for it to clear the block.

Which is anywhere from half an hour to days and days, depending on how much
you're willing to pay in fees.

> One can post their wallet address and make jokes on social media and receive
> bitcoin just because people like the content and are happy to support it.
> (yes that works) You can receive bitcoin without giving anyone your
> name,address,etc,same with sending it to someone and do so for legal
> purposes.

I can do all of this with a PayPal account, both more quickly and with lower
fees than Bitcoin. I need a real name to cash out, but you need that with
Bitcoin too unless you're using a service that's breaking the law and not
doing KYC.

> Try to do any of those 3 above with dollar bills and its just not even in
> the same realm.

Yes, digital transactions are certainly faster and more convenient than
physical ones, because that's an apples-to-oranges comparison. On all these
metrics though Bitcoin loses to PayPal, and when you're losing to a company
that is the embodiment of pure evil, that's not a good look.

~~~
darawk
That is a UX problem, though. The comparable problem in the 'old' financial
system is legislative and cultural. I have tremendous faith that the rough UX
edges of cryptocurrencies will get smoothed out by designers and coders
looking to make a buck on-boarding people. I don't have the same faith
regarding the vested interests of the existing financial infrastructure.

~~~
Analemma_
Two things:

1) Bitcoin isn't new, it has been around for years now, and millions in
venture capital has been poured into it. It's _still_ a pain in the ass to use
at all and basically impossible to use securely. I'm starting to think that if
it could be fixed, it would be by now.

2) Not all those problems are UX faults. A lot of us happen to consider
transaction irreversibility to be a bug and not a feature, for example.

~~~
darawk
> 1) Bitcoin isn't new, it has been around for years now, and millions in
> venture capital has been poured into it. It's still a pain in the ass to use
> at all and basically impossible to use securely. I'm starting to think that
> if it could be fixed, it would be by now.

I think it's improved quite a bit in that time. Especially so if you consider
some of the newer cryptos. Is it there yet? No. But these things take time.
Computer interfaces took a long time to get where they are today. It takes a
while to find the right abstractions, and people are constantly iterating on
these things in the crypto space.

> 2) Not all those problems are UX faults. A lot of us happen to consider
> transaction irreversibility to be a bug and not a feature, for example.

Well, I respectfully disagree. You may want to build reversibility as a layer
on top of Bitcoin. Perhaps something mediated by trusted third parties. But
that should be _opt in_. You want the underlying financial infrastructure to
have immutable, irreversible transactions. On top of that base, you can and
likely should build support for reversibility in certain contexts.

~~~
yorwba
> You may want to build reversibility as a layer on top of Bitcoin.

How is that supposed to work? Once the money has been sent to someone's
private key, you rely on their cooperation to get it reversed.

To effectively force them to give it up, a trusted third party would have to
hold an even larger amount in escrow. But then what if that third party
refuses to cooperate? You would need a larger escrow service to hold the
escrow service accountable ... or they would have to make their identity
public and be personally liable for any losses, putting government regulation
back in the loop.

And this is assuming the transaction was made voluntarily in the first place.
If someone steals your money they are not going to make the transaction
reversible if they can avoid it. Unless you have the clout to convince a
majority of miners to do a hard fork, good luck getting your money back.

~~~
darawk
In Ethereum, reversibility could have strict constraints. For instance, you
could devise a contract in which the funds are held in escrow for 90 days,
during which time a neutral third party may reverse the transaction using
their key.

The important point is that the actual parties to the transaction may choose
how they want to mediate this, whether they want reversibility, what
conditions they want it to have, and have it all enforced by code and
cryptography.

Of course, this burden would only really take place on high value
transactions. For most transactions, there'd be a standard configuration
people and merchants would use.

------
Glyptodon
I thought the IRS decided bitcoin was property, not currency?

~~~
dragonwriter
The IRS determined that, under _tax law_ , it was property.

That has no bearing whatsoever on how _money transmission business_ law treats
it.

Different laws often have different applicable definitions for similar terms.

~~~
bgitarts
For the purpose of money transmission business law, what is considered money
and what is not?

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ensiferum
The banks and governenrs would never allow a currency that they can't control
and tax and which doesn't benefit the rich.

~~~
justicezyx
I am not sure how btc, right now, is not driving buy the rich Chinese
corrupted business man or government officials...

------
Jabanga
This is unfortunate. The world needs electronic cash, for all the same reasons
it needs physical cash. If it weren't for financial bearer instruments,
millions would have died all across the globe over the last decade.

To understand why, you have to understand System D. System D is the global
informal economy, and it is $14 trillion in size.

It provides a lifeline for hundreds of millions of people around the world who
cannot operate in the formal economy due to a myriad of structural
deficiencies in their economy. The only type of money that works in System D
is cash. With electronic cash, the opportunities System D affords expand.
Suddenly people in the informal economy can rent servers, and sell digital
music online. They are not just confined to their local economy. The benefits
of economic development through expansion of System D, in reducing mortality
rates, crime and civil strife, far outweigh the cost of criminal activity that
is enabled by electronic cash at the margins.

~~~
ReverseCold
> System D

They implemented another useless thing?!?!?

------
Eerie
To all the people who think they can bypass the legal system through smart
technological solutions:

The judge won't care how smart you think it was.

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pc2g4d
So if I sell a bitcoin to my friend for cash, I'm breaking the law?

~~~
roguecoder
Nope, but if you started a business where your friends gathered to sell each
other large enough quantities of bitcoin for cash you would be.

(Edited to add that IANAL and none of this is actually legal advice.)

~~~
HappyTypist
You are wrong, selling any amount of bitcoin for money is considered money
transmission and is a crime without licensing.

~~~
Mendenhall
Please link to some information.

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djschnei
they're scared that rather then end[ing] the fed, we'll make it irrelevent.

