Why The Deep Web Has Washington Worried

From online drug bazaars to virtual currency tax shelters, the growing anonymous web has many corners of Washington concerned

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Washington has no idea what to make of the Dread Pirate Roberts.

As Lev Grossman and I write in this week’s cover story, the Dread Pirate Roberts allegedly ran the Silk Road, the world’s most successful online drug bazaar, until the feds caught him earlier this month. His real name, according to a 39-page federal complaint against him, is Ross Ulbricht, 29. He supposedly took the pseudonym from a character in the movie and book, The Princess Bride. In the Silk Road, DPR, as his followers called him, created a business model for anyone wanting to sell illicit items online using free encryption software called Tor and the virtually anonymous crypto-currency Bitcoin. Though the feds have taken Silk Road offline, there are plenty of folks lining up to be the next Dread Pirate Roberts.

Lev and I examine the greater implications of the Deep Web, the massive and growing anonymous area of the Internet. But from the perspective of lawmakers and law enforcement in Washington, Silk Road presents a double conundrum. It’s a blueprint for criminals the world over at a time when FBI resources are stretched thin and political will to empower government snooping has cratered. And it has created a regulatory headache in figuring how to deal with whole new currencies, tax havens and virtual online markets.

While Tor is used by everyone from law enforcement to Syrian dissidents to protect valuable information, it is a double-edged sword. Many experts warn that groups ranging from the Russian mafia to international drug cartels are looking closely at the lessons learned from the Silk Road. It took the FBI more than two years of investigative work to find Ulbricht. They don’t have the resources to compete with Silicon Valley in hiring, or the tools—a long-hoped for modernization of the law governing online wiretapping is on ice in Congress thanks to Edward Snowden.

(Click here to join TIME for as little as $2.99 to read Lev Grossman and Jay Newton-Small’s full cover story on the Deep Web.)

Developing technology to fight the Deep Web, or the anonymous non-searchable web, “is not adequately funded—it’s nowhere near adequately funded,” says Marcus Thomas, former assistant director of the FBI’s technology division and now on the advisory board Subsentio, which helps companies comply with online warranted wiretaps. “Historically it was well funded, but recently especially with sequestration, it’s been hard hit. It’s always been a difficult thing to build cost benefit analysis for. How much money should you spend building a technology you may not use for a year, if ever?”

Chester Wisnieski, a senior information technology security adviser at Sophos, adds that the FBI doesn’t have enough trained staff. “If you look at the FBI—how many agents do they have in cyber? Less than 200,” he said. “There’s been a very fast shift of traditional crimes moving online and don’t have skilled agents to deal with it.”

(MORE: Obama Official Apologizes For Broken Health Care Website)

The policy problem is compounded by Bitcoin, which represents another set of jurisdictional tangles for Washington. The Senate Homeland Security Committee, officials tell TIME, plans on holding hearings on Bitcoin within the month. The committee sent letters to nine federal agencies in July asking for their thoughts on Bitcoins and other virtual currencies in the hopes of developing a holistic approach to the so-called cryptocurrency that neither stifles the currency’s potential nor enables criminals to abuse it. “As with all emerging technologies, the federal government must make sure that potential threats and risks are dealt with swiftly,” Committee Chairman Tom Carper, a Delaware Democrat, and the committee’s top Republican, Tom Coburn, wrote in the letters. “However, we must also ensure that rash or uninformed actions don’t stifle a potentially valuable technology.”

Bitcoin can be a force for good. “We’ve grown used to the idea that virtual transactions should be tracked because they can be; whereas Bitcoin brings anonymity back into online commerce,” says Sasha Meinrath, director of the New America Foundation’s Open Technology Institute. “It’s amazing how scary this notion is to law enforcement. But I see it as akin to trade in gold, cash transactions, and barter: not something to be feared, but simply another useful tool for commerce.”

And yet, virtual currencies have a complex past. In recent years, Liberty Reserve and e-Gold both ran afoul of the law, mostly for money laundering. U.S. Immigration and Customs Enforcement seized funds from the world’s largest Bitcoin exchange, Mt. Gox, in May charging that the company was operating an unlicensed money transmitting service. Mt. Gox has since moved to put names to Bitcoin transfers and register with federal and state governments. There is about $2 billion Bitcoin in existence today. Authorities say Silk Road transactions amounted to $1.2 billion in Bitcoin.

Indeed, regulators have already taken an active interest in Bitcoin. The Senate Finance Committee is looking at language to regulate virtual currencies its tax code overhaul. They’re also considering giving the IRS more money to track virtual tax havens, Senate sources tell TIME. A  Government Accountability Office report in June warned that virtual currencies like Bitcoin could be abused as tax havens. New York Financial Services Superintendent Benjamin Lawsky sent subpoenas to 22 Bitcoin businesses this summer saying it was considering new regulatory guidance on virtual currencies. “If virtual currencies remain a virtual Wild west for narcotraffickers and other criminals,” he said announcing the subpoenas, “that would not only threaten our country’s national security, but also the very existence of the virtual currency industry as a legitimate business enterprise.” A Commodities Futures Trading Commissioner said his agency is looking into regulating Bitcoins as a commodity. And Treasury’s Financial Crimes Enforcement Network put out guidance in March saying Bitcoin brokers would have to follow wire service regulations—a potentially onerous requirement as each wire service must register state by state.

(MORE: Report: Hillary on 2016, “I’m Minded To Do It”)

All of this means that no one is quite sure how to handle bitcoin: is it a currency? A bond? A commodity? Should dealers be regulated like wire services or brokers? Should profits be taxed as capital gains? Few in Washington have even begun to consider these questions, and yet given the rapid growth of Bitcoin, the Deep Web and websites like the Silk Road they will surely be forced to soon.

Internet users are increasingly looking for anonymity as their preferences and personal information are tracked and traded like pork belly futures. For many, the Deep Web represents a haven from those prying eyes. But, as in real life, when there’s anonymity, there are dark alleys where people will abuse it. In the physical world, should we choose it, we can live a cash-based anonymous existence. Should we be able to do so online, even if it means anyone can buy drugs, fake IDs or illicit weapons as well? These are the questions Washington must grapple with as it looks at how to regulate cyrpotcurrencies and police the Deep Web.

Click here to join TIME for as little as $2.99 to read Lev Grossman and Jay Newton-Small’s full cover story on the Deep Web.

68 comments
Sibeone
Sibeone

I think the deep web is so dangerous.  Does anyone else see that this can cause terrorism?  When millions of lives have been shattered by war over the years in the middle east; a real anti-US culture exists.  The whole deep web needs to be shut down.  Does anyone else see this???  

jmlandry77
jmlandry77

Selling products from consenting adult to consenting adult cannot be a crime unless someone is harmed.

Harm is crafting pointless foreign wars, inflating currencies and strong armed enforcement of useless laws.

Bitcoin and the Silk Road are nothing short of a revolution in Liberty and free commerce.

bakerjd99
bakerjd99

Bitcoin is important because it demonstrates how to separate state and currency. The last great separation: the separation of state and religion was a fundamental advance in human freedom. In time the separation of state and currency will be viewed as an even greater advance. The sad historical truth is simple: fiat currencies always go to zero. The US dollar has lost over 90% of its value since 1912, At current inflation rates it will be worthless by 2050. You can rant all you want mathematics doesn't give a crap. The choice between a precise, public and mathematically based regime like Bitcoin and the deranged secret machinations of central banks is stark and undeniable. Upholding the latter is siding with tyrants.

sukram
sukram

Money is a dirty way to which our politics and power is conducted.  By having people in control of the money, without the fear of confiscation, and the freedom to distribute it with out forced taxation, gives the man what is long overdue. Their true Republic voice.

sukram
sukram

Money belongs to people as it measures the means of exchange for their product and services. Trusting some entity with the printer and unlimited ink is a laughable way to control our existence.

jhoughton1
jhoughton1

No.  I'm sorry. The basis for a stable economy is a single, stable currency and transactions that are visible (and taxable, when appropriate).  Bitcoin may seem neato-keeno to the cyber-set, but it's not a good idea and should be squashed.

BaalSach
BaalSach

 wow...

still waiting on the zombie apokolypse

ShawnS.Hudson
ShawnS.Hudson

again, authors, one more time, you had the chance to realize the revolution in bitcoin but choose instead to avoid the big picture and superficially circumvent through the view and focus on the lesser than, by magnitudes of order, an issue succinctly defined in whole as, peripheral. Accept the fact that when revolution hits you in the face you can't identify it as such.

AustinWilliams
AustinWilliams

Very well written article.  Thank you.

As a graph theorist, I think the DHS should really like bitcoin to become widely used.  Because all transactions can be seen on the public blockchain, investigators can learn a great deal about the financial inner-workings of illegal (and legal) operations.

There is an old investigative trick that is done with cash: record the serial numbers on a bunch of bills, then go spend those bills at local drug dealer.  Instruct financial institutions to report when those marked bill turn up.  By looking at where the bills ended up -- and how long they took to end up there -- an investigator can infer some things about the inner financial workings of the drug dealer's operation.  This trick has it's limits, though, because we only know two things: where the money started, and where it ended up.  We know nothing about what happened in between.

However, with bitcoin it's different.  If spend bitcoins with a local drug dealer who's running a bitcoin-based business, I can follow the flow of money the entire way. I can see how the money is moving.  I may not know who it's going to, but I can get an idea of how the internal financial operation works.... is the money consolidating at one address or being broken up and spent quickly?  If I spend coins with several local dealers, does all the money end up in the same address?  etc etc.  A lot can be learned by following the money trail, and bitcoin tells me more about the money trail than cash does.

Granted, tech-savvy users will try to mix coins... but that just gives the investigators another line of attack: infiltrating the mixing services, setting up honey-pots, pulling an (N-1) attack on a coinjoin mixer, etc etc etc.

tl;dr:  The DHS should get behind bitcoin... it will help them catch criminals.

btcbit11
btcbit11

The Bitcoin network is different from the currency, bitcoin. The network is the next layer of protocol now being layered on the internet, while bitcoins are an entirely new asset class.  

drudown
drudown

I'm sure the Foreign Money puppeteer of the GOP would love nothing more than eliminating the last bastion of Free Press: the Internet.

"Anarchy is the stepping stone to absolute power," - Napoleon

deconstructiva
deconstructiva

Thanks, Jay, and congrats on cover story, and also, have fun on your Australian trip. Perhaps one way to fight the Dark Web / Deep Web is sunshine - find ways to Google it and access it openly by anyone and NOT have to use programs like Tor to access it. Crimes are tougher to commit and get away with out in plain view, shadows always needed.

jmac
jmac

Secret banking.   We all should know what secret banking can accomplish.  We missed a Great Depression by a hair.  Should we trust the internet any more than we trusted those big banks?

No.    

PaulDirks
PaulDirks

The trouble is, that with the very noteworthy exception of child-porn, most of the crimes that anonymity enables are just the sort of victimless transactions that Government oughtn't be overly involved with in the first place. Has anyone yet ordered someone killed and paid for it in bitcoin? The question answers itself.



AlisonShaeLee
AlisonShaeLee

@Sibeone It would be near impossible to shut down deep web and besides, have you even been on it? There are barely any terrorists on there because they use their own communication networks and not DW.

drudown
drudown

@bakerjd99 

Just say: Climate Change IS real.

You said it before so say it here again. 

Say: "fracking water tastes great" and is "totally safe for humans, animals and crops."

Just want to make sure we don't need to categorically dismiss everything written about Super Mario Coins (sorry, "Bitcoins") on account of some pretext to obfuscate the "real issues" and therefore deflect attention from "real tyranny".

So, please answer. 

drudown
drudown

@sukram 

You sound like the 13 year old gamer second-guessing the Bob Kraft running the Patriots.

Except you are using a crayon and talking about unicorns while using words like "some entity" and "control our existence" as you foolish propose we trust a private entity with no known origin. Say, do you work for them?

"I'm making some sweet mula with Uncle Rico." - Kip

jmlandry77
jmlandry77

@AustinWilliams 

The question should be "should we decriminalize drugs" ?  Not, "will tracking $btc help the DHS"?.

Mick Jagger said it best "all the cops are criminals, all the sinners saints"

You sir are on the wrong side of this issue.

Tuxavant
Tuxavant

@jmac I'll trust the math of bitcoin against the self-serving whims of any central banker or politician any day of the week.

gumOnShoe
gumOnShoe

@PaulDirks Yes, actually, hits have been paid for with bitcoins. But, they've been paid for with $'s too.

It's not a simple thing to do, but bitcoins are a known entity. They basically function like stocks, that you can produce at random given enough electricity and machinery (at this point, it's really not economical to produce them at all unless you can rob someone else of their resources). The value is based on personal belief, just like that of gold.

But the use of bitcoins is like the use of any other resource. The morality of the substance isn't really in question, but the individuals who use it do. The more relevant questions still have to do with the normal crimes associated with money. Fraud, laundering, illegal substances, etc. Bitcoins aren't really a special case, they just look scary because they are a relatively new medium.

RobHughes
RobHughes

@drudown @jhoughton1 

That's a nonsense statement. Bitcoin has value because people decided bitcoin has value. This is the same reason gold and diamonds and dung all have value; people decided they did. Trying to claim the idea of deciding a thing has value is an illegitimate idea is to claim that no idea of a thing having value is legitimate, and therefore, that nothing has any value.

213iuoywedd
213iuoywedd

@drudown Intrinsic value is irrelevant. The asset is valuable because it's useful and it's scarce. If the asset stops to be either, the value will go down.

Cloudjacking
Cloudjacking

@drudown @btcbit11 bitcoin is already liquid enough for the 99%, companies are already raising capital completely denominated in bitcoin and there are stock exchanges that only list these companies. It is a store of value that is both liquid and efficient, and its network can be used for things aside from currency such as creating contracts that are verifiable by anyone, and all of those uses require having bitcoin to transmit. The more these features are used, and recognized as solving a need, the more bitcoin people will need to acquire. Since bitcoins are a finite resource, this raises the value.

As such, even if a large seller dropped the exchange rate, or even if people became correct that "bitcoin is a ponzi scheme" due to a drop in the exchange rate, all the features of bitcoin would still work, whether one was trading with $200 dollar bitcoins or $.001 dollar bitcoins

jmac
jmac

@Tuxavant @jmac When it comes to money and greed, we shouldn't trust anyone.  There's nothing wrong with oversight.  

haikubybenjamin
haikubybenjamin

@drudown @RobHughes @jhoughton1 So far your responses have only show how ignorant you are when it comes to technology, much like the elderly and out of touch representatives in the U.S. 


News flash, technology is not magic. Technology is not mysterious. You just have to do a little good old fashioned learning. Then, and only then, can you have enough knowledge to intelligently argue one way or the other. So far all you seem to have is derision. Unwise. 


drudown
drudown

@RobHughes @drudown @jhoughton1 

Well, you can keep your Super Mario Coins. 

Say, is that how "Bitcoins" are made? I mean, Super Mario jumps into a block and out they come?

"Wiiiiiii...!!!!!" 

drudown
drudown

@nightman @drudown 

Do you not support a strong and solvent United States Military and Diplomatic Unity with our allies such as the UK, EU and Russia?

"No, I believe in super-PACs ability to "reform" the Bill of Rights, Bigfoot and Bitcoin."

nightman
nightman

@drudown "our National interests."?  Talk about creating something imaginary.

drudown
drudown

@213iuoywedd @drudown 

Useful, eh.

How is an imaginary currency any more 'useful' to a grown boy than a child might disregard a broken toy?

Listen. 

I applaud the innovation of creating something imaginary that people seem to think has "intrinsic value". But unlike, say, buying title to real property that has physical dimensions and "bundle of rights" intrinsic to ownership…there is nothing remotely comparable about buying imaginary currency.

Sorry, merely citing abstract Economics precepts doesn't make an imaginary thing suddenly real, much less a government-backed currency. 

Maybe people shouldn't be so quick to compare them lest they draw the justified attention of the Department of Justice. Are you people advocating that the Bitcoin "supplant" the US Dollar?

That sounds subversive of our National interests.

"The man who glories in his luck/ May be overthrown by destiny."- Euripides 

adlord
adlord

@drudown My jaw dropped to the floor when I read your comment.  Do you think the Federal Reserve is part of the government?  It is a PRIVATE bank that currently prints dollars and they decide our monetary policy.  It is a system for the banks, of the banks and by the banks.  Thier 'mandates' and thier offical sounding name are simply a white-wash for the masses.

drudown
drudown

@isskewl @drudown 

Ok, PR robot.

Maybe you can take your Bitcoin Monopoly money and travel through Europe?

Oh wait. Its "value" as a "currency" is as imaginary as the Yeti.

isskewl
isskewl

@drudown How is the USD "backed" by the US gov? It's issued by the govt, but it's value is given it by the collective faith of the people of the world. When that faith erodes, say, due to collapse in US GDP, and the world turns to other stores of value and the relative value of the dollar plummets, what is the US govt going to do for you? Give you gold? You know we're no longer on the gold standard right? Govts don't back currency anymore. Look up the definition of fiat currency. Govts print money. Miners create bitcoin. Your'e a troll who's mad he didn't buy them a couple years ago when they were a dollar. Piss off.

Cloudjacking
Cloudjacking

@drudown exactly, it is more democratic than any government-backed currency ever created.

Nobody is debating its future as a government-backed currency. Nobody wants that. This article isn't about that. Where did you make that argument up? Bitcoin - more specifically a block chain based ledger and verification system - would more likely back governments, and it is impossible for a government to back it.

anon54321
anon54321

@drudown Here is the entirety of the bitcoin computer code that verifies the bitcoin transactions: https://github.com/bitcoin/bitcoin 

I have a feeling you don't read computer code because you believe there is some way to manipulate it.  The thousands of people who run the code voluntarily to verify transactions, all over the world, would not run the code if someone tried to change it with some malicious intent.


drudown
drudown

@Cloudjacking 

It IS NOT a government-backed currency so WTF is the point of "debating" its future as such? And in terms of it being "finite"…more like "there are infinite ways in which it could be manipulated" to the detriment of consumers. 

"Talking about food does not fill the belly; it takes a suit of clothing to stay warm in the Winter." - Han Shan

drudown
drudown

@Reagent @drudown @hammyburger @AustinWilliams

So…when you turkeys want to "cite an actual case"…I look forward to reviewing and analyzing same. Until then, your "self-perceived" or "subjective" notions of "what the law should mean" is, well, immaterial as a matter of law. Notably, your shopworn "claims" that (ahem) "Bitcoin is a legal currency' FAILS to even acknowledge, among bother glaring deficiencies, whether "something is legal" or "not legal" is the sole purview of the Independent Judiciary to decide (uh, hence the case citations) per Marbury v. Madison and its progeny.

That is the threshold inquiry, is it not?

"You should try it…" - Elizabeth, 'Elizabeth: the golden years'

But it is also laughable- that is, for the glaring the lack of consideration- that is, addressed in your proffered analysis. Namely, what- people that "don't buy this particular commercial product" or "form of entertainment" or "collectors art" will (drudown, I can write this) be "somehow prejudiced" down the road? They aren't parties to any agreement with the parties so how, pray tell, would it even effect the People, other sovereigns, etc.

Nor would official recognition by the United States arguably even be, on its face, lawful in terms of proper construction of the Social Contract.

Again, just because you "deny" or "refute" that "this brief summary of applicable law is 'not really the law' doesn't matter in ANY court of competent jurisdiction, correct?

Applicable law in the Several States clearly holds that contractual terms will be enforced per their usual and ordinary meaning. [see, e.g., Lehman v. Superior Court (2006) 145 Cal.App.4th 109, 115 ("under plain meaning rule, courts give the words of the contract their usual and ordinary meaning")]. In other words, both California and the Several States’ law clearly holds that neither your “subjective observation”, nor any GOP official’s “subjective understanding” on the contractual language n Article I, Section 8, has any relevance to proper construction of agreed-upon terms by our Founding Fathers, i.e., the exclusionary effect of the 'plain meaning rule' holds that no person’s “subjective” intent, “opinion” and/or parol evidence may be considered when acting in an Official capacity on behalf of the People if such State Action contravenes the plain meaning of Constitutional or statutory language. [see, Id. at 115-116; see also 3 A. Corbin, Corbin on Contracts, Sections 535, 542 (rev. ed. 1960 & Supp. 1984)("plain meaning rule requires that the meaning of
contractual language be determined solely by attaching the plain or usual meaning to words that appear clear and unambiguous on the face of an agreement"). 

Sorry, with no government behind it, there is no privity of contract to enforce value.

“Nimble thought can jump both land and sea.” – Shakespeare


Like a flash of fire beneath the timeworn hand.

A wind.

drudown
drudown

@Reagent @drudown @hammyburger @AustinWilliams

"Young Hermes…returns." - Marcus Aurelius, 'Rome II' [HBO series]

Your exculpatory drivel is Brooksonian or- dare I say- Krauthmmaer time-esque but, again, there is no LAW. I want citations. Here. Let me show you guys how to proffer mandatory authority to PROVE assertions based on Supreme Court precedent- not that "Austin's" explanation wasn't, ahem, 'nice'. 

"That doesn't make sense." - Ron Burgundy, 'Anchorman'

Let's see, "gay rights in the workplace"…check. "TSA worker over coverage"…check. "Supreme Court will hear prayer case even though GOP declares war on Christian Values and Jesus' teachings of Altruism"…check. "Bitcoins should replace US dollar despite having no government behind it and illimitable means to defraud consumers without comparable protections that inure to US Dollars/FDIC deposits"…check.

Can the GOP and/or GOP Congress be any more obvious in its blatantly continuous, incorrigible attempts to inject- wait, no…to force- the most divisive, unsolvable and politically incorrect theories into the stream of American culture/Fairness Act-less media's radar screen in these kinds of "controversial topics" dispensed with an eye towards slowly but surely creeping towards the next fabricated "crisis" proximately caused by their own refusal to raise revenue under Article I, Section 8?

(sigh.)

Enough already.

Give the People the commercially reasonable Budget that is required by LAW on an annual basis. The notion the GOP Congress can simply "fail to act" and then cite the foreseeable "chaos" as being indicative of a "failure of government" turns the very purpose of the Social Contract on its head.

"Certain laws have not been written, but they are more fixed than all the written laws." - Seneca (1st C. A.D.)
How can Sen. Leahy just stand there as the GOP Congress subverts the express intent of our Founding Fathers' prescribed duties over what, exactly? Alleged "partisan differences"? That the President refuses to honor your Unconstitutional Legislative Veto request to "defund" the ACA? Uh, should members of the bar just "forget" our rule of law PRECLUDES such State Action [see, e.g., INS v Chadha (1982) 462 U.S. 919]? Above all, there is NO LEGAL AUTHORITY that gives ANY member of the Senate any self-perceived discretion to subvert the "Advice and Consent" function of the Senate- not over some fabricated Benghazi hearing/red herring, much less the "will of money donors". 

Why pretend that our National Security interests are "served" by "shutting down" the government only to, what, "reopen" it and "refuse" to honor the express requirements of your offices? You are all SERVANTS of the People. Let's hope Sen. Leahy honors Procedural Due Process rights on our behalf by upholding the law, by rebuking those that subvert its plain meaning- not merely via overt dilatory tactics and obstructionist conduct- but "openly questioning" the rule of law itself. How was the “shut down”- or just the subversion of the "Appointment Power" not a deprivation of Procedural Due Process if it is undisputed under our laws that the Due Process Clause was intended to secure an individual from an abuse of power by government officials? Daniels v. Williams (1986) 474 U.S. 327.

In other contexts of such State Action that touch and concern deprivation of liberty or Due Process interests (see, e.g., Parham v. J.R., 442 U.S. 584) the “victim” is entitled to a “review by a neutral factfinder”…but not when the United States’ (1) Diplomatic unity with our trusted European Allies is suffering immediate and/or potentially irreparable harm and/or (2) when the United States’ People have their Substantive Due Process Rights to receive the civil liberties contained within the 4th and 5th Amendments is the “victim”? Again, it is axiomatic that the Due Process Clause was intended to PROTECT the PEOPLE from an abuse of power by government officials. See, e.g., Daniels v. Williams, supra. The refusal of the State to enjoin the egregious breaches of our Supreme Court’s precedent on the area of wiretapping and electronic seizures by the NSA constitutes an abuse of power in itself. There is ample case law expressly holding it is per se UNCONSTITUTIONAL. See, Scott v. United States (1978) 436 U.S. 128 ("every wiretap must be conducted in such a way as to minimize the interception of communications not otherwise subject to interception"). The purported means/ends justifying the NSA's unfettered license to conduct the largest dragnet in the history of the World has (drumroll, please) proven to be as false as the purported WMD threat and/or nexus between 9/11 and Saddam. 

"Wrong must not win by technicalities." - Aeschylus”

I dissent.

"The makers of our Constitution conferred, as against the Government, the right to be left alone- the most comprehensive of rights and most valued by civilized men. To protect that right, every unjustifiable intrusion upon the Privacy or Due Process rights of the individual, whatever the means employed, must be deemed a violation of the Fourth Amendment. And the use, as evidence in a criminal proceeding, of fact ascertained by such unlawful intrusion must be deemed a violation of the Fifth Amendment." - Chief Justice Taft, Olmstead v. United States (1928) 277 U.S. 438.


Reagent
Reagent

@drudown @hammyburger @AustinWilliams "Legal" has nothing to do with accepted currency (or to be more precise for these days, fiat currency). Like many other fields, economics has it's own definitions that wind up being ignored or misunderstood in non formal discussions.

Money: Money has value in and of itself, examples include things from precious metals to seed grain. It serves two purposes. First, to facilitate trade since direct barter can only go so far. Second as a storage of value (seed grain doesn't last all that long, but it does have an inherent value to farmers every spring).

Currency: It could be a real pain (not to mention dangerous) to carry around real money. Banks issued paper currency which guaranteed that there was actually physical money that the currency could be traded in for. Banks soon figured out they could have more currency in circulation than they actually had money on hand to redeem it for, but that's a lesson for a different time.

Fiat Currency: Paper promise with no actual value behind it. It's useful for as long as the people using it believe that it will continued to be accepted in trade for things that you want at a reasonably consistent exchange rate.

Governments and bitcoin or similar arrangements are using fiat currency. There is nothing backing it up but belief and a certain amount of hope. If you noticed, governmental involvement wasn't even mentioned until this paragraph. Why? Because everything before were definitions in the field of economics, and apply to any medium of exchange whether a government is involved or not.

I hope this has cleared the air a bit on what is and isn't a de facto (fiat) currency.

drudown
drudown

@hammyburger @drudown @AustinWilliams 

Maybe you and "Austin" can "buy" two stars next to each other in the Milky Way?

That is as "real" as "Bitcoins" are actually currency.

How's this: show me the LEGAL authority that supports your collective assertion Bitcoin is currency?

Just as "going to law school and passing the bar" is a condition precedent of "being a lawyer", so too, are there "legal requirements" in "being a recognized currency."

You're right, let's cut the chase. 

Put up or shut up.

"Truth fears no trial." 

hammyburger
hammyburger

@@drudown Obviously you care or you would not have posted so many rebuttals on this page. You feel threatened by bitcoin for some reason. Why?  In any case, @AustinWilliams put all of your arguments to bed.  Night night.

drudown
drudown

@AustinWilliams 

I have a better question: what's your angle? 

Do you have a financial interest in Bitcoin?

Because there is no other explanation for you conflating LAWS with imaginary currency that unsophisticated people were duped into buying. 

I don't want to "debate" something as asinine as whether an imaginary currency is like _______ . Or whether it isn't.

I could care less. 

AustinWilliams
AustinWilliams

@drudown @TedRyder @Tuxavant @jmac 

It's recognized by plenty of people and companies and governments.  Obviously no contry "backs" it... for they won't back a currency they can't control.  But do some googling and see how many countries recognize it as money.

Also, many things you take for granted are "imaginary" in the sense that they don't exists in the purely physical sense...  Property rights, laws, international boundaries,  value, mathematics, corporations, etc etc.  These are all things devoid of physical existence.

If you can believe that a dollar has value, you should be able to believe that a bitcoin has value.

And don't give me that "but the dollar is backed by the US Gov't" line, because honestly.... when was the last time someone accepted a US dollar strictly because "the US Gov't backs it?".... most people aren't even *aware* that the dollar is backed by the Gov't.  They don't even know what that means.  They accept dollars because they believe other people will accept it too.  It's that simple.  Same with bitcoin.

drudown
drudown

@joebastulli @drudown @TedRyder @Tuxavant @jmac

Look. 

I don't give a &*%$ about Bitcoins.

But it is NOT a government issued currency. 

Period, end of discussion. If you want to compare it to "art", sure. Fine. 

But it isn't currency in any legal sense of the term. You can likewise claim "Garbage Pail Kid cards have value humans assign" and, as such, "that is the same as currency." 

Sorry, that is just as absurd. 

As an aside, who is behind it? 

Does anybody know?

http://www.cnn.com/2013/04/11/opinion/angel-bitcoin-currency/ 

joebastulli
joebastulli

@drudown @TedRyder @Tuxavant @jmac  Recognized by who?  The US Government?  Also, us humans determine what objects have value.  This is considered imaginary.  If you are trying to say what is real and what is not, Bitcoin effects physical properties on my computer and other electronics.  That is real.

drudown
drudown

@TedRyder @drudown @Tuxavant @jmac 

That is completely non sequitur.

Bitcoin is NOT a recognized currency. Why are you comparing to the US dollar?

That is like comparing a painted moon to the actual moon.

drudown
drudown

@dennis76 @drudown @Elta 

Listen.

In order for a creature to be a "cat"... it must share the proper change in gene frequencies over time to manifest in such a feline state.

In order for a medium of exchange to be a "currency"…it must be issued by a government recognized by Western Civilization and that's that.

Similar to enlightenment, any "thing" that needs to be certified, recognized or accepted as being is most likely a false or at least incomplete one. 

By analogy, you can imagine palaces in the air or, like a child, create them in the sand.

With the sheer will of the sword- or modern nuclear might- "value" is determined by the coercive will and agreed-upon right of the Diplomatic Unity between the EU, UK, Russia and USA's collective hand, just as the East and West exist in symbiotic harmony as Ying and Yang. 

Bitcoins?

It didn't build Rome.

"Western Civilization- this Democracy expressed in different ways between us is not a static thing. It is an everlasting march." - Franklin D. Roosevelt

dennis76
dennis76

@drudown @Elta 

Hahaa, @drudown... your comments are just too ignorant to not laugh.

Currency/money is nothing more than a means to transfer goods/services. It covers the main fault with plain barter, which is the non-transferability/liquidity of goods.

Your comments would also go for gold... governments do not make gold. It is mined. People give it a value, because they "like" it and think it retains that value or even increases. It's value is also derived from the fact that it is a rare commodity and hard to get, generally you can't go to a river with a bucket and scoop up gold anymore. Hence the raise in value over the past decades/centuries.

Banks and later Governments used to write "IOU's" on the basis of their holdings of gold.. the Gold Standard. However, that has been abandoned. US Gov basically "invented" a law over night. (There goes your 'reality' about laws).

Dozens of governments have been devaluing their own currencies for decades.. Argentine for instance. European countries used to do it all the time. The reason Greece is in trouble is that they can't devalue now, because they are using the Euro. If they would have had the Dragme, they would have devalued to get out of their debt.

So their goes your government backing... as soon as they devalue, 'Poof'... there goes your value. Of course, you still have $1.000... but in real terms it might be worth $100.

Eventually even gold are not a sufficient backing... because it doesn't fulfil your very basic need for survival... food, water, air to breath. Maslov basics.

So sure, Bitcoins do not have any backing, but it's just a means to transfer whatever goods/services one needs. And people give it a value. Whether it is in dollars, euro's, yen, gold, silver, property or livestock.

I don't own any bitcoins, but it is intriguing how it works, and if it will proceed as being an universally adopted "currency".

People who say it's a 'pump and dump', or 'Ponzi-scheme'.. maybe.. but isn't any other currency as well? As long as everyone accepts, there is no problem. But in the end, I would rather have a nice house, veggie garden, live in a good community where people help each other out. That's all you need to live. A million dollars doesn't feed you much when a loaf of bread has that price! (look at Zimbabwe ;) )

drudown
drudown

@Elta @drudown 

"Objection, non-responsive."

You aren't answering the question and just shed more light on how asinine the a non-government backed currency is. 

Say, why don't you pitch "Monopoly Money" or go "sell someone a Star of their own"...

Elta
Elta

@drudown "by the owners or investors of Bitcoin?" - just an ordinary reasonable investor"

Owners? Do you know who created bitcoins or how they are produced?
There are no owners, it is totally decentralized, they are produced by simply being connected to the network.

AustinWilliams
AustinWilliams

@drudown 

You make me laugh.  Your like the crotchety old man on the porch shaking his fist in the air yelling "it's not real currency!"

Go do some reading on the history of money and currency.   Watch some documentaries on the issue.  It's very interesting stuff.

You'll learn that currency is anything people commonly use to represent value. (Money *has* value.  Currency *represents* value).  There are many properties that we desire a currency to have... we want it to be durable, portable, hard to forge, easy to divide, etc. etc.  Bitcoin has so many of the properties people desire in a currency it's mindblowing.  You should really look into it.   Do more than a cursory investigation... don't just read the first Yahoo article you find and finalize your decision.

You seem so hung up on two things: (1) that bitcoins aren't physical and (2) that the US Gov't doesn't force people to accept bitcoins as payment, that you are missing all of the truly amazing aspects of this new technology.

drudown
drudown

@TedRyder @drudown @gumOnShoe @PaulDirks 

That is ridiculous. Bitcoin is not a currency. So, feel free to make up imaginary stocks and, what, if you can dupe unwary people into buying them….it makes it a "real" security?

Ok, you must pitch "magical Forex trading software" in your spare time.

Hmm. 

"I wonder…how much of the total 'investment' in (ahem) Bitcoin to date has been made…by the owners or investors of Bitcoin?" - just an ordinary reasonable investor

TedRyder
TedRyder

@drudown @gumOnShoe @PaulDirks 

Are you from the past?  Bitcoins are worth 200 bucks apiece.  I tell you what, I'll give you one US dollar for every bitcoin you give me.