Alternative Currency will lead the future

Lay Low · Nov 2, 2012

Gold/silver > all imo. Never was interested in bitcoins. There's no reason to reinvent the wheel.

Hello there! · Nov 2, 2012

I'd rather use a wheel that's not manufactured and governed by an overpowered monopoly

I agree gold is better, but I can't access those reserves right now.

Dissec · Nov 2, 2012

trixman22 said:

silk road. You can get almost any mind altering substance for bitcoins from there.

I like the idea of bitcoins but my programming buddy says a person with the right knowledge can easily hack and create their own bitcoins on debit cards. I don't know if that is true as I don't know much about that kind of tech stuff.
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Nahh, its definitely not that easy. At first bitcoin seems simple and you think you'll find a vulnerability but nope, its pretty damn secure. Security researchers and hackers have been trying to exploit the system since before the Gawker article that sent the bitcoin price skyrocketing and drew attention to it.

Btw guys we're not supposed to talk about online drug marketplace's, I got warned/infracted for it (whatever it is), just so ya know.

MrRaider · Nov 2, 2012

[quote name='"Lay Low"']Gold/silver > all imo. Never was interested in bitcoins. There's no reason to reinvent the wheel.[/quote]

I fully agree but I'm positive you like me welcome competing currencies

criticleMexcan · Nov 2, 2012

Santana starting to finally make his mark with a digital currency.

Lay Low · Nov 2, 2012

MrRaider said:

I fully agree but I'm positive you like me welcome competing currencies
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Agreed. This isn't a competing currency though. It's just a different one. Competing currencies can't exist until the Fed's monopoly on legal tender is abolished.

Dissec · Nov 2, 2012

For those of you doing things with bitcoin that could get you in trouble I recommend being very skeptical of anything new in regards to anonymity and privacy. You never know how a bust will go, remember the FBI/NSA/CIA can do alot of crazy shit and use things as cover to get what they want.

MrRaider · Nov 2, 2012

[quote name='"Lay Low"']

Agreed. This isn't a competing currency though. It's just a different one. Competing currencies can't exist until the Fed's monopoly on legal tender is abolished.[/quote]

True dat

NasaJoe · Nov 3, 2012

^ indeed. That is in fact what makes bitcoin all more valuable at this point in time. Diversify while you have wealth or take it from the vulnerable in the future.

NasaJoe · Nov 3, 2012

Dissec said:

For those of you doing things with bitcoin that could get you in trouble I recommend being very skeptical of anything new in regards to anonymity and privacy. You never know how a bust will go, remember the FBI/NSA/CIA can do alot of crazy shit and use things as cover to get what they want.
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Friday Humor: The ECB Explains What A Ponzi Scheme Is; Awkward Silence Follows | ZeroHedge

http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes201210en.pdf

Page 21 HAHA

NasaJoe · Nov 3, 2012

ECB Bitcoin plug

Bitcoin is probably the most successful – and probably most controversial – virtual currency scheme to date. Designed and implemented by the Japanese programmer Satoshi Nakamoto in 2009, the scheme is based on a peer-to-peer network similar to BitTorrent, the famous protocol for sharing files, such as films, games and music, over the internet. It operates at a global level and can be used as a currency for all kinds of transactions (for both virtual and real goods and services), thereby competing with official currencies like the euro or US dollar. The scheme maintains a database that lists product and service providers which currently accept Bitcoins.

These products and services range from internet services and online products to material goods (e.g. clothing and accessories,electronics, books, etc.) and professional or travel/tourism services. Bitcoins are divisible to eight decimal places enabling their use in any kind of transaction, regardless of the value. Although Bitcoin is a virtual currency scheme, it has certain innovations that make its use more similar to conventional money (see Box 3 in Chapter 4).

Bitcoins are not pegged to any real-world currency. The exchange rate is determined by supply and demand in the market
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http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes201210en.pdf

maxrule · Nov 3, 2012

NasaJoe said:

Friday Humor: The ECB Explains What A Ponzi Scheme Is; Awkward Silence Follows | ZeroHedge

http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes201210en.pdf

Page 21 HAHA
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"Consequently, users face the risk of losing their money if they don't implement adequate antivirus and back-up measures."

Nice find man.

ProvidencePlant · Nov 3, 2012

ECB: "Roots Of Bitcoin Can Be Found In The Austrian School Of Economics" - Forbes

The ECB (European Central Bank) has produced the first official central bank study of the decentralized cryptographic money known as bitcoin, Virtual Currency Schemes. Ignoring for a moment the ECB’s condescending and derogatory use of the virtual currency phrase and scheme phrase, the study produced at least one landmark achievement.

In claiming that “The theoretical roots of Bitcoin can be found in the Austrian school of economics,” the ECB forever linked Bitcoin to the proud economic heritage of Menger, Mises, and Hayek as well as to Austrian business cycle theory. This recognition is also a direct testament to the monetary theory work of Friedrich von Hayek who inspired many with his 1976 landmark publication of Denationalisation of Money.

Bitcoin fully embodies the spirit of denationalized money as it seeks no authority for its continued existence and it recognizes no political borders for its circulation. Indeed according to the report, proponents see Bitcoin as “a good starting point to end the monopoly central banks have in the issuance of money” and “inspired by the former gold standard.”

Economists from the 19th and mid-20th centuries can be forgiven for not anticipating an interconnected digital realm like the Internet with its p2p distributed architecture, but modern economists cannot be. From their own conclusions (on page 48) which inaccurately lump Bitcoin together with Linden Dollars, here is what the modern-day economists at the ECB are still not getting:

1. ECB concludes that if money creation remains at a low level, bitcoin does not pose a risk to price stability. This is incorrect on two levels. One, the creation of new bitcoin is capped at 21 million with eight current decimal places so it grows through adoption and usage rather than monetary expansion. And two, as with gold, silver, and other commodities having a monetary component, price stability is a function of the market not central planners;

2. ECB concludes that bitcoin cannot jeopardize financial stability due to its low volume and limited connection with the real economy. Conversely, bitcoin will tend to increase financial stability and overall soundness. Bitcoin’s connection with the real economy is only a concern for the regulated and taxed economy, whereas bitcoin independently may thrive in the $10 trillion shadow or “original” economy. Besides, with its repeated market interventions, no one has done more to jeopardize financial stability than the ECB itself;

3. ECB concludes that bitcoin is currently not regulated and supervised by any public authority. It would be more accurate to say that State-sponsored regulation is largely irrelevant because of the inherent design properties of a peer-to-peer distributed computing system. But happily, this is still a conclusion that I can agree with and recommend that it remains the case;

4. ECB concludes that bitcoin could represent a challenge for public authorities, given the legal uncertainty and potential for performing illegal activities. While public authorities will certainly be challenged by the introduction of a monetary unit that cannot be manipulated for political purposes, bitcoin in some cases does have the ability to provide tracking capability that far exceeds that of national cash or money substitutes. What authorities will find most troubling though, with bitcoin, is that money flows between individuals and businesses will no longer be exploitable for purposes of unlimited identity tracking and unconstitutional ‘fishing expeditions’;

5. ECB concludes that bitcoin “could have a negative impact on the reputation of central banks, assuming the use of such systems grows considerably and in the event that an incident attracts press coverage, since the public may perceive the incident as being caused, in part, by a central bank not doing its job properly.” Pretentious as it may seem, the ECB is stating here that central banks as protector of the general public with respect to payments have a role to play because it is their reputation that suffers in the event of a bitcoin-related security incident. Firstly, that is an assumed responsibility — not a delegated responsibility; and reputational impact aside, I would prefer to rely on lex mercatoria;

6. ECB concludes that bitcoin does indeed fall within central banks’ responsibility as a result of characteristics shared with payment systems. Of course it does not. Central banks are a form of centralized economic planning so their stated responsibilities are suspect from the outset. Bitcoin represents an intangible math puzzle whose existence is solely restricted to transfer rights on a cloud-based public ledger. It more closely resembles an air guitar than a payment system for purposes of oversight.

Now, in affirming the superior attributes of bitcoin in the role of financial innovation, the ECB correctly identifies why the profligate issuers of national fiat currencies will ultimately feel threatened by such a decentralized nonpolitical unit. The report acknowledges the following with respect to bitcoin: (a) “higher degree of anonymity compared to other electronic payment instruments,” (b) “lower transaction costs compared with traditional payment systems, and (c) “more direct and faster clearing and settlement of transactions” from the absence of intermediaries.

Overall, the fear of the monetary overlords is palpable as the study concludes by basically promising continued scrutiny and oversight. Also forecast for the plebeians is a possible remedy to the global scope and unclear jurisdiction of the regulatory challenge:

“One possible way to overcome this situation and obtain some quantitative information on the magnitude of the funds moved through these virtual currency schemes could be to focus on the link between the virtual economy and the real economy, i.e. the transfer of money from the banking environment to the virtual environment. Virtual accounts need to be funded either via credit transfer, payment card or PayPal and therefore a possibility would be to request this information from credit institutions, card schemes and PayPal.”

However, Michael Parsons, a former executive with Emirates Bank (Dubai), Moscow Narodny Bank, and KPMG Moscow, believes that those efforts will prove futile and he explains, “Bitcoin is ‘regulated’ by its peers and mathematics. And Bitcoin is not a currency like fiat money. It is a value transfer system which is given value only by its users. So the ECB, FED, etc. have no mandate to control a ‘virtual currency’ just because they call it (bitcoin) that! It will just go underground. Bitcoin is like Light and Air. Free to use and transfer. Owned and issued by the people and NOT the State!”

It evokes an image of central bankers huddled comfortably on the safe shoreline as they look out into the horizon and see the dangerous, unstable virtual currencies approaching. The opposite is actually the truth because it is the central bankers who are floating precipitously out at sea. As James Turk famously said about bitcoin’s analog cousin, “When standing in a boat and looking at the shore, it is the boat (currencies) – and not the land (gold) – that is bobbing up and down.”
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ProvidencePlant · Nov 14, 2012

Currencies of the Future - Business Insider

Many people complain about government control of currency, but only a few do something about it. I’m not talking about movements to “audit the Fed” and such. I’m talking about real innovation that makes an end run around the government’s iron grip on the monetary system.

A few of us old folks might like to return to the days of slapping a silver dollar on the bar for a shot of whiskey, but the younger techno-savvy generation sees paying for their Negroni cocktail with virtual currency from their hand-held device. To serve this market, a new world of virtual currencies has popped up spontaneously.

In a debate, Mitt Romney said, “You couldn’t have people opening up banks in their garage and making loans.”

Really? Some people are thinking precisely along these lines and even going further to create new units of accounting.
You might think these people are crazy. After all, to be a proper money, a currency must have a nonmonetary value, a high value per unit weight, a fairly stable supply and be divisible, durable, recognizable, and homogeneous. Gold and silver fit the bill perfectly. But does that mean something else (or a variety of things) can’t?

Money develops from being the most marketable good that in turn is used for indirect trade. Historically, that has been gold and silver. However, governments have worked very hard to demonetize gold and silver with taxes on precious metals and legal tender laws. And while a few people swear by storing their wealth in gold and silver, in relation to all other financial assets, the percentage of portfolios invested in precious metals is only 1%.

The idea that government is going to re-shackle its currency to gold anytime soon, when the only way federal governments are staying in business is with an unfettered printing press, is naive. Governments always have driven and will keep driving the value of their currencies to the value of the paper. It may take decades, it may take centuries, but it will happen eventually.

The answer to the currency question may not be to reform government in a way that it can’t reasonably be reformed, but to turn loose entrepreneurial genius to solve the problem and create a quality product. There are plenty of government roadblocks, but every new innovation encounters government resistance. Entrepreneurs persevere. However, this is a particularly risky area. There are currency entrepreneurs sitting in jail for competing with the government.

In 2009, Japanese programmer “Satoshi Nakamoto” (not his real name) was designing and implementing Bitcoin. It’s not for the faint of heart. It’s proven to be highly volatile. But it’s also proven to be very useful in a digital age.

Some people in the free-market community don’t know what to think of Bitcoin and have dismissed it. They say no currency can exist that doesn’t have a prior root in physical commodity.

That is because, as Robert Murphy summarized Ludwig von Mises: “We can trace the purchasing power of money back through time until we reach the point at which people first emerged from a state of barter. And at that point, the purchasing power of the money commodity can be explained in just the same way that the exchange value of any commodity is explained.”

The naysayers contend Bitcoins never had a nonmonetary commodity value. The case for it is then dismissed without thought or argument. However, Mises built his “regression theorem” on the work of Carl Menger, the father of Austrian economics and subjective value.

In Menger’s view, economizing individuals constantly look to make their lives better through trade. These individuals trade less tradable goods for more tradeable goods. What makes goods more tradeable, Menger emphasizes, is custom in a particular locale.

“But the actual performance of exchange operations of this kind presupposes a knowledge of their interest on the part of economizing individuals,” Menger writes. But Menger goes on to explain that not all individuals gain this knowledge all at once. A small number of people recognize the marketability of certain goods before most others.

These might be considered currency entrepreneurs. They anticipate consumer needs and demands, and as is the case with any other good or service, these entrepreneurs recognized more salable goods before the majority of people.

“Since there is no better way in which men can become enlightened about their economic interests than by observation of the economic success of those who employ the correct means of achieving their ends, it is evident that nothing favored the rise of money so much as the long-practiced and economically profitable acceptance of eminently saleable commodities in exchange for all others by the most discerning and most capable economizing individuals.”

For example, cattle were, at one time, the most saleable commodity and were thus considered money. Although cattle money sounds unwieldy, the Greeks and the Arabs were both on the cattle standard. This currency had four legs that could move itself, and grass was everywhere, so feeding it was inexpensive.

But then the division of labor led to the formation of cities, and the practicality of cattle money was over. Cattle were no longer marketable enough to be money. Cattle still had value, but, “They ceased to be the most saleable of commodities, the economic form of money, and finally ceased to be money at all,” Menger explains.

Then began the use of metals as money: Copper, brass and iron, and then silver and gold.

But Menger was quick to point out that various goods served as money in different locales.

“Thus money presents itself to us, in its special locally and temporally different forms, not as the result of an agreement, legislative compulsion, or mere chance, but as the natural product of differences in the economic situation of different peoples at the same time, or of the same people in different periods of their history.”

So while people contend that money must be this or must be that, or come from here, or evolve from there, Menger, the father of the Austrian school, seems to leave it up to the market. When a money becomes uneconomic to use, it loses its marketability and ceases to be money. Other marketable goods emerge as money. It’s happened throughout history and likely will continue, despite government wanting to freeze the world in place to its liking.

Which brings us back to Bitcoin, what the European Central Bank (ECB) calls in its latest report “the most successful — and probably most controversial — virtual currency scheme to date.”

Ironically, while some economists are pooh-poohing Bitcoin, the ECB devotes some of their lengthy report to the idea that the Austrian school of economics provides the theoretical roots for the virtual currency. The business cycle theory of Mises, Hayek and Bohm-Bawerk is explained in the report and Hayek’s Denationalisation of Money is mentioned.

The report writers indicate that Bitcoin supporters see the virtual currency as a starting point for ending central bank money monopolies. Like Austrians, they criticize the fractional-reserve banking system and see the scheme as inspired by the classic gold standard.

Bitcoins are already used on a global basis. They can be traded for all sorts of products, both material and virtual. Bitcoins are divisible to eight decimal places and thus can be used for any size or type of transaction.

Bitcoins are not pegged to any government currency and there is no central clearinghouse or monetary authority. Its exchange rate is determined by supply and demand through the several exchange platforms that operate in real time. Bitcoin is based on a decentralized peer-to-peer network. There are no financial institutions involved. Bitcoin’s users take care of these tasks themselves.

Additional Bitcoin supply can only be created by “miners” solving specific mathematical problems. There are somewhere around 10 million Bitcoins currently in existence, and more will be released until a total of 21 million have been created by the year 2140. According to Bitcoin’s creator (whomever he or she is), mining on Bitcoin provides incentives to be honest:

“If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or by using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth”.

The ECB’s report explains that Bitcoin supply is designed to grow in a predictable fashion. “The algorithms to be solved (i.e., the new blocks to be discovered) in order to receive newly created Bitcoins become more and more complex (more computing resources are needed).”

This steady supply increase is to avoid inflation (decrease in the value of Bitcoins) and business cycles caused when monetary authorities rapidly expand money supplies.

Bitcoin has become the currency of the online black market. For instance, The Silk Road (the Amazon of the illegal drug trade that can only be accessed through private networks using the IP scrambling service called Tor) only accepts payments in Bitcoin. However, as the ECB report points out, there are only about 10,000 Bitcoin users, and the market is illiquid and immature.

So why does the ECB give a damn about Bitcoin and other virtual currencies? The central bankers are worried that they are not regulated or closely supervised, that they could represent a challenge for public authorities and that they could have a negative impact on the reputation of central banks.

At the same time, the report makes the point that “these schemes can have positive aspects in terms of financial innovation and the provision of additional payment alternatives for consumers.”

The report says big players in the financial services arena are purchasing companies in the virtual payments space. VISA acquired PlaySpan Inc., a company with a payment platform that handles transactions for digital goods.

American Express (Amex) purchased Sometrics, a company “that helps video game makers establish virtual currencies and… plans to build a virtual currency platform in other industries, taking advantage of its merchant relationships.”

This would dovetail with American Express’ entry into the prepaid credit card business. Banking industry insiders are upset with Amex and Wal-Mart, that also is offering prepaid cards, because these prepaid accounts would amount to uninsured deposits, according to Andrew Kahr, who wrote a scathing piece on the issue for American Banker.

Kahr rips into the idea with this analogy:

“To provide even lower ‘discount prices,’ should Wal-Mart rent decaying buildings that don’t satisfy local fire laws and building codes — and offer still better deals to consumers? And why should Walmart have to honor the national minimum wage law, any more than Amex honors state banking statutes? With Bluebird, Amex can already violate both the Bank Holding Company Act and many state banking statues.”

Kahr is implying that regulated fractionalized banking is safe and sound, while prepaid cards provided by huge companies like Amex and Wal-Mart is a shady scheme set up to rip off consumers. The fact is, in the case of IndyMac, panicked customers forced regulators to close the S&L by withdrawing only 7% of the huge S&L’s deposits. It was about the same for WaMu and Wachovia when regulators engineered sales of those banks being run on. Bitcoin supporters, unlike the general public, are well aware of fractionalized banking’s fragility.

Maybe what the banking industry is really afraid of is the Amexes and Wal-Marts of the world creating their own currencies and banking systems. Wal-Mart has tried to get approval to open a bank for years, and bankers have successfully stopped the retail giant for competing with them.

However, prepaid credit cards might be just the first step toward Wal-Mart issuing their own currency — Marts — that might initially be used only for purchases in Wal-Mart stores. But over time, it’s not hard to imagine Marts being traded all over town and easily converted to dollars, pesos, Yuan, or other currencies traded where Wal-Mart has stores.

Governments are destroying their currencies, and businesses know it. Entrepreneurs won’t just stand by and theorize. They’re doing something. They recognize a market opportunity. The banking industry realizes it. As Mr. Kahr concluded his article that calls for an end to all uninsured deposits: “Otherwise, we might have an unregulated Facebook or Google of payments, even PayPal, quickly becoming both highly vulnerable and TBTF. (It could actually be run by someone wearing a hoodie, without tie or even white shirt!)”

Here at LFB, we don’t know what tomorrow’s money will be. Digits and computer algorithms? Silver and gold coins engraved with someone wearing a hoodie, perhaps? What we know for sure is that we’re rooting for enterprising entrepreneurs to give the government a run for their money in the money business. Watch this space.

Doug French

Original article posted on Laissez-Faire Today

Read more: Currencies of the Future
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ProvidencePlant · Nov 14, 2012

Bitcoin Kiez Rollout: 3 New BTC-Accepting Stores and Restaurants in Berlin, More to Come | Bitcoin Magazine

While the rest of the Bitcoin community was celebrating Bitcoin Friday by taking advantage of the large discounts made available by their favorite Bitcoin shops, Joerg Platzer of Room 77, a restaurant that has become the epicenter of the Bitcoin community in Berlin, used the date to announce Bitcoin Kiez, a project to get a large number of businesses to accept BTC in Berlin’s Graefekiez district.

Now, Bitcoin Kiez has announced its first three participants:

Primo Maggio – as Rooom77′s Joerg Platzer describes it, “original Italian food at its best.” This restaurant features a wide variety of homemade sandwiches, antipasti, pasta and desserts, as well as a unique selection of drinks. It places a large emphasis on high-quality ingredients, writing on its website: “everyone who wants to share in our philosophy on good food are cordially invited to come to Primo Maggio on a journey of discovery. In our kitchen and our bar we allow only products which we stand behind. Our customers should only receive what we would take for ourselves, not only when we want to satisfy our hunger, but also our taste buds”.
Fabelhaft Bar – features some of the best cocktails in Berlin. As one review describes it, “entering the one-room space is like stepping into a gothic castle crossed with an underground bordello, with requisite fin-de-siÃ¨cle lamps and old candles softly glowing above funky mismatched chairs, each casting soft shadows against the mostly barren and crumbling stone walls. Mondays through Thursdays, unkempt barflies mix with artsy expats and laid-back locals to exchange jokes and talk politics over cold brews or fresh cocktails, including the popular Moscow Mule made with cucumber, vodka, ginger ale, and hand-ground ginger.”
Vinyl Living Room Longplayer – a small and cozy used record store that is popular as a hangout spot for DJs even outside of Berlin. The shop features a large selection of hip-hop, funk, soul and jazz records and also some reggae, rock and punk, and many of the records that can be found there are difficult to find anywhere else. Although there is no food to buy here, it’s located on the GraefestraÃŸe almost right across the street from Room 77 itself.

This is only the beginning, and Room 77 owner Joerg Platzer is confident that there is more to come. Platzer wrote in a thread in the German Bitcointalk forum on the subject: “In the next few weeks the experiences of the participants in this public beta phase will be taken into account to further adapt and optimize the Bitcoin infrastructure. During this time more retail stores and restaurants will announce their acceptance of Bitcoin to the point that in December you will be able to go shopping for Christmas gifts and eat in many cafes and restaurants and pay for everything in Bitcoin. We are calling it ‘an alternative local currency with global reach.’”

If Platzer’s efforts succeed and a stable local Bitcoin community forms inside Berlin, it would be a major step forward for Bitcoin, as it would mark the first large-scale Bitcoin acceptance trial to take place in the physical world. Furthermore, in the eyes of the residents of the Graefekiez, Bitcoin would no longer simply be an abstract topic they may or may not have once heard of; rather, it would be very real, as they would see signs of stores accepting it and customers using it to pay for products and services every day. It would also be a great opportunity to see Bitcoin used in the real world by a non-technical audience, and would provide something very concrete to show to Bitcoin naysayers that the currency is now far more than just a speculative investment. And, most importantly of all, it would be a model for other cities to follow in Berlin’s footsteps.
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AshTRE · Nov 28, 2012

ProvidencePlant, do you ever blog?

Also, you should drop by the #bitcoin-otc chatroom on freenode server
My username: ElevatedDownfall

ProvidencePlant · Nov 29, 2012

Total number of Bitcoins hits 10.5 million, production halves to stop inflation | The Verge

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The total number of Bitcoins in circulation just hit 10.5 million, triggering a safeguard against inflation that was hardcoded into the digital currency. This means a drastic change in the number of new Bitcoins being created, which is expected to have a huge impact on the economy that has been developing around the ecurrency.

The safeguard has to do with the "block reward," the number of Bitcoins that can be created at a time, which has dropped from 50 to 25. Bitcoin miners, geeks who configure their own computers to mint the cultish digital currency, have been waiting for this moment for a long time — about four years, which is how long Bitcoins have been in circulation.

The sudden scarcity of new coins is likely to drive the value of Bitcoins up, as fewer new coins enter the system and current Bitcoin owners hoard their stashes. It's also possible that the change will simply trigger a period of instability due to the sudden change in the money supply. Another factor could add to the turmoil: new chips custom-built for Bitcoin mining will make the process many times more powerful and efficient.

Exactly who designed Bitcoin is still a mystery. However, the ecurrency was engineered so that the technology could automatically adjust itself, replacing the need for a central monetary authority like the Federal Reserve. The block reward change is just one of many safeguards built into the protocol, which has been hailed as a masterful technological and economic accomplishment.

Bitcoin has been hailed as a revolutionary populist movement, but it's also a grand economic experiment. The market's reaction in the coming weeks will be the first major test of whether technology can replace government's role in regulating money.
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AshTRE · Nov 29, 2012

Happy half-reward day

ProvidencePlant · Dec 4, 2012

Dollar-Less Iranians Discover Virtual Currency - Businessweek

Under sanctions imposed by the U.S. and its allies, dollars are hard to come by in Iran. The rial fell from 20,160 against the greenback on the street market in August to 36,500 rials to the dollar in October. It’s settled, for now, around 27,000. The central bank’s fixed official rate is 12,260. Yet there’s one currency in Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-only currency.

Created in 2009 by a mysterious programmer named Satoshi Nakamoto, bitcoins behave a lot like any currency. Their value is determined by demand, and they can be used to buy stuff. Bitcoin transactions are encrypted and handled by a decentralized global network of tens of thousands of personal computers. Merchants around the world accept the currency, from a bakery in San Francisco to a dentist in Finland. Individuals who own bitcoins and wish to exchange them for physical currencies like euros or dollars can use exchange sites such as localbitcoins.com, a Finland-based site founded by Jeremias Kangas. “I believe that bitcoin is, or will be in the future, a very effective tool for individuals who want to avoid sanctions, currency restrictions, and high inflation in countries such as Iran,” Kangas wrote in an e-mail.

The advantage for Iranians is that bitcoins can be swapped for dollars that can then be kept outside the country. Another plus: Regulators can’t easily track the transactions, since bitcoins aren’t issued from a central server. Bitcoin users can conduct business on virtual private networks, which hide customers’ identities.

At online store coinDL.com, shoppers can use bitcoins to buy Beyond Matter, the latest album from Iranian artist Mohammad Rafigh. Anyone in the U.S. downloading songs, which fetch .039 bitcoins or 45Â¢ each, risks violating U.S. sanctions. That doesn’t bother Rafigh, who’s studying computer engineering as well as playing music. “Bitcoin is so interesting for me,” Rafigh wrote in an e-mail. “I wish the culture of using digital money spreads all over the world, because it does not have any dependency on anything like politics.” Rafigh has translated some bitcoin software into Farsi for his friends. “I love Iran, and if bitcoin is good for me, it can be good for more Iranians like me.”

Iranian-American bitcoin consultant Farzad Hashemi recently traveled to Tehran and talked up bitcoin to his friends. “They are instantly fascinated by it,” he says. “It’s a flash for them when they realize how it can solve their problems.” Iranians working or living abroad can send bitcoins to their families, who can use one of the online currency matchmaking services to find someone willing to exchange bitcoins for euros, rials, or dollars. Bitcoins are useful to Iranians wishing to move their money abroad, either to children studying in Europe or America or simply to stash cash in a safe place.

As the value of the rial plunges, many Iranians are trying to acquire foreign currencies. “We have no idea what will happen,” says Amir-Hossein Madani, who says he’s traded tens of millions of street market dollars in Tehran over the past two years. “These days prices change every 10 minutes.”

The uncertainty has led some Iranian software developers to ask clients to pay them in bitcoins. “Anyone with a computer is able to own, send, and receive them. You can be at an Internet cafe in Iran and managing a bitcoin account,” says Jon Matonis, a founding board member of the Bitcoin Foundation, a Seattle nonprofit that promotes the currency. The exchange rate in Iran is 332,910 rials per bitcoin. It isn’t known how many Iranians use bitcoins to skirt sanctions. According to localbitcoins’ Kangas, 32 people in Iran have contacted each other through his site.

An internal FBI report in April expressed concern over the online currency. The report was leaked to Wired and Betabeat. “Since Bitcoin does not have a centralized authority, law enforcement faces difficulties detecting suspicious activity, identifying users, and obtaining transaction records—problems that might attract malicious actors to Bitcoin,” says the report. For now, Iranians are using bitcoins to maintain a fragile connection to the outside world.

The bottom line: Iranians are resorting to virtual currency to move money into and out of the country in a way that Western authorities find hard to detect.
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NasaJoe · Dec 4, 2012

bitcoins! suck it laylow!

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ProvidencePlant In crypto we trust

ProvidencePlant In crypto we trust

ProvidencePlant In crypto we trust

AshTRE Perspectivist

ProvidencePlant In crypto we trust

AshTRE Perspectivist

ProvidencePlant In crypto we trust

NasaJoe Life is sacred

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