Online Gambling Site Bets On Bitcoin To Avoid U.S. Laws 347
SomePgmr writes with a story about an online gambling site planning to use Bitcoin to sidestep U.S. regulations that effectively ban online gambling. From the article: "Michael Hajduk had sunk one year and about $20,000 into developing his online poker site, Infiniti Poker, when the U.S. online gambling market imploded. On April 15, 2011, a day now known in the industry as Black Friday, the U.S. Department of Justice shut down the three biggest poker sites accessible to players in the U.S., indicting 11 people on charges of bank fraud, money laundering, and illegal gambling. ... Infiniti Poker ... plans to accept Bitcoin when it launches later this month. The online currency may allow American gamblers to avoid running afoul of complex U.S. laws that prevent businesses from knowingly accepting money transfers for Internet gambling purposes. 'Because we're using Bitcoin, we're not using U.S. banks — it's all peer-to-peer,' Hajduk says. 'I don't believe we'll be doing anything wrong.'"
Re:Another idiot buying into the bitcoin scam. (Score:4, Interesting)
Yep! This'll stop the government from coming after you! Not!
It should, actually.
Otherwise, the government could come after anyone who plays Monopoly, too. Or anyone who plays poker with virtual gold coins in an MMORPG.
Doomed to fail (Score:5, Interesting)
Not too long after Black Friday I had the same idea of using Bitcoin currency instead of real moolah. A site called Betcoin [betco.in] had already done this using the jpoker/jspoker [pokersource.info] library. I frequented the site for a while and even went back to it months later. In both cases the volume of people on the site was extremely low and the amount of bitcoin compared to real USD value was paltry even in comparison to the Full Tilt Poker $0.25/$0.50 tables. There just wasn't enough money in circulation on the site and not many people wanted to stake their futures on the volatile Bitcoin currency in the poker world. Plus, anyone that did any decent research just found various overseas and Indian-owned online casinos (harder for the US Gov to prosecute Indian territory casinos in Canada) and could exchange money by select Visa merchants, cash proxy sites, or by money order.
Re:Another idiot buying into the bitcoin scam. (Score:5, Interesting)
Proving Bitcoins have value is trivial - there are exchanges where they are traded against other currencies for non-trivial prices, so they clearly have value. What more proof could you demand?
Yes, you can charge back with credit cards. This is great for the credit card companies who then lose the incentive to make their systems more secure, because merchants (ie, the poker companies) lose the money. With Bitcoin you cannot, so the deck is metaphorically stacked in favor of the merchant vs the punter. It's a little better than the reverse because most merchants at least have reputations they want to protect and aren't going anywhere, unlike buyers who can disappear in an instant. But Bitcoin does have ways to offer buyer protection - it's discussed in the very first page of the white paper describing the systems design. The protocol allows for dispute mediators who can decide who gets the money (buyer or seller) but who cannot steal the money themselves.
Re:So... It's an Arcade (Score:4, Interesting)
Re:Another idiot buying into the bitcoin scam. (Score:5, Interesting)
The dollar has value because it can pay a dollars worth of taxes.
When Germany jumped into the eurozone, adoption of the euro was extremely slow until the year that Germany required all taxes be paid in euros, and in that year almost everyone converted.
Re:Another idiot buying into the bitcoin scam. (Score:4, Interesting)
should the debtor offer you legal tender and you refuse, then you attempt to collect the debt at a later time the debtor can (and will if they are smart) raise your refusal to accept payment as a defense to your subsequent attempt to collect payment.
Re:Another idiot buying into the bitcoin scam. (Score:2, Interesting)
If you know something about computer science and theory of computability, you'd know that bitcoins are actually much harder to acquire than a government issued currency, and is therefore much harder to manipulate (e.g. like gold).
Harder to acquire? Maybe.
Harder to manipulate? Not if you're running a shady exchange.
I'm sure at least ONE of the exchanges out there is trying to run a clean, secure, legit business. Simply because I can't think of one off the top of my head doesn't mean it isn't happening.
That still doesn't help if all the rest of them are getting broken into, or the people running them are shady.
Re:Another idiot buying into the bitcoin scam. (Score:4, Interesting)
No, but the taxation often provides the tipping point.
A national currency is marked by 2 things: that you can (or must) pay your taxes with it, and that the employees of that government (most especially the military) accept it in payment. As long as both of those are true, even with serious inflation, the national currency has value.
A coherent (and polite) response (Score:4, Interesting)
Firstly, if you didn't mean to be offensive, perhaps you should have avoided directly insulting my intelligence and education.
I had a much longer rant planned, but then I realized you misunderstand the nature of my objection to the economic understanding of the BtC designers. (And, to be fair to you, I didn't mention it in my original post.) I have no problem with the idea of an electronic currency of fixed, limited, pre-determined, supply. While unsuited as a national currency, (there's a reason every single modern economy uses fiat currency; though some economies do it better than others) it can, nonetheless, be a very useful tool, and the idea is certainly a worthy experiment in technology and economics. I merely believe that the particular expansion curve chosen was a stupid one. I believe that it ramped up too quickly, leveled off too soon, and the long-term increase in the supply is too low. A better-chosen curve would have struck a better balance between staving off deflation and inflation. (It started too quickly, and then became deflationary/economic growth limiting.) They were too optimistic about the uptake of BtC's, and did absolutely nothing to account for any kind of significant long-term growth in their use after the "intro" phase was complete. This is why the value of BtC's has been so unstable and deflating so much.
Now, on to my (now) shorter rant:
While a large portion of economics is indeed a large pile of untested bullshit, the same could be said about any branch of science. Just as we do not seriously question classic Newtonian mechanics as a useful model for predicting the behavior of masses, nobody seriously doubts things like the fundamental relationship of Supply and Demand (used as a general model.) Conversely, there are many unproven branches of physics (i.e. String Theory) for which the evidence is little stronger than the abstract theories produced by the egg-headed economist of your choice. We CAN do economic experiments to test theories (such experiments are done all the time at the micro level, and are also done at the macro level by central banks, although the results of those experiments take much longer and the results aren't usually very clear-cut.)
I ignore divisibility for the simple reason that I do not argue (as many BitCoin skeptics do) that BitCoins are illiquid simply due to the relatively high value of 1BtC. I know that is incorrect.
I ignore velocity (which is certainly a legitimate means of expanding an economy without increasing the supply of currency the economy is denominated in) because BitCoins have given us no reason to believe that their velocity will be higher than any other currency, (and reasons to think it would be lower, namely the lack of a functioning credit market.) and there is an upper bound to how much of an increase is possible. As a side-note, since the supply curve has leveled off too quickly, and will continue to get even flatter, almost ANY economic growth (over the small value of the BtC expansion curve) will have to come through velocity increases... that rather limits the total size of the economy, and therefore BtC adoption. The ability to adjust the money supply based on the current and expected size of the economy is why every modern economy uses fiat currency, although, as earlier mentioned, some do it better than others.
I don't know if you are one of the people that believe this (I'd like to think you aren't), but large increases in the value of a currency are NOT a good sign if you want it to be a viable currency. Increases ARE good if you are investing in said currency. A currency is most useful when it is STABLE, and, barring that, reasonably predictable and not severely deflating. That is, if you want a credit market at all. (Inflation of a steady doubling per year could theoretically be baked into interest rates, you can't do that with a currency deflating by a similar proportion, like BtC's did last year.) And the current intra-day volatility of several percent make it utt