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Comment Re:Dangerous is right! (Score 1) 858

This brings up a point that I have yet to find a satisfactory answer to: what is bitcoin actually backed by? Even the US dollar is backed by something, in a very indirect way, but bitcoins appear to be backed by nothing at all.

Iono, what's gold backed by? Not the industrial uses -- gold would be worth far less if its value was based only on what you can make from it. The real value comes from people attributing value to it, based on its properties. It's very resistant to corrosion, it's rare, and it's divisible. Bitcoins share these traits, which makes them valuable to some people. And by virtue of being valuable to some people, Bitcoins have value. (It's kind of a chicken-and-egg thing, but not really.)

Comment Re:Untraceable? (Score 1) 858

In addition, if it doesn't save the "from" source after the transaction, there is no way to tell where the money came from.

It does, though. Knowing where the coins came from is required to ensure that someone doesn't double-spend money. This information is preserved indefinitely in the block chain, so you can trace the history of each currency unit back to the block it was minted in.

That's not to say you can't be anonymous, but Bitcoin isn't some sort of panacea to the anonymity problem; you have to know what you're doing to remain anonymous.

Seems like it would make money laundering and tax evasion easy.

To a certain degree, yes. Bitcoin does make laundering easier, especially if the service you use to launder money is run on a darknet like Tor. Attempting to launder money yourself using multiple wallets is likely to result in a very traceable series of transactions in the block chain. It's definitely advisable to avoid laundering money using your own wallets unless you know how the block chain works on a technical level.

And while Bitcoin does make storing and moving money for the purposes of tax evasion a bit easier, note that you can still evade taxes using any physical currency, like US dollars or gold.

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