It may not be such a surprise that more technologically advanced nations would be more open to the use of Bitcoin inside their borders, as well as developed countries would accept Bitcoin more than developing countries. Why? Developing countries are still continuing to encourage their own local economies to grow, and do not want Bitcoins […]
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Myth: No one knows who started Bitcoin.
Truth: “Satoshi Nakamoto” is a fictional name for a single person, or, potentially, a group of people who wish to remain out of the public eye. Since they’ve managed to do this so far, it’s likely that they have a long history of secrecy keeping. This suggests strong bonds, such as one finds in a governmental context (i.e. ex-NSA employees, like Snowden), or organized crime. In any case, it’s likely that a few people, potentially including governmental security agencies, know who “he” is. Some of these people are undoubtedly becoming extremely rich along with Satoshi.
Myth: Bitcoin only has 21 million possible coins and therefore can’t be used broadly as an exchange mechanism.
Truth: Each Bitcoin can be subdivided, so presumably after there is widespread usage the basic unit of exchange will not be a Bitcoin but something like one millionth of a Bitcoin. This will undoubtedly have some other name, like a Bitdollar.
Myth: Bitcoin is criminal.
Truth: The pseudonymous aspect of Bitcoin led to a lot of early growth from people doing things that their governments didn’t want them to do. However, since Bitcoin transactions are easily tracked, it can actually be a honey pot for the US government. All they need to do is find one “exit node” (i.e. a known criminal), and they can trace back the source of the funds. It’s also a guarantee that as Bitcoin grows governments will regulate it. This is already the case where it is quite difficult to buy Bitcoins without providing your personal identity. So, for better or worse, the ability of people to use Bitcoin to perform transactions their governments wouldn’t want is decreasing over time.
Myth: Bitcoins are not based on inherent value.
Truth: The Bitcoin protocol includes both a payment network and a currency. As basic economics dictates, value is based on scarcity. Since Bitcoin is a currency that can’t be generated at will, this forced scarcity insures value rather than decreases it. Are credit cards valuable? It’s not just the piece of plastic, it’s the network and associated infrastructure that provides the value. In this case, the network and forced scarcity combine to create something that is extremely valuable, a sort of digital gold.
Myth: Bitcoin is inherently volatile and unfit to be a currency.
Truth: If you want decentralized, irrevocable, near fee-free payment, you have to give up something. Some degree of price stability is probably one of those things. There are also ways to solve this problem, like systems that are only partially Bitcoin backed. It is also likely that some of this volatility will disappear as there is greater volume.
Myth: Bitcoin is a bubble.
Truth: This claim essentially states that Bitcoin is overvalued, something that is unlikely. As we’ve stated, there is value in the deflationary aspect, the scarce aspect, the low-to-no fees payment aspect, the irrevocable payment aspect, and as an insurance policy against an unstable government. The rapid growth, which is likely to accelerate, might be compared to the birth of the stock markets. There were both upward and downward movements of epic proportions. Although both are likely here, the fact is that Bitcoin offers a unique value proposition that no one else is providing at this moment. The value is there, it just remains for the world at large to discover it. Many people are understandably excited about the upside potential.
The post Six myths about Bitcoin appeared first on Bitcoin Magazine.
The Dark Horse Gains a Bit of Gravity written by Scott Williams The world of cryptocurrency is a competitive one driven by profit margins. In the past there was a particular problem with Bitcoin miners hopping pool to get the most profit for mining Bitcoin. In present day, the problem has evolved into larger mining-pools, […]
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Over the past two months numerous regulators have issued warnings against the use of digital currencies, and some have even taken concrete steps to halt trading, most notably China and India.
Israel, however, appears to be taking a different approach.
Israeli regulators are not ignoring digital currencies, they are simply waiting to see what the rest of the world does about them.
Certain Israeli financial institutions are engaged in bitcoin transactions, and they would like to see clear guidance from regulators. However, the Bank of Israel, the Israel Securities Authority and government ministries have not said a word on the matter. Yet, this may be about to change.
According to Haaretz, regulators do not feel the need to prohibit transactions related to digital currencies at this time. Attorney Shiri Shaham, who specializes in banking law, told reporters that there is no legislation in Israel today that could address bitcoin and similar digital currencies.
Therefore, the use of digital currencies remains legal, or ‘unregulated’ to be more precise. Shaham said:
“Bitcoin brings with it a lot of innovation that has not existed until now. Consequently, it’s no wonder that it was not in the wherewithal of lawmakers in Israel and around the world to foresee this development and address it.”
Lawyer Guy Lachmann points out that currency is defined as the country’s legal tender and since bitcoin is not recognized as legal tender anywhere in the world, it should not be seen as a currency.
Although Israel can apply existing money laundering legislation to questionable bitcoin transactions, there are still a number of issues that need to be addressed.
Taxation is perhaps the biggest problem. Traders must report their trading income to tax authorities, but there are some exceptions that might attract tax dodgers. In addition, value-added tax does not apply to the purchase of bitcoin.
Shaham believes the Bank of Israel should not ignore digital currencies, but she cautions that it should not adopt a conservative position either. She argues that there is nothing lawmakers can do to prevent trading in bitcoins, even if such trades are outlawed. She said:
“People who want to get their hands on bitcoin will always succeed, and it would be a pity if it were to occur in the shadows and not under the supervision of the banking system.”
Yesterday we published the news Will The UK Exclude Bitcoins From Taxation? and it is now clear that United Kingdom is going to completely change their rules on Bitcoin taxation. Richard Asquite from the TMF Group breaks the news and says that the new clarification will give people and businesses using Bitcoins a far more […]
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Yesterday proved rather interesting for the digital currency markets, particularly as related to alt coins. While prices were mostly up on the day across the board, one particular dynamic stood out as noteworthy: a massive leap in LTC / USD was followed shortly thereafter by a similar climb in XBT / USD. We’ve written previously about the interaction of bitcoin and litecoin, noting that their trading indicates a strong relationship between the two (see here and here for further detail), but for litecoin to so visibly and dramatically lead trading is relatively unprecedented and largely unexpected. Bitcoin maintains a total cumulative market size some 15x larger than litecoin, with the latter often looked at as the first example of the ease of creating new digital currencies devoid of network-driven value. Yet, today’s trading showed that not only is the relationship between the two strong, but also that the perennial favorite may even be subject to a much smaller asset. Despite having a lower overall USD-equivalent capitalization, trading volume in litecoin...
The post Litecoin Leads Bitcoin in Dramatic Price Move appeared first on The Genesis Block.
