Bitcoins and you

In the past few days, a real life situation has developed
that will have to be made into a non-fiction movie.
Where is George Clooney and the producers of Oceans 15...

Scene 1: The US Navy develops an "dark" internet communication system
that hides the identity of the sender and the recipient and their locations

Scene 2: Legitimate people develop a system of "double blind" transactions called "bitcoins"
which use the Navy's internet system for financial transactions

Scene 3: People involved with internet gambling, pornography, and sale of drugs, stolen goods, etc
jump onto this system which is ideal for their purposes of anonymity

Scene 4: The US government via the FBI gets involved and
shuts down one of the biggest drug-sales exchange centers

Scene 5: A new drug-sale exchange center develops and
the value of bitcoins increases 10-fold in 4 months

Scene 6: Suddenly the assets (bitcoins) of the new exchange is hacked,
and millions of dollars worth of bitcoins are "stolen"

Scene 7: Our hero of the film, known only by his/her internet user name,
notices the theft and begins an on-line "car chase" to track the hacker
through thousands of internet transactions based on a tag of 0.000666 bitcoin.

Scene 8: The "dark" internet community goes wild, threats of "hit men"
and blood and hero-worship and...

Scene 9: Questions arise about the legitimacy of the new exchange...
Was it set up intentionally for the heist ?
Were the founders of the exchange in on the "theft" ?
Was there any "theft" at all and the thief is only a diversion ?

Denoument: Ummm, No, that would giving away the ending



Motherboard.vice.com
DJ Pangburn
12/2/13

Did One of the Silk Road's Successors Just Commit the Perfect Bitcoin Scam?

Yesterday, Sheep Marketplace, an anonymous digital narcotics bazaar
that grew popular after the shutdown of the Silk Road, announced
that it had been robbed of 5,400 bitcoins—the equivalent of $6 million
at current exchange rates—and then promptly shut itself down.

This came just days after Black Market Reloaded announced it would be shutting down
due to an inability to absorb a massive influx of new users leaving Sheep Marketplace.
<snip>

Here is an article in Forbes about the bitcoin theft,
with a description of the bitcoint market's recent history

Forbes
Andy Greenberg
12/1/13

Silk Road Competitor Shuts Down And Another Plans To Go Offline After Claimed $6 Million Theft

<snip>
Black Market Reloaded, the current largest anonymous market for contraband online
with nearly 7,000 product listings, responded Saturday with a message on its forum
for users saying that Black Market Reloaded wouldn&#8217;t be able to handle the influx
of new customers and sellers, arguing that the[COLOR="DarkOrange"] Tor anonymity software[/COLOR]
that hides the identity of the site&#8217;s users and owners isn&#8217;t designed for such a large user base.

On Sunday he followed up by blocking new registrations, closing inactive accounts
and notifying users that the site would go offline in around two days.
&#8220;This puts BMR in the edge of the blade, Tor can&#8217;t support any site to be too big,&#8221;
wrote the BMR administrator who calls himself Backopy.
&#8220;[Black Market Reloaded] can&#8217;t hold another wave of refugees&#8230;.
Without competition the wisest thing to do is to shut down the market,
doing it in a timely and orderly manner.&#8221;
<snip>

Currency ?
Commodity ?
Barter chip ?


NY Times
WILLIAM ALDEN
December 5, 2013

For Bitcoin, a Setback in China and an Endorsement on Wall Street

China has thrown some cold water on Bitcoin,
the popular virtual currency that has gained many adherents in the country.

The Chinese government on Thursday moved to restrict banks from using Bitcoin in transactions,
declaring that it was not a true currency at all, The New York Times reports.<snip>

The price of Bitcoin, which has surged in recent months and is characterized by bouts of volatility,
dropped on the news. After reaching a high of $1,240, the price fell to around $1,085 on Thursday,
at one point touching a low of $870, according to the Mt.Gox exchange.

At the same time, China said that investors were free to speculate on Bitcoin at their own risk.
“Ordinary members of the public have the freedom to participate in Bitcoin transactions
as a kind of commodity trading activity on the Internet,
provided they assume the risks themselves,” the statement said.

But while hopes of a Chinese seal of approval have been dashed,
Bitcoin is gaining some institutional respect in the United States.
In a move that appears to be unique among Wall Street firms,
Bank of America Merrill Lynch has begun to cover Bitcoin,
saying in a research report on Thursday that it could be useful in e-commerce and money transfers.

“We believe Bitcoin can become a major means of payment for e-commerce and may
emerge as a serious competitor to traditional money transfer providers,”
said the report by Bank of America currency strategists
led by David Woo.
“As a medium of exchange, Bitcoin has clear potential for growth, in our view.”

Still, some monetary policy experts are skeptical. Unlike conventional currencies,
[COLOR="DarkRed"]Bitcoin is not backed by a central bank or government.[/COLOR]

But then if you want something the local gendarmes don't want you to have...

.

I've been following the conversations on-line about bitcoins... it is entertaining.
To wit:

* A. Stanton
* Dallas, TX

I think I've finally got my act together. I've got some Bitcoins
and shares of Twitter and Facebook and just signed up for Obamacare.

* Dec. 6, 2013 at 8:25 a.m.

Bitcoin is backed by the good faith and credit of the unsavory element of society which has been established for thousands of years. While there are legitimate fronts, it wouldn't exist without the opportunity to get something for nothing. It caters to some people's greed and willingness to take advantage of other peoples fears, in this instance stemming from their loss of faith in the credit worthiness of the world's governments (i.e. their un-backed currencies) during these harsh economic times. People often flock to commodities such as precious metals (bitcoins can be "mined", how's that for spin) under such circumstances.

Governments continuously seek to make their currencies more stable and more secure. If bitcoin offered significant improvements in these areas, governments would jump on the bandwagon since governments invest too. As it stands, bitcoin stability requires that more people continue to buy into it not unlike a pyramid scheme. Its security is dependent on state of the art information technology under private control with no oversight and no recourse if compromised by either outsiders or insiders. At times, it may seem that some the world's currencies aren't worth the paper they're printed on; but, you can still wipe your ass with them. You don't have intrinsic value with bitcoins to even that extent. Currency? Commodity? Barter chip? Going into bitcoin is more like converting your legal tender money into virtual jewelry because its bling is seducing even some who should know better.

The preceding has been an editorial and does not reflect the opinion of The Cellar which may accept bitcoins in the tip mug.

I've noticed that Bank of America seems to be amicable to bitcoins.

Do whatever it takes to make a buck... or a few billion

Bitcoins are the new real estate and we know what happened to the housing market. They'll enrich a few who know how to manipulate that market at the expense of the many. Being a virtual entity rather than a tangible one means less regulatory interest and less popular/political sympathy for those who get burned since they knew they were buying nothing real [pun intended] in the first place. The public sentiment will be that a fool and their money are soon parted.