The part that intrigues me is the whole security aspect of it. Take your average bright guy and say "Lets set up a place where people can store and move around gold coins. All the gold coins are going to sit in your living room, and of course if anyone were to get there hands on those coins they could melt them down into pieces and resell them so that you never knew where they went. There is going to be more than a million dollars worth of coins in your living room, do you think you're door lock is up to it?"
Ok so its a stretch, but Bitcoin has two interesting properties, one it is pretty fungible, and two most if not all governments consider it about as 'real' as the gold in World of Warcraft. If CFAA doesn't apply (say the server is outside the US) then what exactly would you even charge someone with who "stole" 1000 BTC? It isn't recognized as currency by any jurisdiction on the planet as far as I can tell, so what got stolen? Numbers? Block chain data?
This fairly unique combination of properties quite possibly make Bitcoin the ideal target for thieves. Better than cash, better than raw gemstones, better than pretty much anything except possibly bearer bonds [1]. Have you seen how much security there is around vaults that hold bearer bonds?
And yet people create exchanges or wallet services or whatnot and then seem shocked when they get compromised by very sophisticated programmers [2], that steal all their BTC? You are surprised?
Given these huge thefts where is the money going? I mean is there a steady stream of redemptions at exchanges? Is there a note in the chain when the coin is transacted for cash? Should there be?
Thanks for the link, the reasoning from the ruling [1] is a bit more precise however. For the purposes of establishing standing the SEC to prosecute. The judge reasoned to that in part with this:
"First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money."
The key here is that the judge is trying to understand if the transactions involved met the standard of being an 'investment of money.' Which he reasons to by establishing that you can convert currency to and from BTC and you can buy products with BTC. He doesn't address the question of people who create BTC out of the act of 'mining' it. Let's say Van Gough was alive today, you could use his paintings as "money" in exactly the same way, except Van Gough could make new money just by painting something. Which makes other things more complicated (are bottles of tide "money" if you can trade them for drugs? [2]) It sounds like this ruling simply allowed the SEC to move forward with their case, but I'll be interested to watch it to see if it gets appealed (the ruling). Clearly ruling to overly broad here would put the onus on people with collectibles to follow FinCen rules when trading them, which to date they have largely avoided.
Wow that is a the saddest ponzi scheme I've come across so far... it really makes you wonder how bad our educational system is if our ponzi schemes are getting so poorly designed and managed.
The part that intrigues me is the whole security aspect of it. Take your average bright guy and say "Lets set up a place where people can store and move around gold coins. All the gold coins are going to sit in your living room, and of course if anyone were to get there hands on those coins they could melt them down into pieces and resell them so that you never knew where they went. There is going to be more than a million dollars worth of coins in your living room, do you think you're door lock is up to it?"
Ok so its a stretch, but Bitcoin has two interesting properties, one it is pretty fungible, and two most if not all governments consider it about as 'real' as the gold in World of Warcraft. If CFAA doesn't apply (say the server is outside the US) then what exactly would you even charge someone with who "stole" 1000 BTC? It isn't recognized as currency by any jurisdiction on the planet as far as I can tell, so what got stolen? Numbers? Block chain data?
This fairly unique combination of properties quite possibly make Bitcoin the ideal target for thieves. Better than cash, better than raw gemstones, better than pretty much anything except possibly bearer bonds [1]. Have you seen how much security there is around vaults that hold bearer bonds?
And yet people create exchanges or wallet services or whatnot and then seem shocked when they get compromised by very sophisticated programmers [2], that steal all their BTC? You are surprised?
Given these huge thefts where is the money going? I mean is there a steady stream of redemptions at exchanges? Is there a note in the chain when the coin is transacted for cash? Should there be?
[1] http://www.investopedia.com/articles/bonds/08/bearer-bond.as...
[2] When the payoff is huge, the risk small, you can pay someone a lot of money if they are good to get you the coins.