Bitcoin Technology in Florida, the United States, and the World
Disclosure statement: The Florida Bitcoin Technology and Federal Regulation opinions of this author are not necessarily shared by the owners of AvNetmedia and the author holds less than 50 USD worth of Bitcoin. The author also does not own any firearms nor has he ever cared to.
Summary of Florida Bitcoin Technology Federal Regulation trends
The cat’s out of the bag. Either government will learn to adapt to the innovation brought by Bitcoin’s blockchain technology or play an endless game of militaristic whack-a-mole trying to control an already Global phenomenon.
Is Bitcoin a currency more valuable than USD or Gold?
I cringe whenever Bitcoin (BTC) is described as either a panacea for the world’s currency-related problems or when Bitcoin is described as a scam. In my opinion, one of the most valuable things to come from Bitcoin is the public’s re-education about what currency actually is and the associated removal of misconception.
Let’s start, then, with a brief discussion of currency. According to Wikipedia, “[precious] metals were used as symbols to represent value stored in the form of commodities.” Of course, these metals (thought to be Bronze, Silver, Gold, etc.), were uniquely formed to fend-off counterfeiting, and were militarily protected. But, “in an era where there was no place that was safe to store value, the value of a circulating medium could only be as sound as the forces that defended that store.”
Although this article is not meant to be a full discussion of the origins of currency or of the definition of its value, the preceding paragraph brings up what I believe to be the two most important aspects of currency valuation. First, the “value stored” must be notionally equivalent to “the form of commodities” that are being stored. The first question, then, is “how is the best way to store value?”
I would argue that the BEST way to store something valuable is to store it in such a way that no one knows of its existence. If a potential robber has no idea that he is standing next to a suitcase full of gold coins at the airport, he would have NO incentive to rob the owner. Of course, as a matter of practicality, valuables cannot remain anonymous forever (or can they?). A follow-up question would be “What is value?”
Let’s face it if you are a starving person, at that moment you could care less about Silver or Gold – you simply want to eat. So to YOU – at that moment – FOOD has the most value. So, it should be relatively obvious that “value” is a transient property – it changes based on our basic human needs and/or wants at any moment in time. Currency is simply a means to transmit that value in a ubiquitous form from one entity to another. This brings us to the concept of Fungibility.
Via Wikipedia, the definition of Fungibility is “the property of a good or a commodity whose individual units are capable of mutual substitution. That is, it is the property of essences or goods which are ‘capable of being substituted in place of one another.’”
Currency Value Alternatives
For those that need a short review on what is meant by “CENTRALIZED” (vs. “DECENTRALIZED”) servers here is a snapshot from the recent Maidsafe post on the subject:
Is Bitcoin really anonymous?
What do those techno-savvy nerds mean when they call Bitcoin “pseudo-anonymous”? To answer that question, one has to think about the methods with which Bitcoin is transmitted. After all, Bitcoin is a DIGITAL asset that rides over the internet. This asset can be purchased directly from an individual, from an online brokerage, or from a Bitcoin ATM. Because Bitcoin ATMs are the most common way to quickly get into the Bitcoin ecosystem, I will elaborate on its anonymity.
The Bitcoin ATM
Owners of Bitcoin ATMs (BTMs) are defined as “money transmitters” according to U.S. Anti-Money Laundering (AML) & Know Your Customer (KYC) regulations. Each state has different levels of enforcement but there are limits to the amounts one can purchase from a Bitcoin ATM. In addition, BTMs must collect certain pieces of information such as the phone number of the customer, the driver’s license, and biometric data like customer fingerprints. Typically, I’ve seen purchases below 1000 USD requiring only the phone number where as higher amount purchases require the input of more personal information.
Telecommunications database providers such as NeuStar provide the necessary data integration to provide law enforcement agencies with links from a smart phone number to the personal data of the owner (every smart phone has a unique identifier also). These pieces of information are used today by large United State money transmitters to ensure compliance with AML/KYC regulations.
Bitcoin – U.S. Regulation
As I have carefully watched the Bitcoin ecosystem evolve over the last few years, I’ve seen many narratives proliferate across the U.S.:
- From, “Bitcoin is Monopoly money!” to “Wow, the I.R.S. now regulates Bitcoin!”
- From, “Bitcoin has crashed!” to “Bitcoin could be worth more than $1 Million!”
- From, “Bitcoin is used to purchase drugs!” to “Bitcoin donations were used to feed the poor!”
Regardless of anyone’s opinion, the technology innovations that brought us Bitcoin are here to stay. NOW, authorities are ramping-up their activities because the Bitcoin genie has escaped from its bottle and is never going back. (I entertain myself by listening to people discuss Bitcoin because they’ve seen it on Sheeple-vision…er…um…Television)
SEC Regulation and Florida
While the young tech-savvy entrepreneurs I’ve met go on & on with regard to how they will help “change the world” with an assortment of Bitcoin projects, most have not existed long enough to realize the lessons that their parents learned decades before. So what does the SEC have to do with this?
No government will tolerate competition with its currency. As Mayer Amschel Bauer Rothschild said so many years ago,:
“Give me control of a nation’s money and I care not who makes its laws.”
“The SEC’s activism in finding novel financial arrangements to be securities is legendary; moreover, with an eighty-year head start, the agency is aptly experienced at litigation aimed at expanding the definitional or registration sections of the securities laws, even in the absence of a complainant. Specifically, the Howey decision of 1946 [Florida] began a ceaseless period of brashly applying the Securities Acts to…nonconventional securities–an ever-growing list of investments the First Circuit has coined ‘a kaleidoscopic assortment of pecuniary arrangements that defy categorization.’” – 2014 Syracuse Law Review; J. Scott Colesanti, LL.M
In Florida, as recently reported by Federal authorities:
“Anthony R. Murgio and Yuri Lebedev never bothered to get a Money Services Business license for Coin.mx, a Bitcoin exchange”…and “knowingly exchanged cash for people whom they believed may be engaging in criminal activity.” – 2015 article by P.H. Madore (see https://www.cryptocoinsnews.com/coin-mx-bitcoin-exchange-operators-arrested/)
The Public Perception “Blame Game”, Federal Cases, and the Judiciary
Have you been following the gun-control debates? On one side you have a bunch of gun owners fighting for their inherent U.S. Constitutional “right to bear arms”. On the other side of the debate you have the U.S. Government pushing for the enactment of gun control based upon the scare tactic of:
“See? Person A just killed Person B with a gun and therefore we must ban all citizen-owned guns!”
The same type of tactical narrative is used to try to push for more regulation of Bitcoin. The narratives change a bit but the underlying logic remains the same:
“See? Person A just sold drugs to Person B anonymously using Bitcoin – We must monitor and regulate [but pretty darn near to ban] all Bitcoin!”
Cases and points:
In the case of Silk Road, an online illicit drug store, the court declared that Bitcoin was money in order to find grounds to support a criminal charge of money laundering. – see United States v. Ulbricht
“What, if any, causal relationship or nexus between the defendant’s conduct and the victim’s harm or damages must the government or the victim establish in order to recover restitution under 18 U.S.C. §2259?… the previously mentioned avenues in which criminals acquire and trade child abuse images are a constant source of concern for law enforcement and allied professionals… Aside from traditional money as a means in which to pay for services or goods, the use of digital money such as Bitcoin is both increasing and difficult to track.” – see Doyle Randall PAROLINE v. Amy UNKNOWN and UNITED STATES; November 20, 2013; Appellate Brief; U.S. Supreme Court
Of course you can’t talk about money and “The Blame Game” without the Family Courts:
“The confusion surrounding the categorization of Bitcoin, a type of virtual currency that can be obtained and transferred anonymously, frustrates courts’ ability to properly value divorcing parties’ assets and determine a fair distribution of marital property.” – January 2015 North Carolina Journal of Law & Technology Online Edition; Caline Hou