1. I have some cash which I want to stash away from government.
2. My options are a) Buy property (India's property boom) b) Buy gold c) Store the cash somewhere (say inside mattress)
For
a) I can be identified or property can be lost. As can't buy it on my name
b) Can't easily transfer internationally. Theft fears etc.
c) Inflation, fire, water
With Bitcoin. I buy Bitcoins in cash (localbitcoins). Or use third party accounts (same used for buying gold or property).
1. I have full access to the money
2. Can take it anywhere and convert it to local currency
Only downside would be if Bitcoin crashes i.e. loses all value or a lot of value within short span. But if more and more businesses start using it. Virgin, Overstock etc. then chances of that happening would get lesser and lesser.
I define significant here as $50,000 or more.
It is not easy to buy BTC in cash through LocalBitcoins. I know first hand how intimidating the process is (even after the 10th time) because you don't know who you're meeting and what their intentions are. Secondly, there aren't a lot of people willing to transact $50,000+ in BTC. This is usually a supply problem as these people don't have hundreds of BTC to sell.
Using third party accounts is also silly as that leaves a paper trail. If any of your cash goes through someone else's hands, it is most likely recorded.
To take this further with your 'solution', you can't simply convert this significant sum of money into local currency easily. There is still going to be a paper trail of you converting the money from BTC and if you have done any selling on exchanges, you'll know you need your identity verified.
If I were someone shady, I would NOT turn to BTC to launder my money, it doesn't make a lot of sense.
People often confuse cryptocurrencies and BTC in general with being totally anonymous. They're not.
I guess a follow up question, then. Internet geeks seem to really be pro- bitcoin. Do you think money laundering is not a big deal compared to the benefits of bitcoin? Do you think there is anything that should be done to try to fight it?
They get together and trade cash for BTC. Now the dealers can go on any exchange, and convert the BTC back to digital currency, then can transfer into their bank.
I agree with you until this point. Banks will still be able to apply the same safeguards they use when customers deposit large amounts of cash (reporting large transactions, "suspicious" activity, etc)
Same goes with certain type of merchants such as precious metal dealers.
I don't know if other merchants that deal with large transactions need to report large cash transactions (casinos, car dealerships, etc?)
Bitcoin is really no different than cash in this respect, except it's easier to move but actually more traceable since the blockchain is entirely public.
Either way I don't think places like Dubai or Switzerland have any problem with Russian drug money.
Like smoking cigarettes, there is no law that bans you from smoking, but the health organizations are warning you that it can be dangerous for your health.
I am sick of this sort of stories which make to top of hacker news like the recent one by NBC about being "hacked" in Sochi [2] which was pathetically demolished by HN community [3]
[1]: http://www.consultant.ru/document/cons_doc_LAW_158121/
[2]: http://www.youtube.com/watch?v=waEeJJVZ5P8
[3]: http://blog.erratasec.com/2014/02/that-nbc-story-100-fraudul...
translation:
"According to the title 27 of the Federal Law "On Central Bank of Russian Federation" "the official currency of Russian Federation is rouble. Issue (introduction) of other currencies and currency surrogates on the territory of Russia is prohibited". Anonymous payment systems and cryptocurrencies, including the most popular - Bitcoin, are currency surrogates and can't be used by physical persons and corporations. "
This determination - bitcoin as a currency surrogate - was made by the "expert group" consisting of high level bureaucrats from the enforcement side, ie. Central Bank, FSB, police (police in Russia is one big vertically integrated structure from local to federal level), Attorney General office.
How is that different from any other country? Its a generic law that every other country has, you can't start spreading a new currency in United States as well because "official currency of United States is US Dollar".
We all know what happened to a "Liberty Dollar" in United States [1]:
In 2006 the U.S. Mint issued a press release stating that prosecutors at the Justice Department had determined that using Liberty Dollars as circulating money is a federal crime. The press release also stated that the "Liberty Dollars" are meant to compete with the circulating coinage (currency) of the United States and such competition consequently is a criminal act.[2]
[1]: http://en.wikipedia.org/wiki/Liberty_Dollar#Federal_Governme...
[2]: http://www.usmint.gov/pressroom/index.cfm?flash=yes&action=p...
You don't need a new law to ban something. All you need is one stupid official to apply an old law to a new concept.
Based on the old law, one cannot mine, trade, accept, and even use bitcoin to buy stuff in Russia.
The US from 1776 to about 1880 > the US of today > Russia of today > Soviet Union > North Korea.
Conflicting information on whether individuals can still trade in bitcoin legally. If so, this would leave Russia in pretty much the same boat as China.
What they might do at some point, is prohibit selling goods for bc, this is possible.
Mining / exchanging and buying outside of the country, or buying virtual goods will not go anywhere for sure :)
Again, another Orwellian-themed fake news about my place (or am I getting paranoid?)
UPD: just read the article at http://genproc.gov.ru/smi/news/genproc/news-86432/ -- yep, no new laws, nothing -- "measures will be taken to prevent fraud, etc."
The overall impression is, they are going (a some point, not now) to explicitly delegitimize cryptocurrencies as a means to make payments officialy, but not ban / outlaw using the mining tools, or exchanging the bitcoins.
Does BTC follow the same economic principles as standard currency. Such as your basic supply/demand, when supply goes down, demand goes up and price goes up. Or is it immune to such things?
Just curious. . .
This is probably true in this case. In the case of physical goods it is not always true. If there is continued demand but less of it, prices can rise for some goods because the fixed costs of manufacturing increase on a per item basis as you can't buy materials in as much volume. Increased costs of manufacturing an item will lead to higher prices for the consumer.
Thus reduced demand does not always lead to reduced prices.
This notice is more a reminder that bitcoin is treated as other non-ruble currencies are. I'd assume most of the Russian based markets already knew that.
The laws are there but they are extremely difficult to police, while you can't just open a bank account and accept USD (which you need a license for) there is still a large grey economy.
Haha, tell that to the guys with the jackboots and machine guns.
But here's an interesting story I just found: http://www.policeone.com/police-administration/articles/6643...
Dear participants of the project BTC-e.com! In connection with decision-making in relation to the crypto-currency in Russia working with Qiwi suspended indefinitely, as well as with other payment systems in Russia. All financial obligations will be met in full without the means available additional commissions. encourage you to use the system okpay (USD, EUR), interest on the conclusion on it is reduced to zero. apologize for any inconvenience. Sincerely support btc-e.com
