[Portion removed.]
They are just bullying bitcoin with unwarranted remarks.
This article failed to clarify that the bitcoin foundation replied back and basically shut each of this ridiculous claims off completely.

There are a number of videos on Youtube that attempt to explain the while BitCoin concept. The ideas are very difficult to follow.

Leaves one with a basic question: "how do I follow the money?"

Stay away from bitcoin scammer Butterflylabs. A stink hole in kansas!!!

You been warned.

"how do I follow the money?"

It is much easier to follow the money on Bitcoin than with government money. You simply go to blockchain.info and type in any address that is used in a transaction. From there you can see every transaction that has ever occurred with that address.

It is pseudononymous because all transcations are transparent to anybody. You make it anonymous by not tying your name to the purchase of your bitcoins.

[Post removed by Palo Alto Online staff.]

Bitcoin is a ponzi scheme. Good for making illicit transactions, but you don't want to be left holding the bag when the bubble bursts. If you think the Winklevii are better stewards of your money then the federal reserve, then bitcoin may be for you.

> It is much easier to follow the money on Bitcoin
> than with government money.

Government money is numbered. These numbers can be used to actually track the currency. These numbers can also be used to determine whether a bill is counterfeit, or not.

The government money is also backed up by the government (for better or worse). At least there is a known entity to deal with if there are problems with the currency. The government also mandates that the currency be accepted as "legal tender"--and must be accepted when debts are repaid.

The whole BitCoin "network" could evaporate overnight--and then where would the money be? Can you sue anyone for coding errors that result in fraudulent "bitcoins"? Can you force people to accept them?

The history of private currencies, which were prevalent here in the US up until the Civil War (at least), is nothing but a trail of tears and woe. Private banks would issue private currencies, which usually ended up being accepted only at a discount, and often ended up having no value when the issuing banks collapsed, for the typical reasons banks collapse--mismanagement and fraud.

The government currency works. It's not clear why we need another private, uninsured, and almost "underground" currency?

I am surprised that a legitimate business is dealing with this scam.

It is primarily used for money laundering.

It is ironic that the comic strip DILBERT delved into the "bitcoin" topic just today:

Web Link

Good points, Joe. Here are my responses:

>Government money is numbered. These numbers can be used to actually track the currency. These numbers can also be used to determine whether a bill is counterfeit, or not.

In practice, cash is fairly easy to counterfeit and is a burden to businesses accepting large volumes of cash, especially when the goods for sale can be resold.

Electronic money is not traceable unless you are the government. In bitcoin, every party can trace any transaction to pseudonymous owners.

>The government money is also backed up by the government (for better or worse). At least there is a known entity to deal with if there are problems with the currency. The government also mandates that the currency be accepted as "legal tender"--and must be accepted when debts are repaid.

Nobody compels a small business owner to accept any money for any good or service. US taxes, however, can be paid with USD only. But what about the rest of the world? Wouldn't it be useful to have a nonpolitical currency that you could use regardless of the political leaning of the government that controls the geographic region? I think so. Especially on the internet.

>The whole BitCoin "network" could evaporate overnight--and then where would the money be? Can you sue anyone for coding errors that result in fraudulent "bitcoins"? Can you force people to accept them?

Bitcoin is entirely voluntary. If you don't trust the system, you don't have to use it. As a software developer, I trust bitcoin much more than my banks, credit card issuers and the private corporation called the Federal Reserve, which prints $85 billion dollars in new money each month.

>The history of private currencies, which were prevalent here in the US up until the Civil War (at least), is nothing but a trail of tears and woe. Private banks would issue private currencies, which usually ended up being accepted only at a discount, and often ended up having no value when the issuing banks collapsed, for the typical reasons banks collapse--mismanagement and fraud.

Well, yes, government does not tend to give up its privilege of seignorage very easily. However, looking back at other fiat currencies, there are no shortages of failures there as well: Web Link

>The government currency works. It's not clear why we need another private, uninsured, and almost "underground" currency?

Having a voluntary alternative appeals to people who want a free system that is not under the control of a single regime. "Free Money" if you will. Additionally, imagine the potential for cash transactions on the internet- no identity needed, just pay and go. Today that's impossible without a system like bitcoin. There are lots of other advantages but I'll leave it to other readers to lead their own research. Again, if you don't have a need for it, it's voluntary!

> The government mandates that the currency be accepted as legal tender and must be accepted when debts are repaid.

Just curious -- where do I go to pay my income tax debt with this legal tender? I've always been told the IRS will not accept Federal Reserve Notes.

Regarding private currencies, that's what precious metals are for. Coin collectors are familiar with the phrase "I am good copper, value me as you please."

> Regarding private currencies, that's what precious metals are for.

Bullion (or other forms of commodities) are not in any way "legal tender". No merchant (in the US) is required (by law) to accept your copper, or silver, bars/dust, in payment for goods and services.

Precious metals are more often seen as a hedge against the vagaries of public currencies--rather than a private currency.

If you can use your precious metals to settle your account somewhere--that's a private transaction. As long as both parties are satisfied with the conditions of the transaction, then it's a matter between the parties--and there is no requirement that a government sanctioned mode of payment be involved.

> where do I go to pay my income tax debt with this legal tender?
> I've always been told the IRS will not accept Federal Reserve Notes.

What mode of payment have you been told the IRS will accept?

> As a software developer, I trust bitcoin much more than my banks,
> credit card issuers and the private corporation called the
> Federal Reserve, which prints $85 billion dollars in new money each month.

Very interesting comment. How does being a software developer give you insight into these entities (banks, credit card companies, the Fed)? Did you take courses while you were in college that provided you information that other students weren't provided?

Since virtually everything in the financial world is now software-based, how is it that you trust people writing “bitcoin” software, but not people writing credit card/banking software?

Would you ever accept a job working for any of the enterprises you claim you don’t trust?

CD hasn't told us how much real money he has invested in bitcoins.

I doubt he really sees bitcoins as a store of value. To him, it is a device to pass something ultimately worthless onto suckers.

I stand corrected. After looking into it, the IRS office in San Jose says they will indeed accept cash currency (exact change required). And California accepts cash tax payments at an office in San Francisco. My main concern has been the movement towards mandatory e-file, involving third parties, security concerns, and additional costs, but that's a story for another thread.

Regarding private currencies, I'm not so much worried about what merchants are required to accept, as I am about what merchants are ALLOWED to accept.

>Very interesting comment. How does being a software developer give you insight into these entities (banks, credit card companies, the Fed)? Did you take courses while you were in college that provided you information that other students weren't provided?

I write software that moves money in the US, primarily using the card networks (VISA/MC) as well as through the ACH system, which is a federated system of banks and the federal reserve. I didn't get any knowledge of these systems in college, unfortunately.

>Since virtually everything in the financial world is now software-based, how is it that you trust people writing “bitcoin” software, but not people writing credit card/banking software?

There are two key reasons- 1) the bitcoin software is open source. Anyone can read it and learn how it operates. See http://bitcoin.org for more details. 2) The cryptographic elements that protect bitcoin users are used in electronic banking, however all banks are built on a legacy system that relies on the trust of central authorities, not a publicly verifiable system that does not require trust between the parties. This is the key technological innovation that makes bitcoin valuable and enabled an economy to grow from $0.00 in value to approximately $1,000,000,000.00 in about 4 years.

>Would you ever accept a job working for any of the enterprises you claim you don’t trust?

Yes- I do work for "the man". I also support free software and believe that we shouldn't expect the existing banking system to be the best solution to our monetary needs as a culture.