I’ve covered Bitcoins a few times and gone into a little detail about what’s up with that shit. I’ve warned repeatedly not to get into that quagmire. And I’ve talked briefly about how I mined a single bitcoin on a whim, then sold it for $112, intending to buy more when they inevitably crashed again.
Well they’re not crashing yet, but it may soon be a moot point. The legal pressure on Bitcoin has just gotten rather intense.
A few weeks back, the biggest online exchange for them, Mt. Gox, ran into some legal trouble. This came in the form of federal agents seizing their US-based funds from a large Dwolla account. In the wake of this, Mt. Gox announced that cashing out for USD was “temporarily” on hold. This, of course, is a huge deal: any folks with USD in their Mt. Gox account (as in, me, with the sale of my single Bitcoin) suddenly couldn’t cash out if they wanted to. Nor could they cash in. This had the curious effect of slowing trades significantly, so BTC didn’t quite crash.
Fast forward to a couple days ago. The state of California issued a cease and desist letter to the Bitcoin Foundation in mid-May, claiming that Bitcoin was a money (it kind of is), and that it therefore must be licensed by the State and US Treasury department. Now, the Foundation is a nonprofit that advocates the use of BTC and doesn’t actually administrate it, but it’s a sign that the legal pressure is hitting new highs.
Then you’ve got this curious record from the DEA listing assorted drug forfeitures. If you check page 125 you’ll see they list a seized Bitcoin account… and nothing else for that individual. This most likely means it’s someone who was trading BTC for narcotics, though on which end of the transaction, who can say.
This all begins to add up. The government can, still, shut down Bitcoins and is starting to look like they intend to do so. How, you ask, if it’s an encrypted currency? Well the Mt. Gox one at the start shows you. If you can’t use Dwolla or Paypal or other digital means to transfer from your bank to elsewhere, then you can’t buy fucking Bitcoins. Nor can you cash out of Bitcoins. The whole concept, in the US at least, can slowly strangle because the trading slows to a crawl.
In my first post about Bitcoins I advised against buying in. Although I’d said so more because I expected it was something of a fad, the fact that it wasn’t just a fad led to the next major hurdle.
If Bitcoin somehow survives this, then go for it. But I’m not expecting it to live on except as a curiosity.