Bitcoin, Ethereum and other cryptocurrencies are surging in value, at least for the moment.That is also causing a surge in attention.Governments are wary of cryptocurrencies for the same reasons that libertarians love them.As Wikipedia puts it: In centralized banking and economic systems such as the Federal Reserve System, corporate boards or governments control the supply of currency by printing units of fiat money or demanding additions to digital banking ledgers.In case of decentralized cryptocurrency, companies or governments cannot produce new units … Central bank representatives have stated that the adoption of cryptocurrencies such as bitcoin pose a significant challenge to central banks’ ability to influence the price of credit for the whole economy.They have also stated that as trade using cryptocurrencies becomes more popular, there is bound to be a loss of consumer confidence in fiat currencies.Gareth Murphy, a senior central banking officer has stated “widespread use [of cryptocurrency] would also make it more difficult for statistical agencies to gather data on economic activity, which are used by governments to steer the economy”.

He cautioned that virtual currencies pose a new challenge to central banks’ control over the important functions of monetary and exchange rate policy.The above sounds like a libertarian dream (at least some libertarians have embraced bitcoin), and a statist nightmare, though some libertarians dislike Bitcoin.It shouldn’t be surprising that the Green Party is less enthusiastic.I can’t find anything on the US Green Party website.I did find something from the UK showing the Greens seeming to oppose it: The Green party contend that money creation is far too important to be left to the profit-driven private sector, with its murky motives and moral hazards, and that a new state-funded organisation with day-to-day autonomy from the government should have that responsibility.For more depth see this article on Greens and cryptocurrencies.Of course the Greens are not uniform and at least one Green candidate accepted Bitcoin donations.Something I never see discussed about cryptocurrencies is what I see as a bifurcation of the market.

There are essentially two worlds of Bitcoin.bitcoin beursThe better known end of it is what I refer to as the government-approved world, dominated by operators like Coinbase.ethereum statisticsLesser known but perhaps more important is the part that operates outside of government control and supervision, which I will refer to her for fun as the netherworld.giá bitcoin hôm nay but there are many “wallets” out there.bitcoin bancontactIn the latter world cryptocurrencies offer tremendous advantages including anonymity, low transactions costs including across national borders, and security from government confiscation.ethereum usd coinbase

For those who think that last benefit is silly, remember that FDR confiscated gold.bitcoin block headerExcessive government interference forced this bifurcation and causes a substantial separation between the two worlds.o que é mineração bitcoinsMy early efforts involved receiving Bitcoin from relatively anonymous sources in the unapproved world and then attempting to transfer that into a Coinbase account.bitcoin transaction id formatGovernment paranoia over money laundering involves know your customer regulations.bitcoin crime unitGreens, at least in Europe, support the notion of treating money laundering as a crime.Of course libertarians generally consider money laundering to be a made up crime and an excuse for government and banks to spy on us – see Mises – Banks as spies.

Side note, the Libertarian Party’s Bitcoin donation works through BitPay in the government-approved world.As a result of those regulations Coinbase closed my account when I received money from my netherworld wallet.I know of at least one other person who had a similar experience, and it seems common with operations in the government-approved world.This makes it much more difficult for users to convert their cryptocurrencies into cash or to use them to shop online or otherwise.In a classic example of unintended consequences, cryptocurrency remains useful in the so-called Dark Net involved in more shady activities like gambling and drug dealing., where you can buy or sell Bitcoins in a variety of ways, including in-person cash transactions.But this creates its own set of potential legal problems.The US government has made a substantial effort to prosecute those who transact business in cryptocurrencies.Some of the more famous cases have involved Bitcoin exchanges like Silk Road and BitInstant.

Since few of us are likely to operate such an exchange, that’s not a concern for most.But there are still significant legal risks for smaller players.For example, a chiropractor got caught up in Bitcoin and was charged with money laundering.Randall Lord was a Libertarian congressional candidate in 2014.For another article on his case see KTBS story.As a criminal defense attorney, I see serious pitfalls for those interested in Bitcoin and other cryptocurrencies.The biggest concern is that one could face federal prosecution for money laundering.Randall Lord and his son went beyond merely investing in Bitcoin or treating it as a hobby. where they would both buy and sell, and engaged in transactions totaling over $3.5 million.That took them to the level of being treated as a money services business, which the Feds feel requires registration, licensing, and following FinCen regulations (the “know your customer” rules mentioned above).I myself have engaged in a small number of in-person transactions facilitated through the same website.

One can advertise on that website to both buy and sell bitcoin, charging a percentage of each transaction as a fee.Thus you can make a profit on both types of transaction.That starts to look like a money services business.That term is defined in Title 31 of the Code of Federal Regulations, section 1010.100(ff).Being aware of cases like that chiropractor, I have kept my activity very limited.I do not treat my activities as a business, but rather as a hobby.I only advertise to sell Bitcoins – I don’t buy – that I have accumulated in other ways and I don’t make a significant profit from the transactions.I also keep the transaction sizes down – I haven’t done any for more than $1000.I usually deactivate the ad after one or two transactions and go on hiatus for a while.Some players on the website have multiple ads in multiple locations.I only have one ad for one location.I also conduct business openly in my own name – I don’t hide what I’m doing.And when I receive cash for Bitcoins I deposit the cash in my bank account and properly report it for tax purposes.