blog/data/2010-12-11-bitcoin.txt

   1 Title: Some thoughts on bitcoins
   2 Tags: english, debian, bitcoin, personvern, sikkerhet
   3 Date: 2010-12-11 15:00
   4
   5 <p>As I continue to explore
   6 <a href="http://www.bitcoin.org/">BitCoin</a>, I've starting to wonder
   7 what properties the system have, and how it will be affected by laws
   8 and regulations here in Norway.  Here are some random notes.</p>
   9
  10 <p>One interesting thing to note is that since the transactions are
  11 verified using a peer to peer network, all details about a transaction
  12 is known to everyone.  This means that if a BitCoin address has been
  13 published like I did with mine in my initial post about BitCoin, it is
  14 possible for everyone to see how many BitCoins have been transfered to
  15 that address.  There is even a web service to look at the details for
  16 all transactions.  There I can see that my address
  17 <a href="http://blockexplorer.com/address/15oWEoG9dUPovwmUL9KWAnYRtNJEkP1u1b">15oWEoG9dUPovwmUL9KWAnYRtNJEkP1u1b</a>
  18 have received 16.06 Bitcoin, the
  19 <a href="http://blockexplorer.com/address/1LfdGnGuWkpSJgbQySxxCWhv8MHqvwst3">1LfdGnGuWkpSJgbQySxxCWhv8MHqvwst3</a>
  20 address of Simon Phipps have received 181.97 BitCoin and the address
  21 <a href="http://blockexplorer.com/address/1MCwBbhNGp5hRm5rC1Aims2YFRe2SXPYKt">1MCwBbhNGp5hRm5rC1Aims2YFRe2SXPYKt</A>
  22 of EFF have received 2447.38 BitCoins so far.  Thank you to each and
  23 every one of you that donated bitcoins to support my activity. The
  24 fact that anyone can see how much money was transfered to a given
  25 address make it more obvious why the BitCoin community recommend to
  26 generate and hand out a new address for each transaction.  I'm told
  27 there is no way to track which addresses belong to a given person or
  28 organisation without the person or organisation revealing it
  29 themselves, as Simon, EFF and I have done.</p>
  30
  31 <p>In Norway, and in most other countries, there are laws and
  32 regulations limiting how much money one can transfer across the border
  33 without declaring it.  There are money laundering, tax and accounting
  34 laws and regulations I would expect to apply to the use of BitCoin.
  35 If the Skolelinux foundation
  36 (<a href="http://linuxiskolen.no/slxdebianlabs/donations.html">SLX
  37 Debian Labs</a>) were to accept donations in BitCoin like EFF is
  38 doing, how should this be accounted?  What exchange rate should be
  39 used when calculating taxes?  Would receivers have to pay income tax
  40 if the foundation were to pay Skolelinux contributors in BitCoin?  I
  41 have no idea, but it would be interesting to know.</p>
  42
  43 <p>For a currency to be useful and successful, it must be trusted and
  44 accepted by a lot of users.  It must be possible to get easy access to
  45 the currency (as a wage or using currency exchanges), and it must be
  46 easy to spend it.  At the moment BitCoin seem fairly easy to get
  47 access to, but there are very few places to spend it.  I am not really
  48 a regular user of any of the vendor types currently accepting BitCoin,
  49 so I wonder when my kind of show would start accepting BitCoins.  I
  50 would like to buy electronics, travels and subway tickets, not herbs
  51 and books. :) The currency is young, and this will improve over time
  52 if it become popular, but I suspect regular banks will start to lobby
  53 to get BitCoin declared illegal if it become popular.  I'm sure they
  54 will claim it is helping fund terrorism and money laundering (which
  55 probably would be true, as is any currency in existence), but I
  56 believe the problems should be solved elsewhere and not by blaming
  57 currencies.</p>
  58
  59 <p>The process of creating new BitCoins is called mining, and it is
  60 CPU intensive process that depend on a bit of luck as well (as one is
  61 competing against all the other miners currently spending CPU cycles
  62 to see which one get the next lump of cash.  The "winner" get 50
  63 BitCoin when this happen.  Yesterday I came across the obvious way to
  64 join forces to increase ones changes of getting at least some coins,
  65 by coordinating the work on mining BitCoins across several machines
  66 and people, and sharing the result if one is lucky and get the 50
  67 BitCoins.  Check out
  68 <a href="http://www.bluishcoder.co.nz/bitcoin-pool/">BitCoin Pool</a>
  69 if this sounds interesting.  I have not had time to try to set up a
  70 machine to participate there yet.</p>