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Uncategorized Wednesday, June 8th 2011 at 2:44 pm

Senators Want an Investigation into Bitcoins

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Since its inception, enthusiasts and watchers of virtual P2P currency Bitcoin have wondered aloud whether the government would tolerate a decentralized, difficult-to-track cryptocurrency which could in theory — and in some cases even in practice — be used to pay for illegal drugs and prostitution. As of this week, this question has become a less hypothetical one, with Senators Charles Schumer and Joe Manchin writing a letter addressed to U.S. Attorney General Eric Holder and DEA head Michele Leonhart expressing their concerns about Bitcoin.

The senators’ letter comes on the heels of a Gawker report on Silk Road, an online marketplace whose users can exchange Bitcoins for “any drug imaginable.”

Reuters:

“The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days,” the senators’ letter states. “We urge you to take immediate action and shut down the Silk Road network.”

The DEA is “absolutely” concerned about Bitcoins and other anonymous digital currencies, agency spokeswoman Dawn Dearden said when asked for a response to the senators’ concerns.

“The DEA is constantly evaluating and analyzing new technologies and schemes perpetrated by drug trafficking networks. While we won’t confirm or deny the existence of specific investigations, DEA is well aware of these emerging threats and we will act accordingly,” she said.

While the senators notably do not appear to be advocating for a shutdown of Bitcoins themselves (should such a thing indeed be possible), Bitcoin users have expressed concern that a crackdown on Bitcoin exchanges with bank accounts — the chokepoints where users trade cash for Bitcoins — could be on the horizon.

But government action isn’t the only reason would-be early adopters should be cautious about Bitcoin: For a good general critique, see Adam Cohen’s on Quora.

(Reuters via Techmeme)

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  • Anymail

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  • Anonymous

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  • Free Man In America

    Operationally one of governments biggest forms of control over its populace is its ability to size personal assets and wealth whenever it wants. Wealth is usually held in denominations of the local national currency. Bitcoin is an attempt to circumvent this control and restore personal freedom and security. Bitcoin is a form of personal financial freedom. With financial freedom people have many options on what they should do with there lives. Government seeks force people to knuckle under by eliminating personal options and freedom, in the West this is done on the individual level via financial control.

    Lets talk about the Devil, the Devil has been very useful to those in political power for ages. The Devil from the mid twentieth century was drugs. And as we know some people really like to take drugs especially Senators. While this may not be the best idea to do draconian laws has had little effect on slowing consumption.

    As far as government is concerned what is the greatest threat?
    Heroin, meth and crack use or a widely accepted Bitcoin?
    Bitcoin by a thousand times!

    Drug users might sleep a lot, collect useless junk or run around in circles. While this is disastrous on a personal level it is little threat to the government. In fact they may even depend on the government.

    With the on going recession, large numbers of poor depend on various
    forms of government handouts. The bellies are full and minds entertained on fantasies of meaningless politically correct junk, they are easy to manipulate
    and pose no real threat, they have no real power.

    The worst thing for government is someone who thinks for themselves, even worse is someone who is immune to the many forms of government extortion. Someone who thinks for themselves and has by their own industry options via financial resorses has real power.