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[Cthulhu]

Sure you can, you can waste electricity by mining bitcoins and selling them to techno-libertarians.  You could also use your computer's processing power on something that actually yields more money than you'll spend on electricity, but where's the fun in that?

[Jimmy]

I personally think the perception of Bitcoins as a means of perpetrating shady deals online is a misinterpretation. The point of money is to represent value, illegal or otherwise. The fault isn't with the money for being used in an illegal transaction, and the fact the money has been used this way doesn't mean it's less valuable for other legitimate uses.

Case in point, three in four bank notes in Los Angeles are contaminated with cocaine.

Contaminated Currency

[Leafsnail]

Except that those massive flaws I pointed out earlier mean that you have much better options if whatever you're purchasing is legal.  It's not that Bitcoins are contaminated, it's that they suck horribly and their only possible deal saver is participating in black market deals.

[Jimmy]

You have better options but no true equivalent for the pure sake of privacy. An online purchase might be legal but it might not be in your best interests to make it public. Want to buy your wife a birthday present online? Shame she'll know exactly how much you paid, when and where you bought it, etc. Suddenly that purchase of several hundred dollars worth of lingerie is available on your account statement. What's worse? Turns out you didn't buy it for her, but for yourself. Now she knows your secret fetish too.

Cash is a simple system designed around anonymity. I can walk into a store, buy a cheeseburger and leave and nobody will ever be able to trace that purchase to me through my money unless they were deliberately watching me. Bitcoins try to preserve this same option online. It's similar to the anonymous nature of the mail system, where you have the choice of sending a letter to anyone you choose without them ever knowing you were the person who sent it.

[Darvi]

The obvious solution is to not buy underwear with a shared bank account, duh.

[Leafsnail]

Two responses.

Firstly, as Darvi said there are ways to buy things online that aren't a shared bank account.  You could use, for instance, a pre-paid card or your own seperate current account.

Secondly, Bitcoins fail hard at anonymity.  There is a publicly available list of transactions.  You have to keep making new accounts constantly (a much bigger pain in the ass than using an easier conventional methods) or else everyone who has performed a transaction with you will know all your other transactions.

[Jimmy]

Compare this to walking into a store and buying said lacy intimate apparel with cash. Nobody, not even my wife, could trace it back to me. The options we have today only offer this level of anonymity if we hide our activity from others. If I want to have a separate account, one my wife doesn't know about, to do this sort of thing, I run the risk of her finding out about it when I receive a statement in the mail or something else exposes it to her knowledge. If I buy something with cash out of my wallet it's accepted as reasonable to not know where that money was spent. The point is that this guarantee of anonymity given to the purchaser of a product should be available in every transaction, online or offline. If I choose to spend my money somewhere, I should be able to choose to have nobody but me know I spent it.

So, does Bitcoin fit this bill? Nope, as others have shown. However what it does is take a step in this direction. And at the end of the day it shows my transaction history but it also can be used in such a way that should a determined individual try to trace it back to me after the fact (for example, my ex-wife hiring a private investigator to dig up dirt on me and ruin my life) it provides an extra buffer of privacy.

[Cthulhu]

A digital cash equivalent that doesn't require third parties like PayPal to perform online transactions might be nice, but a highly volatile and deflationary commodity currency whose main uses are buying drugs, laundering money, Ponzi scheming, and being an Internet libertarian probably isn't the best candidate for the job.

[G-Flex]

The options we have today only offer this level of anonymity if we hide our activity from others. If I want to have a separate account, one my wife doesn't know about, to do this sort of thing, I run the risk of her finding out about it when I receive a statement in the mail or something else exposes it to her knowledge.

There's always the option of, you know, being honest with the person you married and making it clear to them that you still have a private life that you don't necessarily want her peering into. I mean, it's not as if marriage means you're obligated to share each other's passwords, e-mails, or anything else like that, so why not?

[Helgoland]

The options we have today only offer this level of anonymity if we hide our activity from others. If I want to have a separate account, one my wife doesn't know about, to do this sort of thing, I run the risk of her finding out about it when I receive a statement in the mail or something else exposes it to her knowledge.

There's always the option of, you know, being honest with the person you married and making it clear to them that you still have a private life that you don't necessarily want her peering into. I mean, it's not as if marriage means you're obligated to share each other's passwords, e-mails, or anything else like that, so why not?

You kinda missed the point there, methinks.

[Cthulhu]

He's addressing the point that there really aren't all that many reasons for wanting more anonymity in your commerce than what regular currency provides that aren't illegal.

And it's a good point.  For all the talk of legitimate needs for anonymous currency, so far BitCoin has basically zero white market penetration aside from novelty shit.  It's almost entirely used for money laundering, speculating, and illegal commerce, all of which is done not with the intent to actually use it as a full time currency but as a temporary investment for anonymity or profit.  As soon as you're done you cash out for real money, which is one of the reasons BitCoin is so volatile.

On the subject of speculation, it's very interesting to note that if you look at the bitcoin records, a huge number (Pretty much all of the coins mined the first year or so) have never, ever changed hands.  What are the holders doing?  I guess they could be planning some kind of reserve bank once BitCoin stabilizes, but remember the kinds of people who run bitcoin.  They're gonna fucking dump that shit and fiddle while Rome burns.

[GreatJustice]

I know YOU don't care about the debt. That's obvious. No-one would claim you care about SOMEONE ELSE'S DEBT. You don't NEED to care. The system doesn't require that.

The "reasonable expectation that I'll be able to exchange it for what I want" is due to the demand for dollars generated by those business' who need to repay their debt or declare bankruptcy and have their managing directors banned from running companies again. They generate demand for dollars since their livelihood requires it. They could take non-monetary payment, but then they'd fail to repay their loans since they're legally denominated in the state currency.

"somebody else needs it" is the basis of demand. You are not required to give a fuck about why they need it.

...Which is still dependent on people considering the legal tender in question to be worth something. Otherwise, people start conducting their business through barter/alternative currencies and use FRNs just to pay taxes. The ability of the government to maintain the value of legal tender would collapse if even 10% of the population started using something else instead (eg. gold backed notes), since enforcement would be utterly impractical. Presently, the main method of preventing growth in alternative currencies, in the US at least, is crack downs on the issuers for "counterfeiting".

[Criptfeind]

Presently, the main method of preventing growth in alternative currencies, in the US at least, is crack downs on the issuers for "counterfeiting".

This sounds pretty interesting, are there any times this has actually happened though that was not counterfeiting or fraud?

[Cthulhu]

The Liberty Dollar (Another libertarian pseudomoney, this one backed by gold) vault was raided by the government because the coins resembled legal tender and were intended for interstate commerce.  Several people accidentally took liberty money thinking it was real, only to find out it wasn't, and even the metal was half or less the face value.

[Criptfeind]

Is that a yes or no from your prospective?