[ale] [OT] (but computer and cryptography related) Bitcoin, Litecoin

[Alex Carver]

On 3/30/2013 17:13, Michael B. Trausch wrote:
> On 03/30/2013 05:51 PM, Ron Frazier (ALE) wrote:
>> There are many things that could foil my plan.  Congress could make this
>> illegal, or make it too painful to cash out.  Or the currency could
>> fizzle and become worthless.  Who knows.
>
> BitCoin is essentially nothing more than another "foreign" currency.  It
> may not be fiat (established by a law), but it is a currency.  There is
> nothing that I can think of that grants Congress the power to make any
> currency---fiat, mineral-backed, or virtual---illegal.  As I understand
> it, Congress simply doesn't have that authority, and if it attempted to
> do so, it would be very likely to be challenged and overturned in the
> SCOTUS.

This is where things get a little harder.  By US law, anyone 
participating in currency exchange within the US must register with and 
abide by the rules of the Bank Secrecy Act.  That's how Congress gets 
its power.  It's the equivalent of many other financial institutions 
requiring licenses to operate within the US.  It has nothing to do with 
whether the currency is dollars, gold bullion, or rubber chickens.  The 
law (and Congress and the Treasury) latches on the moment you begin a 
currency exchange but only a currency exchange.

If you were to agree to accept rubber chickens for installing a PBX then 
the BSA/Treasury/Congress has no claim because the rubber chickens are 
not being exchanged for regulated currency, they are being exchanged for 
goods and services directly.  But if you want US Dollars and I only have 
rubber chickens then I have to go exchange my rubber chickens for US 
Dollars and, boom, BSA steps in.

>
> Essentially, though, legal tender in the states doesn't imply that there
> is an illegal tender.  It just means that if you have sold a good or a
> service, you cannot refuse payment in the legal tender, for doing so
> means that you have cancelled the debt.
>
> To put that in concrete terms:  Let's say that you contract me to set up
> a PBX for you.  I do so, and then I invoice you.  You then come to me
> and offer me cash---not a check, not a credit card, not a money order,
> not a Western Union, not Bitcoin---but cold, hard cash.  Now let's say
> that I refuse that cash.  At that point, I have invalidated the debt,
> effectively voiding the invoice and giving you the PBX and my time that
> went into setting it up, for free.
>
> However, let's say that you contract me to set up a PBX for you, and I
> say "sure, I'll do that, but you have to prepay me with BitCoin."  If
> you refuse, it is simple: I won't put the PBX in for you.  I haven't
> sold you anything yet, so I haven't refused legal tender nor cancelled
> the transaction---the transaction simply hasn't happened yet.  That's
> perfectly permissible.
>
> That's also why places like fast food restaurants can refuse to take
> anything larger than a $20.  You pay BEFORE you get your goods, and so
> they can refuse whatever they want, and just not give you your goods.
> The same can be said for anything that works the same way; a grocery
> store, for example.
>
> But if things are being done on purchase orders, and you ship me a
> semi-truck of goods, and I now have the goods in my warehouse, and I
> offer you United States fiat currency and you refuse it, the goods are
> mine---free and clear.