Topic: Bitcoins - we don't know what it can be used for ! (Read 884 times)

If they could get away with saying that Bitcoin eats babies and will likely result in the flipping of the earth's magnetic poles they would try that excuse instead.

Unfortunately for them, that would make them look silly so instead they latch onto the next closest thing that they can, which is the AML / KYC provision that financial institutions know their customer (as in how does the customer earn money, are these funds deposited by the customer earned in a legal manner, etc.)



Ok, now that is a different question.  That one is simple.  Banks have a hard time dealing with fraud.  They don't require that their customers all use two-factor authentication.  Hell, most of them let you reset your password through the e-mail, and they consider it secure because some even insist that you you know your dog's name (yes, the same name you just Tweeted about or commented on in your publicly available Facebook page.)

So rather than deal with the risk that fraudulent transfers will be routed through accounts of bitcoin exchanges, they would rather keep their heads stuck in the sand.  (Well, that isn't entirely true.  See most bank executives are just two more annual bonuses away from retiring, and if this whole bitcoin thing can just be put off for a while longer, the costs of imposing proper security won't be incurred until after those bonuses have been paid.  And since neither you nor I are allowed to open a bank to compete against them, they can continue to get away with the crap that they do, like not serving customers that are unprofitable.)

I have some genuine questions that I would like to have your input on.

As we all know, there exist several online payment systems, and some of them are used to interface with bitcoins, for example traditional banks, payment processors, online e-money wallet services and so on. Some of these services have taken a clear stance against bitcoin, and won't simply touch bitcoins, while others are more friendly.

I've been researching quite a bit, and from all my mailing, there's something that is a recurring argument:

"We are afraid, because we do not know what the bitcoins can be used for!"

Bitcoin is a new technology, it's not a household technology yet, and I think many people fail to understand what it is all about. Bitcoin is not evil, it's neutral. People useing bitcoin however can be 'evil'. Just like cash (US bills) are not evil, but people using them can be 'evil' (ie drug dealers, illegal gambling, gun sellers etc.)

Seeing as how some large banks (can't be bothered with referenced now) has been and most likely is aiding large criminal organizations in moving money, heck some would argue the banks in general are criminal organizations themselves, it's a bit strange that something as small as bitcoin is something that makes online financial services afraid.

If someone purchases a gun with money paid through paypal, then kills somebody, paypal can't be blamed, in my view. However, when it comes to bitcoin, it seems like the opposite is true. If a payment processor accepts fiat bank transfer and the customer gets bitcoin from an exchange or a bitcoin seller, and then the customer uses those bitcoin to buy a gun, and then kill someone, it seems like the payment processor is afraid that this will back fire on them ?

Where's the logic to this ?

I am not a lawyer, but as far as I know, criminals have always existed, even before the US bill was invented, throughout history, there's always been ways to make black market purchases, and there's always been dealers. Only their methods change.

Since we know crow bars, sledge hammers and other heavy tools are used for physical break ins in banks, should we limit the sale of said tools, or should we have sellers of said tools ID'ing and registering all customers ?

I would like to think most bitcoiners are using bitcoins for legit purposes, and don't use their bitcoins for illegal stuff. Am I wrong ? Is there a reason lot's of payment processors and e-money wallet servies don't want to deal with bitcoins ?

Some say that some services are afraid of bitcoin, because it's a threat to their business model. I think bitcoin can coexist with a lot of other payment options online.

I guess a lot of criminals use laptops as well, so should payment processor companies reject the application of merchants selling laptops, because they 'don't know what it can be used for' ?

How on earth is it any banks or payment processor comany or online e-wallet service business what bitcoins are used for ? If it's used for illegal purposes, that's a matter for the law to deal with, and how could the companies aiding the purcases of bitcoins be held responsible or be held liable for the actions of the customer ?

Following this logic, then all ATM's should be removed from the streets, because we never know what the money could be used for. I guess a lof of cash is used to buy services that's illegal, like drugs, weapons, hookers etc.. I don't see any banks or payment processors showeling money into a companies bank account complain about stuff like this ?


So in the end.. Exactly why do you think that a lot of online financial companies are reluctant to deal with bitcoins, and is their arguments valid  (ie. we don't know what it can be used for)?