largest-bitcoin-exchange-suspends-withdrawals.si

A few days ago, the powers that be in Washington decided that Bitcoin will be treated like a commodity and not like a currency. That means it’ll be taxed as capital gains if you make money off it, just like stocks. But there’s one thing that the untraceable, anonymous, and very high-tech crypto-currency can buy that you can’t directly trade your shares of IBM for: guns. Specifically, TrackingPoint’s Toyota Camry-priced rifle . . .

The Biz Journal has the story:

“We’re proponents of progress, both internally in our smart rifle development and externally in the rapidly modernizing world around us,” said John Lupher, TrackingPoint CEO, in a statement. “The recent advent and success of cryptocurrency has the potential to redefine our monetary system—and we must continue to innovate in our business practices as well as our technology.”

Apparently the decision to start taking the still-young currency is former rapper turned marketing meister Oren Schauble.

To put this in context, a company accepting Bitcoin for payment is basically like being able to trade a Vincent Van Gogh painting for a Prosche 911 (the kind that don’t catch on fire) and getting a couple Albrecht Durer sketches as change.

In the grand scheme of things, it’s not really a big deal. Trading goods and services is the basis of all business, no matter the currency. But because it’s the new and shiny Bitcoin that you can (OMG!) buy guns with now it’ll be to grab some headlines. Like this one.

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58 Responses to TrackingPoint Accepting Bitcoins for Firearm Sales

  1. Bitcoin broke below $500 late this past week. Real “currencies” do not trade like a pre-revenue internet stock. Why any commercial enterprise would accept Bitcoin 1.0 is beyond me. I say 1.0 because I believe there will be a viable virtual currency at some point in the future but the current incarnation of Bitcoin is not it. And given the ease with which hackers have shown Bitcoin to be stolen, instead of calling it a cryptocurrency, maybe it should be called a kleptocurrency.

    Apologies to those who think otherwise but recall that the Dutch thought tulip bulbs were a “currency” too back in the 1630s – anyone accepting tulip bulbs for payment today?

    • The problem with an internet currency is cyber security. It is impossible to completely secure bitcoin from thieves unless you tie possession of a particular coin to a specific individual. At that point the entire purpose of the project is rendered moot since now every transaction can be tracked by the government.

      Bitcoin is a solution to the wrong problem. As I explained before the problem with our current fiat currency isn’t the lack of a commodity backing it. It is the concept of fractional reserve banking that create booms and busts. From 1787 through 1933 we had a 100% gold back dollar yet we still had cycles of boom and bust. That was because banks issued currency based on multiple of their gold holdings betting that not enough people would show up at the same time to cash in their paper certificates. Every so often they bet wrong. If you don’t allow fractional banking you have no need for banks since all they can do is hold on to your money. They can’t pay you interest since they can’t use your money to make money. Without financial intermediaries trade grinds to a halt because everything comes down to barter. By the way bitcoin is fiat currency as well.

      • There is no “cybersecurity” problem with Bitcoin itself, the protocol is perfectly secure. So long as you keep your BTC in your wallet, and your wallet on your machine (appropriately secured etc), it’s safe and sound. All the recent fiascos so far have been BTC stolen from exchanges, where people have accounts. This is basically the equivalent of you giving your money to the bank to store in a safe, and them botching the security of said safe such that someone else comes in and sweeps it. It is a problem, but it is the same problem that unregulated banks had, regardless of currency. The short story is, if you give your money to someone else, in whatever form, it better be a very trustworthy person or business, otherwise there is a high chance of losing it. Don’t want to lose it? Keep it to yourself. You don’t need to have an account somewhere to use BTC for payment.

        • If something is stored electronically it can be had. There are no secure cyphers since there is always a human element and humans make mistakes and can be had.

        • There’s always a human element with anything, including physical cash, gold etc. If you are susceptible to being scammed, it’ll work with any currency (case in point: all those people who fall for Nigerian online scams).

          However, if you keep your coins in your wallet, then you and only you are responsible for the security of that wallet. If you do your job in securing it properly, it will be safe – safer, anyway, than when you give it to anyone else to hold for you.

    • Bitcoin broke below $500 late this past week. Real “currencies” do not trade like a pre-revenue internet stock.

      Percent Change in the Last 24 Hours
      EUR/USD+0.01003%
      USD/JPY-0.00817%
      GBP/USD-0.01096%
      USD/CHF-0.02183%
      USD/CAD-0.00903%
      EUR/JPY+0.00185%
      AUD/USD-0.01126%
      CNY/USD+0.03365%
      Mar 29, 2014 21:31 UTC

      Really?

      • Jus Bill – What is your point? A single day’s change in the majors of less than 3/10ths of a percent means what? My point about Bitcoin’s price history is based on the past six months or so as shown here:

        https://coinbase.com/charts

        A high of nearly $1,200 and a current bid below $500 – is that the performance of a “real” currency? Does that foster confidence in it as a medium of exchange? Sure, if you own it below $200, you still feel good. But what about all the saps that bought it above $1,000 when they thought it was headed to $2,000 on a rocket shot move?

        Again Bill, your point?

        • My point is that the dollar fluctuates against other currencies exactly as do any other fiat currencies, including Bitcoin. Hence real “currencies” trade like a pre-revenue internet stock. Obviously some more violently than others, but so did the Weimar Mark, the post-WW II Yen and the Argentine Peso. Watch for similar activity by the Yuan when the Chinese bubble bursts.

          No fiat currency is immune because they have no intrinsic value.

      • Yes, really. In the past few months (not decades) Bitcoin has cycled between around $50 to $1200, is now below $500 again, and you want to compare .00xx%? Try 20% in 24 hours, then we’ll talk.

    • Bitcoin doesn’t have to be a useful currency to be a useful medium of exchange. Sell USD, buy BTC. Send BTC over to the other guy. Guy sells BTC, buys USD. Volatility doesn’t really matter in that scenario, as the entire transaction takes about 10 minutes with current network hashing capacity. Yet the transfer is done strictly between you two, no banks or other third parties involved, and no way to trace it if you do it right.

      And the reason why it does work for BTC but doesn’t work for tulips is because tulips don’t possess any “magical” properties that allow them to be securely and nearly-instantaneously transferred over the Net in a decentralized fashion, while BTC does. That’s its whole point. The whole “currency” angle is actually secondary to that – the ability to do such decentralized and potentially perfectly anonymous transfers is what gives BTC any real value that it might have (as opposed to speculative value).

  2. Hey, you got Bitcoin in my Trackingpoint!

    You got Trackingpoint in my Bitcoin!

    Two worthless fads, together at last!

  3. “Proshe”, eh? Is that a confabulation of “Prussian” and “Bosche”? If so, isn’t that terribly redundant?

  4. I don’t even trust our printed dollars much less electronic bank transfers. Bitcoin? I trust that even less than electronic bank transfers.

    I appreciate the idea that someone wants to be on the bleeding edge of technology. In this case I think it an extremely unwise move to accept BitCoin for payments.

    • Bitcoin, by itself, is actually more secure than bank transfers – the protocol is secure, and you need no agents between you and recepient (whereas with bank transfers, you need two banks – well, I suppose you could do with one in some cases).

      If you know enough cryptography, and have studied the mathematical model of Bitcoin, you know why. If you don’t know, then you’re not really qualified to judge (you can believe that one thing is better than the other, but it’d be pure belief, not an objective evaluation).

        • They didn’t actually steal their Bitcoins directly. Rather, the attackers have hacked into the database that contains records of their customers’ accounts, and were able to request withdrawals in such a way that their recorded balance in the database did not change. So the BTC withdrawal itself was technically completely legit, nothing compromised there – but Mt.Gox records didn’t show those withdrawn BTC as withdrawn (while their wallet did – but those idiots didn’t have any audit process in place to make sure that the contents of their wallet is in sync with the records in their account database).

          Obviously, this can only last for as long as there are actual Bitcoins to withdraw – at some point the request for withdrawal will come in, the database will give it a “go ahead” based on the account balance being sufficient, but then the actual transfer will fail because no BTC are left in the wallet – which seems to be what happened there.

    • A common misconception is that Bitcoin is untraceable and an anonymous. Bitcoin is anything but untraceable, and it is extremely difficult to use it anonymously.

  5. Van Gogh for any Porsche? Have you priced any Van Gogh’s lately? I admit I don’t “get” bitcoins. I deal in fine art & antiques. The supply of genuine Van Gogh’s is extremely limited. Porsche 911 not so much. No change either.

    • Hence why the hypothetical Van Gogh/Porsche exchange was not an even trade. Also, not every 911 was made equal. Feel free to offer $85,000 for a 911 GT1 on the grounds that it’s the same as MSRP for a brand new base model Carrera, just be prepared to face manslaughter charges after the people running the auction house laugh themselves to death.

      • I don’t know where we stand on this but I would rather have a nice car than a messed up painting. I say that as an artist.

        • The R.E. Olds museum in Lansing, MI is one of my favorite museum memories, far ahead of any art collection I’ve ever been to. Take whatever you want from that statement.

  6. I was just thinking about an alternate form of money this morning. I cannot think of any good alternative. Even gold, whether in the form of coins, troy ounces, or grams, doesn’t seem all that reliable because it would be fairly easy to counterfeit any of those. I suppose people could carry little scales around to verify the exact weight of gold coins, ounces, grams and thus verify their authenticity. That sure seems like a royal pain in the @ss.

    It’s too bad that we cannot trust government issued money.

    • 22LR rounds. 5 rounds = 1 egg. Then you just work up values from there. Gold is worth too much to be used as a currency for trade, no one would be able to give you change for a gold eagle. Gold is only valuable in a society where there is enough excess for people to trade something valuable like food for something useless like a soft 1 oz lump of metal that they say is worth the same as a PWS MK114 rifle or 264 bushels of corn. Silver quarters would be a much better bet. Intrinsic value, easily identifiable as real, and small enough denomination that you don’t have to worry about the family that sold you 264 bushels of corn for a single gold coin coming back and killing you when they starve.

      • Actually after the apocalypse ammunition makes the perfect currency:

        22LR = $1
        223 = $5
        243/270 = $10
        308/30-06 =$20
        300 winmag = $50
        any larger rounds = $100

        for coins:
        380 = 1 cent
        9mm = nickle
        40cal = dime
        45 ACP = a quarter.
        357 = half dollar
        44 mag = $1 coin.

        • I just read James Cook’s fourth installment of his “Surviving the Dead” series (highly recommended if you read zombie genre) and the protagonist negotiated a deal at a brothel of six 5.56 rounds daily for the best room they had and dinner. Earlier, a dozen eggs was worth several .45 rounds. Another example where in post-apocalyptic days, precious metals are copper, lead and brass and gold has no functional utility.

        • CTsheepdog- I’ve always liked James Cooke and haven’t read a book in over a year. Just got the first three books for my Kindle and reading it now.

    • As long as you can test the purity and weight of gold in a coin, it doesn’t matter who minted it. During the gold rush there were private mints producing coins out of the gold that was being mined.

      If by “counterfeit” you mean “not actually made by the govenment,” then using a precious metal as your currency makes that a moot point. If you actually have the specified amount of metal at the proper purity, then who made the coin becomes meaningless.

      If you mean someone may mix in non gold into the gold coins, then I’m not sure how difficult that is to detect. That hasn’t been an issue for quite some time and I have no idea where the current state of that art lies.

      • Its a simple math problem. Take a container of water (hopefully with measuring marks on the side), lower in the gold, measure how much the water level goes up in ml. Gold density = 19.32, Silver is 10.49. The equation to use is density = weight (grams) / ml of water displacement. If its lower its mixed with something else.

      • Marcus,

        When I said “counterfeit”, I was referring to the purity of the content. Let’s look at silver coins for example. I could start with an iron disk and then apply a thin coat of silver and no one would be the wiser. You could do something similar with gold coins starting out with a lead disk and then applying a thin coat of gold. (Gold is fairly dense/heavy so you would need a dense base material such as lead.)

        As for B’s comment of testing the density of fake coins, there are two problems. The first is the practical hurdle of carrying around both scales and containers with water (to measure volume). The second problem is that you can create a counterfeit coin with the correct overall density. All you need is a base material that is at least as heavy as the outer material.

        What I am describing was not easy to accomplish 100+ years ago. Today, pretty much anyone could create fake coins with the correct density.

  7. Haha, what did I say? If you deal in Bitcoin, you will still need dollars to pay taxes on transactions made with Bitcoin. That is, if it doesn’t get stolen first. I’m sorry to burst the bubble for all the Bitcoin believers (Bit-lievers?), but it’s not the future. It has no intrinsic value, it’s extremely volatile, storing it has proved risky to say the least, and now you have to pay taxes on it. Face it folks: the people who got in early made out nicely and got out. Everybody else is rolling the dice.

    • Hmm, no intrinsic value, highly volatile, risky to store, taxable…doesn’t sound any better or worse than the U.S. dollar when you put it that way.

      • I never said the dollar is better. Except of course you’ll need dollars to pay taxes on any gains from selling Bitcoins. Make Bitcoin or the dollar or any other currency backed by gold and we’ll talk.

        • Well, I’ll stick with the one that my landlord and liquor store accept. That system’s just not without shortcomings, either.

    • >> If you deal in Bitcoin, you will still need dollars to pay taxes on transactions made with Bitcoin. That is, if it doesn’t get stolen first. I’m sorry to burst the bubble for all the Bitcoin believers (Bit-lievers?), but it’s not the future. It has no intrinsic value, it’s extremely volatile, storing it has proved risky to say the least, and now you have to pay taxes on it.

      Storing BTC yourself is not risky (well, it’s as risky as you make it, since the security of your wallet is entirely in your hands). Giving it to other people and trusting them to keep it safe is risky, sure, especially when the market is completely unregulated. That’s what happened with Mt.Gox customers – they gave their BTC to Mt.Gox, and those guys fucked it up because they ran an extremely amateur operation. Do you think they’d do any better with dollars or gold? Nope.

      In any case, why would you store BTC? You convert it to something else as soon as you receive it. Its usefulness at this point in time is primarily as payment medium, not as storage of value.

      • I was referring to the Mt.Gox type wallets or exchanges. Obviously thousands of bitcoins were stolen and even though they claim to have found some of them, they don’t know what happened or who took the rest. If we compare that to storing thousands of ounces of gold somewhere, I think it’s obvious that stealing gold won’t be as simple as writing and executing some code that will divert the gold to your wallet, unnoticed by anybody. Therefore storing large amounts of gold is actually safer, since stealing it, while not impossible, would be much more difficult. Just ask all the mints out there when was the last time they “lost” millions of dollars worth of physical gold without noticing it for months?

        • Again, see my detailed description of what happened to Mt.Gox in another comments. They didn’t get their BTC stolen as such – the attackers have rather hacked their (own, custom-written) ledger system, which allowed them to withdraw BTC, though the usual withdrawal process, but then revert the database entry for their account as if the withdrawal doesn’t happen. Any bank that stores any kind of currency and maintains customer account balances in a database is susceptible to this kind of attack. Of course, any trustworthy bank would perform periodic audits to ensure that their records match the actual balance – the amateurs who ran Mt.Gox didn’t do an audit for years.

  8. So … If bitcoin is an all electronic currency, why do people persist in using pictures of tokens with the bitcoin logo?

    I mean, faking a shot of a virtual currency … Just weird.

  9. Anyone ever play Metro 2033?
    Bullets used as currency. Probably 7.62×39 since its based in Russia.
    Only “factory” ammo was currency, reloads were just for shooting.

    • 5.45×39 according to the wiki. Their currency is the stuff we shoot from the cheap spam cans, the regular dirty ammo is reloads. Just think, at current exchange rates a Metro 2033 sausage is worth $1.50 in 5.45 (15 rounds at .10 a round.) I played the first one, but it was just so soul crushingly depressing that I had to stop playing.

      • Bullets used as currency is a recurring staple of Russian post-apocalyptic sci-fi. Usually it is assumed that 5.45, 7.62×39 and 7.62×54 are all used, ranging from cheapest to most expensive in that order.

        • Just checked on gunbot, 5.45 has more than doubled in price to $0.24 a round. Stupid inflation from Russia invading Ukraine and Obama blocking imports has made my quality Russian underground theoretical sausage $3.60.

  10. Look up bitcoins on Wikipedia. It appears they were generated to bypass central banks. I’m an old guy and remember the REIT failures of the early 1970’s, the Savings Bank crisis and the 2008 collapse. There were lessor failures,about once every 10 years.

    Tracking point may be doing this for publicity.

    The Central Banks jump to the tune of bankers and the very rich. The middle class always suffers, to wit, witness Bernanke saying that allowing banks to ADD hundreds of billions of assets with the Feds approval (no actual assets added, just a letter from the Fed saying their asset balance was now hundreds of billions more, just make the keyboard change in your system) was not printing money!

    Noticed inflation lately? The dollar survives because we all trust it, someday some will not . . .oh wait! Bitcoins have appeared.

    Took me decades to understand simple inflation. We really don’t have inflation . . . too few goods chased by too many dollars, we have LOSS of value of the dollar, too many dollars chasing very available goods.

    You might want to look at Argentina and Venzuela, we are going that way.

    Just like in the book, THE THIN RED LINE, except for the 1%, this is all about PROPERTY, assets. The dollar will too pass, the Central Banks will do all they can to destroy bitcoins and other cyber currency. This is why they are being taxed.

    I’ve never used bitcoins but someday I will.

    This note is a bit disjointed because I’m not happy with where America is going. I too miss America but no empire survives forever.

    • Property ownership is an illusion. Stop paying property taxes on your land and see how long they let “own” it. The numbers slowly drip over to the other column, the gap gets bigger, the middle class is prevented by government laws and taxes from accumulating true wealth that can be passed on. Just spend spend spend or the government will take it and give it to someone who will.

  11. Bitcoin? No thanks. Aside from any of the gun related issues here, no way I’m using Bitcoin unless and until it has been around for years working as well as money order, credit cards, PayPal, cashier’s checks and/or good old fashioned paper money.

  12. the only thing better than taking bitcoins would be taking bitcoins for the sale of just an upper equipped with their system. This would not require any records to be kept since its not a firearm.

  13. Oops, the IRS has determined that Bitcoins are property, not currency, which makes the accounting even more challenging.

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