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by Alan Brooks

I finally managed to track down some CCI #41 small rifle primers for reloading and some Speer Gold Dot short barrel hollow points for my daily carry piece (don’t forget to swap out that ammo every 6-9 months to ensure reliable function). But before I could pick them up I had to stop at an ATM to get cash because Tex Guns doesn’t take debit or credit cards. However, if Central Texas Gun Works carried reloading components and/or ammunition, I wouldn’t have to worry about dealing with banks or carrying cash. I could pay with Bitcoin . . .

Bitcoin is, for the uninitiated, a digital currency that can be transferred to anyone, anywhere in the world without a bank or transfer fees and without the risks of fraud or theft that come with credit cards, cash, and checks. Over the weekend, Central Texas Gun Works took the leap into the 21st Century by installing a Bitcoin ATM machine in their lobby. Now you can turn Federal Reserve greenbacks into digital currency…and then into a gun.

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They kicked off their foray into the world of Cody Wilson’s dreams in true Austin style with live music, a stand-up comedian, five different flavors of wings, and plenty of people open-carrying. Michael Cargill, the CEO of Central Texas Gun Works, said that he wants people to be free financially and that Bitcoin is a way to get out from under the current “too-big-to-fail” banking system.

Granted, the Bitcoin market is still a bit volatile, but it’s nice to have an alternative (any alternative) to the Gosbank.

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137 Responses to Question of the Day: Does Your Local Gun Store Take Bitcoin?

  1. I dont mean to be a troll, but it seems like you’re literally just shooing away business from your door not taking credit. Motivations aside, bitcoin is still sort of new and as you noted, volatile.

    Side NOTE:
    I keep hearing about Russia stopping imports of ammo into the US today, sounds like its some mongering to get some tul-ammo or wolf sold 🙂

    • There are lots of small businesses around here that won’t take credit or debit cards because they are charged between 3 and 5% of the face value of the transaction–which cuts greatly into their profit margin. That’s why the dealers on GunBroker or GunsAmerica who do take cards add on a surcharge to cover that cost.
      And you know why there is that charge to the retailer? its to pay for all of those cash back credit cards you see touted in advertising, and the rest is pure profit to the card company. Credit card companies are massively ripping off consumers. With 20+% interest charges (on money they borrow virtually free from the Fed), they gouge you at one end and the retailer at the other. that’s why they are swimming in billions of dollars of hard cold cash–and then have the audacity to cry poor. Something else to thank Uncle Joe for.

        • From a purely business standpoint, how many bounced/forged checks does it take to equal the known expense of credit/debit transactions?

      • I have a way to maybe get back at the card companies. I have cancer and while my survival chances are 80%/90%, I still may not make it.
        I’m thinking of buying more guns, with plastic of course, and paying only the minimum payment. If I end up taking the “Dirt nap” my wife can sell the guns and the card company cant touch her. I live in a non community property state.

    • My Lucky Gunner email came today from Angela on time. Wolf and Tula are cheaper than ever and certainly not up. It’s possible but I see no signs.

    • Price fluctuations in BItcoin make it risky for an LGS if they hold onto the coin. I could sell a new handgun for 1 Bitcoin (worth $655 at the moment), then sell for USD within the next 4 hours, everything is fine. If they only convert their Bitcoin holdings to USD every few days, they run risk of losing 5-10%, but they also risk GAINING that.

      Merchants like overstock.com that accept Bitcoin do a live up-to-date conversion of USD to Bitcoin for their products, then promptly sell 90% of their Bitcoin for USD. Now, if I want to return my product they will refund the amount of Bitcoin in USD equivalent.

      • Bitcoin is a speculative sh*tshow. Add to that the Mt. Gox failure and I wouldn’t touch it, accept it, or spend it with a ten-foot pole.

        While I applaud gun-shops for accepting alternative forms of currency, this is one they could (and probably will) get burned on.

        • Alternative currency is here to stay. Probably not in the form of Bitcoin, though.

    • Tex Guns used to take cards… dunno what happened.

      I bought my Ruger .270 from there a couple of years ago with a Visa.

  2. I don’t really have a strong opinion for or against Bitcoin. At the very least it proves the adage that something, even money, is only worth what someone is willing to give you for it.

  3. I’ve got to write a piece about Bitcoin this week. I always thought about it on the same level as Farmville. Nope. Suddenly, it’s like studying economics, which really isn’t my bag.

    • It’s just another fiat currency, except far more unstable.

      If you want to gamble on it go ahead–but the key word here is GAMBLE. Don’t put in more than you can afford to lose.

      • the difference between bitcoin and government backed currency is that it (in theory) is immune or resistant to political flux. If the American govt suddenly tanks, dollars will be worthless but bitcoins will not. Thats the theory. In practice, it isnt so simple.

      • The difference between it and other fiat currencies is that with Bitcoin you can do anonymous digital transfers, at any distance. There’s a reason why it’s called “digital cash”. That is something that other currencies cannot do, and that can potentially enable a thriving economy outside of the reach of any regulating entities.

  4. My LGS takes cash, check and most major credit cards. They do not take BitCoin and I wouldn’t use it if they did.

    As for why many gun stores don’t take plastic, it’s rather simple. Most banks don’t like dealing with guns in any way shape or form. Setting up a merchant account can often be more trouble than it’s worth.

    • Also, the merchant (LGS) has to pay the card company to 2-3% fee for processing the transaction (this includes most debit cards). Also, by taking card it means you won’t get the cash until the end of the month when you settle up with the card company. If you are playing a cash flow game like many dealers are, that is a problem. That’s why a lot of places offer a discount for cash, which is really an up-charge for using a card. Budsgunshop.com does this. If I was a shop owner and I was still moving inventory just fine, I might not take card either. I would have to expect A LOT of added business generated by taking cards in order for me to deal with the headache and I would raise all my prices by 5% to cover the vendor charges and to make up for having to wait on the cash.

      • Not a comment against what you said, just a note: vendors have to be careful about up-charging for credit card users. In some states that’s against the law. As is a “minimum charge” if you use a card. Michigan is that way. It’s one of those laws that doesn’t ever stop anyone from doing either, but it is the law.

        • @Don:

          Starting January 27, 2013, merchants in Michigan are allowed to surcharge customers for the actual costs of processing Visa and MasterCard credit card transactions

          Apologies, my info was old. It’s been 5 or 6 years since I left the job where I need to keep up with that type of thing.

        • The Jan 27 2013 date refers to a settlement in a lawsuit involving Visa and MC. Prior to that date, Visa and MC prohibited merchants who accepted their cards from imposing surcharges. After that date, it’s up to state law. According to the MI AG release above, Michigan never had any such law.

      • by taking card it means you won’t get the cash until the end of the month when you settle up with the card company
        If you don’t get the cash until the end of the month, it’s time to change card processors, merchant account providers, etc.

        When someone pays me with a credit card, and as long as it’s before the daily settlement cutoff time, the funds are in my checking account and available to me within 2 business days (3 or 4 for AmEx).

        The processing fees are a drain, though.

      • It just really depends on the business. If there’s an impulse element to the buy, or it’s what i like to call a “little luxury” (something in the $200 to $800 range that’s more than pocket change, but not wait-until-Christmas thing, either), then accepting credit cards can help drive sales. That’s all on the sales side, but what’s less discussed, are the cost savings of accepting credit cards.

        An all credit card company saves by not having to handle the cash. It takes labor hours to count and recount cash, store it, guard it, then to deposit it. Transactions are usually faster with cards, too which increases customer service and employee priductivity.

        There’s also the ever-present risk of theft, either internal or external. There’s potential civil liability during robberies if someone’s injured and blames you. Not accepting cash removes that risk itself, while also lowering liability insurance premiums. So it can be a complex business decision whether accepting cards is a net benefit or hassle for the business owner.

        • Yes.

          I accept credit cards and PayPal from people who want to register “shareware” that I’ve written. In exchange for a registration fee, they get a key that lets the software run past its 30-day trial period.

          When I first started, I accepted PayPal, cash, and checks. When people paid via PayPal, a registration key was generated and emailed automatically. With cash and checks, I had to manually generate a key, email it to the user, then make a trip to the bank. I started accepting credit cards (same automatic key generation as PayPal) and stopped accepting cash/checks.

          The 3-4% I pay on each credit card transaction more than makes up for the time, diesel fuel, and aggravation of “paper” registrations.

      • I’m a retail merchant (not gun sales) and accept MasterCard and Visa. I choose not to take Amex and Discover since their rates are much higher than the other two.

        However, I know of no CC processor that does not deposit the funds into a merchants checking account within 48 hours of end of the day batch submission.

        I suspect that if some LGS doesn’t take credit card is either (1) their sales volume is too low to get a rate much under 5%, or (2) they don’t want a hard copy of the sales record so that their customers will feel that their identity is protected. (A silly notion since those names will be in the NICS computer and on the Form 4473 … perhaps forever.)

    • I recently bought a gun that the dealer put a price on of $795. I asked him if he would drop it a little if I paid cash ( just got a tax refund) I was expecting him to take off around $15 to $20, but he took off $35.

  5. An aside
    isn’t all that stuff to shoot out of your Mosin made in the 60’s and yet there is the reference to imply your SD ammo goes bad in a year being you should replace it every 6-9 months?
    Any comments or opinions on that.

    I’m not talking about unloading and reloading the chamber where the first cartridge in your magazine gets the bullet push deeper into the case by being repeatedly chambered

    • I am carrying Winchester Silver Tips that were produced over 10 years ago and that have been in my various carry guns for about 5 years. I shoot a few of them every once and a while, but I still have several hundred loaded in magazines. Never had a problem with any of the ones I have shot at the range from time to time.

    • Unless it is green from exposure, ammo lasts virtually forever. Even black powder. Read once that someone fired General Lee’s Colt Navy sidearm–seven years after it had been last loaded. Worked just fine. There is only one thing to worry about, and that is bullet set back (I think there is a more technical name for this that I can’t recall right off.) Loading and reloading a round can cause the bullet to be pushed into the casing, and this can cause a dangerous overpressure leading to a kaboom. Cartridges that are crimped beneath the bullet (a cannula?) are less likely to suffer this condition.

      • Rim fire ammo posses an additional problem that a lot of folks are unaware of. If your primary, or back-up gun is a rim fire, when you are walking, the powder is “sloshing” around inside the case, and can sometimes dislodge the priming compound from inside the rim.
        If you have been carrying the same ammo for a long time, there is a possibility that you may experience a misfire.
        In the article I read about this, author suggested that you replace your “carried” rim fire ammo frequently.

        • “SLOSHING”? LOL.

          According to your theory, .22 rimfire has a high probability of failure? Any real-world examples?

        • William Burke”
          Read my post again! I sad nothing about a “high probability” rate of a failure. I used the words “possibility” and “may”
          I did not write the article that explained about this, only repeated some of it. If you don’t believe it could happen, that’s fine with me.

        • All I’m saying is it’s never happened to me, or anyone I know. I did not mean to suggest it’s impossible. All manner of things can happen, but we don’t pay them any mind. It seems the kind of failure you’re talking about is in the same league as getting hit by a meteorite. And that’s happened, but….

  6. What-coin?

    Seriously … After the Mount Gox debacle, did you really write that Bitcoin is “…without the risks of fraud or theft that come with credit cards, cash, and checks” with a straight face?

    If the LGS wants an alternate, how about gold? Coin sizes range from a couple of grams to over an ounce. At the present spot price of $1350/oz as reported by Kitco, an American Eagle or a Krugerrand should be about right for a mid-range Kimber, modulo taxes and such.

    • Yes, my bitcoins are quite secure. Mt.Gox was an exchange. That exchange lost peoples money. It was not Bitcoin’s fault. In order to sell coins on Mt. Gox to get US dollars you have to give them your coins. People handed Mt.Gox their Bitcoin, and also people gave Mt.Gox US Dollars for bitcoin. Mt. Gox let their Bitcoins get stolen, and then now longer had the ability to return the Bitcoins given to them ,or sold to other people.

      • Please forgive my ignorance of Bitcoin, but how is a currency stored and traded through the Internet any more secure than using a credit card or online banking? Is it not subject to being hacked into, just like anything else online?

        • Bitcoin *isn’t* any more or less secure than other electronic payment. It exists precisely because it’s an alternative to state controled fiat.

          It’s volitaile, mysterious, and will likely cease to exist someday. Not unlike the dollar.

        • No one can steal my Bitcoins unless I give them the private key. I have the private key in a secure place. I can send and receive bitcoins by posting my address on the internet. Other people can not “withdraw” my coins without the private key.

          The Bitcoins from Mt.Gox were stolen because….
          1.) Bitcoin has a 20 minute confirm time
          2.) To run an exchange you need “instant” confirmation
          3.) Mt.Gox used a method to “instant” confirm transfers that was unsafe. It allows someone to modify the amount of money transferred on the fly
          4.) People learned about Mt.Gox’s bad method and flooded the site with modified transfers, essentially withdrawing all available coins
          5.) Other exchanges do instant confirms the proper way, and have been doing so for more than 6 months, Gox new this was a problem 6 months ago, and did nothing about it.

          FYI: If you want to send me some coin, here is my Bitcoin address 😀

          1NdmLKPntjHTonaN7oz6MWu9TrWecA12TM

        • @ RandallOfLegend

          There is no such thing as a 100% secure electronic medium or exchange. Nor will there ever be.

        • CharlesT: Theoretically, yes, there is no 100% secure system. Modern encryption techniques however, are nearly impossible to break using brute force methodologies. Running through all the possibilities in a given keyspace in a reasonable amount of time would require processing power orders of magnitude greater than is available.

          The effort/return ratio simply is not good enough. To be secure you don’t need to be completely unhackable, you need to be hard enough to hack that it simply is not worth it to try. In a like manner, BTC does not need to be perfectly secure to be a better alternative, security-wise, to current centralized currencies, it just needs to be more secure than they are, something that is entirely possible.

        • It’s kinda hard to explain this fully without going into the detail of how the crypto that backs it works. But, basically, Bitcoin itself is a distributed ledger, where everyone’s accounts are public (but are associated with random numbers rather than names – so you can see that wallet 1234 has 100 BTC in it, for example, but you don’t know who owns 1234 – that’s the anonymity angle), and every node on the network has a copy of the ledger. Thus, you cannot falsify entries on the ledger because the other nodes will see one “hacked” copy, and discard it because it doesn’t match the millions of legitimate ones. The only way to falsify the ledger is to control over half of nodes on the network.

      • And how do you know that your bitcoins are secure? Can you print them out and store them someplace safe? No. You either store them in a electronic wallet program on your computer, online somewhere, or at an exchange like Mt Gox. If you store them on a device that connects to the Internet, you have a hacking risk. Do you really think you are so much smarter than the elite hackers out there? Here’s a tip – Mt. Gox’s business model was based around safeguarding its assets. I would suspect that they had a lot more money to spend on security than you do. Granted, they are a bigger target than the average small fry, but if they could get hacked, so could you. There are only a finite number of bitcoin wallet programs out there. Don’t you think its possible that someone could find an exploit in a popular one and use it to clean a bunch of folks out?

        The advantage with money in a U.S. bank is that if the bank gets robbed, the FDIC steps in and replaces it. If your credit card or debit card number is stolen and used to rack up purchases, you are not responsible. If your bitcoin store gets hacked, the money is gone.

        Finally, do you really think that governments can’t track Bitcoin transactions? Japan just passed a law to tax Bitcoin transactions, so you gotta think that they have some means of watching them. Other countries will either figure out ways to trace them or else simply outlaw their use.

        Add this to the massive fluctuation risk in the value of Bitcoins against other major currencies and I don’t see this being terribly practical. You see that nice Glock 42 that costs .5 bitcoin today. You come back to the store the next day and the price has doubled. Great if you are a student of history and want to feel like a member of the Weimar Republic. Not so great if your money just lost half its value.

        • “The advantage with money in a U.S. bank is that if the bank gets robbed, the FDIC steps in and replaces it. ”

          It depends upon how much is “lost”; banks may lend ten dollars for every dollar they have on deposit. Some may exceed that number. Look up “fractional reserved”.

          If there is a mass theft or robbery of assets by wolves, it’s a pretty good bet that there will not be enough money to cover all the losses.

        • You actually can *literally* print out a bitcoin wallet in such a way as to prevent any electronic access. Usually called a paper wallet or offline wallet.

        • I would recommend not falling into the same trap that antis do when discussing guns, and fully understand things before criticizing them. If you know how Bitcoin actually works, you know how exactly it is anonymous (and how it’s not).

          One thing to understand is that a Bitcoin wallet does not store your bitcoins. Your bitcoins are “stored” as a record in the block chain – effectively, a shared ledger maintained by the entire network. The wallet stores your cryptographic private key that allows you to make transactions that originate from that record, effectively spending the associated bitcoins. A private key is just a sequence of bytes, and can be stored on any medium that can store information – it doesn’t even have to be digital, heck, you can write the numbers out by hand with a pen if you want, and type them back in every time you want to make a transaction; it’s just a lot of numbers.

    • If it is electronic, trust me, it is even more susceptible to fraud etc. Plus, it has a highly volatile value and no actual physical backing. It is just as bad as the U.S. Dollar or any other fiat currency only worse.

      • It is just as bad as the U.S. Dollar or any other fiat currency only worse.

        I don’t agree. Fiat currency is forced on the populace by the government. Bitcoin comes from the free market. No one is being forced to use it and anyone can quit using it at any time. Big difference.

    • The bitcoin phenomenon is akin to the Dutch Tulip Mania of 1636-37. The only differences are that tulip bulbs still had some inherent value and they still looked nice after blooming even after the bubble burst.

      If you don’t like Federal Reserve Notes, buy gold, silver, guns or ammo. The prices may go up or down, but they never go down to zero. One can’t say that about bitcoins.

    • Ugh. Not this tired crap again. This is about as useful as the caliber wars.

      SD ammo choice is a very personal decision based on a lot of factors.

      Can’t we just assume that the grown-ups we trust to CARRY FIREARMS IN THE FIRST PLACE can make their own decisions about caliber, firearm type/size/brand and ammo selection?

      • I bought some Remington 223 that had a round with disfigured primer that would never had fired. At least when I reload, I inspect every item that I use, and I know its good.

    • Funny, I don’t recall anyone asking. Oh wait, I forgot, you’re an expert. Please, enlighten everyone.

    • First Meta is not a Bitcoin exchange. It is a currency exchange that supports Bitcoin. There is a difference there. Media is presenting it from the Bitcoin view because it’s the hot new thing.

      It is volatile due to large price fluctuations, but it is steadily rising in value. Bad for a day trader, great as an investment.

  7. Stay away from that bitcoin for awhile. Two bitcoin exchanges have gone bankrupt in the last 30 days. One was hacked and robbed and one mismanaged the money. Beyond that risk I have two warnings for those who want to trade bitcoin. One is the actual value of the coin. I was there in the .Com craze where companies were paying people salaries in stock options and even paying their building leases with stock. In many instances the stock was not trading. The whole thing collapsed because the boom ended and ultimately the shares have no value. I was caught up in that stock option salary debacle not by my election. The other warning is the government… Bitcoin only has to infuriate one sector of people and it will become regulated. There was a market that operated outside of the stock and commodity markets call the OTC market. It was not held to too many rules but after the 2008 Financial crisis the market is now almost over regulated and the value of doing business in this outside market has decreased greatly. Just my two cents.

  8. Selling retail for Bitcoin makes zero sense if the rest of the supply chain still wants dollars. The volatility puts all the risk on the vendor; you still have to pay your suppliers in real dollars which means a conversion (which results in fees just like credit cards) and then have to settle for what you can get. If it isn’t enough to cover your payment to the supplier, you get to make up the difference. if you’re on such a tight margin that the cash flow from taking credit cards is a problem, this hardly seems like a solution to me.

    I’m fine with no charge cards or a cash discount – everyone is up front about what is happening and what is being charged but taking Bitcoin at retail is just a publicity stunt IMO.

  9. Bitcoin’s a passing fad & those that use it are either fools or drug dealers. Cash, credit, check, debit… They all spend just fine.

    Also, ammo doesn’t go bad in 6-9 months.

    • Ammo CAN go bad over time, depending on the climate and how it’s constructed. “Bad” is a relative term. It does not matter much at the range, but for SD use…could be life or death.

      But, I think a lot of the “replace your ammo often” idea comes from the Old West gunfighter days when it really did matter quite a bit more than it does now.

  10. My only experience with Bit Coin was when I some jackass hacked my PayPal account and took $200.00 billed via ebay. Filed with Paypal and got my money back. He didn’t even have a real email address just a chat room you can log into. The satisfaction of knowing he did not get to keep his ill gotten money. So guess you can say the whole bit coin thing didn’t work out for him..

  11. Bitcoin = bitcon as in a scam. Don’t get suckered in, it will never thrive as an alternative currency.

  12. A bit volatile? Try extremely volatile. From a few bucks per coin to $1k, only to drop 50% again when MtGox got (presumably) hacked and all their bitcoins stolen. I’m pretty sure I’ve heard interviews with Erik Voorhees saying that it’s impossible to hack bitcoin. Next thing you know, MtGox went bankrupt, lost hundreds of millions in dollar value, and apparently nobody knows exactly how. I’d stay away from bitcoin and (the dozens of) other, lesser known digital currencies.

    • Randal or somebody, please correct me if this isn’t correct…

      Well, in fairness, the Bitcoin algorithm itself (which as I understand it protects against counterfeiting, etc.) wasn’t hacked.

      Rather, the attack was via the protocols used to transfer Bitcoins from one entity to another in a verifiable fashion. Basically, they hacked the electronic equivalent of Brinks, not the bank or the mint.

      Still not reassuring, but not as bad as it could have been.

      • OK, so if the bitcoin algorithm cannot be hacked, doesn’t that just mean that bitcoins cannot (at least in theory) be duplicated? They have to be mined, right?. But, as the examples of MtGox and Flexcoin clearly illustrate, they can be stolen. And to make things worse, the thief’s identity may never be known. If that’s the case, more people may try to steal them if they won’t be found out. The whole thing is too risky and too volatile.

        • Bitcoins cannot be duplicated. There is no way to inject new bitcoins into the market aside from mining them. The algorithm is very secure.

          And physical currencies can be stolen too.

        • Bitcoins cannot be stolen, either, so long as they are in your wallet. Unless someone steals the private key to that wallet, but that’s up to you to secure; it’s just a bunch of numbers, make sure no-one else knows them.

          What happened with MtGox is kinda what happens with banks. You give them your money, and they store it in their wallet, and make a record that such and such has X bitcoins in his account. This arrangement is, obviously, only as secure as their wallet (i.e. which people and what software has access to it?), and their ledgers. In this case it was entirely about the ledgers – basically, the database where they recorded which customer has what in his accounts was hacked in such a way that allowed the attacker to request withdrawals against his accounts without the database actually being updated. So they had ledgers saying that they have significantly more money “in the vault” (i.e. the wallet) than they actually had – and no audits to catch this, so the attacker could slowly (so as not to draw attention) trickle out literally millions of dollars worth of BTC before anyone noticed.

  13. If anything, the advent of bitcoin (etc.) demonstrates the global market’s desire for alternative, non-state mediums of exchange.

    Bitcoin might very well cease to exist. But other, more sophisticated, alternative currencies will surely take its place as markets atempt to fill the void left central banks destroying their nations’ currencies.

    Most LGSs are also pawn shops, and are more than willing to accept the *original* alternative currencies, gold & silver.

  14. Before you think about doing something stupid, please read this.
    http://www.nationalreview.com/article/372286/bitcoin-not-real-money-larry-kudlow

    If there was a better reason to avoid anything having to do with something that is “trending” this is it. It’s more than a tiny “bit” disturbing to find someone in the gun biz operating in this realm of make-believe. The game tickets you win at Dave & Buster’s have a more stable, knowable, real value than bitcoin. All this is supposed to prevent the government from tracking your firearm purchases? I’ve got some bad news for you. They already know. If you’ve ever bought a firearm or ammunition from a store, they know. Unless you only paid cash for every gun you own; that you bought from a private individual who doesn’t know your name or where you live; and have bought all accessories for your firearm under the same circumstances, somebody in the government knows. They should call this Bit-o-paranoia-coin.

    • “Unless you only paid cash for every gun you own…”

      Ummm….yeah. Right before that boating accident in late 2013. Terrible tragedy.

  15. Bitcoin is a cult, like Apple is a cult (socially-conscience users who ignore the fact that their products were made with slave labor) and like Tesla is a cult (a market cap of $31 billion for a company that has made 25,000 cars in its entire history)

    But back to bitcoin…

    If you believe the pumpers of bit coin, it’s safer, more secure, can be anonymous, and doesn’t require any government… all of which isn’t true at all.

    Someone else already mentioned Mt Gox, but a better example would be Flexcoin, another bitcoin ‘bank’ that went bust on March 2nd.

    In the case of Flexcoin, hackers got in and stole ALL of the bitcoins they had in their ‘hot wallet’. And what was the answer from the company? They pointed users to their terms of service which said… if the coins we hold for you are stolen, that’s too bad, you lose.

    Use your story as an example… they won’t take credit cards, so you have to exchange your cash at the door to pay with bitcoin? Why not just pay cash in the first place?

    Add to that the fact that bitcoin values are about as stable as most of my ex girlfriends, that transactions can be traced more than they can with cash, that there really is nothing supporting their value other than the ‘hope’ that someone thinks they’re worth something… and what you’re left with is a bad idea, a pyramid scheme set up by people who don’t understand finance and bought by people who literally don’t know the value of a dollar.

    Personally, I would never transact in bitcoins, nor would I support a business so foolish as to do so.

    If you want to use a standard of value held up by nothing more than peoples belief that it has value, stick with gold.

    • Right now, the price of Bitcoin is based purely on speculation. Whoever takes bitcoin, what’s the first thing they do? They sell it for dollars, since you can’t do much else with bitcoin, like use it to pay taxes for example. The speculators who got in early made their money. Everybody else will most likely have to take a big loss and get out. Bitcoin has no intrinsic value and the fact that these ‘wallets’ or ‘banks’ are getting hacked should make people think twice. In my opinion bitcoin has very little credibility, if any.

      • So? Right now the price of dollars is based purely upon speculation. It’s all faith, based on an estimate of how much other people value the paper in your wallet.

        • As unstable as the future of the Dollar is, it is still less volatile than bitcoin.

        • However, you pay your taxes (in the US) with dollars. If you make money (either as an individual or a business) you owe a fraction of the net gains to Uncle Sam. That’s true whatever currency or barter goods you conduct your business with; the government always wants its share of the profits.

          The US government won’t accept anything other than US dollars in payment, however, and at the end of the day that’s a pretty solid reason for using dollars or dollars denominated proxies like credit cards or checks – it eliminates at least one conversion.

          Not that I like baseless currencies, but there is a convenience factor to consider.

        • Yes, the dollar isn’t backed by anything today, so it’s correct to say that it only has value because people agree to accept it. But at least I can pay my taxes in dollars, so there’s that. I doubt the US gov will accept bitcoin or any other digital currency, and some governments already banned it. The problem with bitcoin is that it also isn’t backed by anything and the stores that accept it, turn around and sell it for dollars (or could hold it and hope that the price will go up and then sell it). It’s speculation, and it’s too volatile to be universally accepted. And then there’s the problem with it being ‘anonymous’ or untraceable. I guess it works both ways. The crooks who stole the bitcoins from MtGox could remain anonymous forever. That could encourage other criminals to do the same.

          @John: what is the intrinsic value of bitcoin? Nothing. People / stores take accept it as payment because they hope the exchange price will go up so they can sell it and make some money. But wouldn’t the US gov count that as profit sooner or later? People will have to pay taxes in dollars on selling their bitcoins for dollars… hehe.

        • Mr. Pieroge:
          “People / stores take accept it as payment because they hope the exchange price will go up so they can sell it and make some money. But wouldn’t the US gov count that as profit sooner or later? People will have to pay taxes in dollars on selling their bitcoins for dollars… hehe.”

          I’m not a tax professional, but my guess would be, the tax treatment would be similar to commodities trading (best guess), forex, or sales of collectibles.

          If you buy and sell purely for speculative reasons, then the tax treatment should be as straightforward as it ever can be given the tax code.

          If you buy some bitcoins, use one to buy a thingummy, accept another one in exchange for a kajigger, and then convert back to dollars – beats me how to sort it out. But I’m sure the IRS will eventually publish a phone book on it and you can pay a tax pro lots of money to deal with it.

    • Seeing how often Apple is attacked by Windows users for little or no reason, I wonder which one is the cult here?

  16. Bitcoin is like the currency issued by banks in the 19th Century before the creation of the Federal Reserve. It is subject to fraud, manipulation and sudden loss of value. Bitcoin enthusiasts think that this private currency is somehow not subject to either the laws of economics or human nature. It is a solution to a misunderstanding of a problem.

    Monetary instability isn’t caused by the issuance of fiat currencies. There was plenty of monetary instability under the gold standard. It is fractional reserve banking that is the villain. However, without fractional reserve banking there are no financial intermediaries. Without intermediaries there is no functioning market economy. A bank can’t make money unless they loan out their depositors funds. If you require 100% reserves there is no reason for the bank to exist. It can’t make loans and at best it can do is make a little money letting you store your funds in their physical or electronic vault. Try getting a mortgage, starting a business or buying a car when you have to raise the funds on your own.

    • Try getting mortgage, starting a business or buying a car when you have to raise the funds on your own.

      Not really that difficult, just highly abnormal in today’s society.

      • Fractional reserve banking has existed for several thousand years. It is not a modern innovation. Even when it has been banned it happens because the banker figures out that few people call for the money at the same the time. When that happens it is a big oops. It was quite common in the 19th Century when banking was basically unregulated just as Bitcoin is now. There is one major difference that made 19th Century banking slightly more secure. Money was a physcial entity that someone had to come and take. Now bank robbers can just hack in and take the bank’s money.

        • I wasn’t making a comment about fractional reserve banking. I’m aware of the history. I was commenting on the attitude that a majority of people hold that you HAVE to borrow money. You absolutely do not. Just because something is normal does not make it right.

      • Buying a “disposable” consumer good (car) is entirely different than buying a house or starting a (real) business.

    • “A bank can’t make money unless they loan out their despoilers funds.”

      Absolutely true. And the risk incurred by depositors in facilitating those banks’ fractional lending, is supposed to be reflected by interest rates. I.e., you the depositor are rewarded with higher interest, in exchange for ‘risking’ your deposits as a loan to borrowers.

      Fractional reserve lending *must* occur for economies to function. 10% reserve requirements however, with zero asset backing, is a system doomed to failure. Markets are waking up to that reality, and responding with alternative currencies like bitcoin.

      • Fractional reserve lending *must* occur for economies to function.

        The position we’re in now, not just in the U.S. but globally, does require fractional reserve lending. But if everyone, governments and civilians alike, were to live on less than they take in there would be no need for lending at all.

      • Was not “doomed to failure” until demtards started their spending and forced the fed into creating out of them air/”printing” “currency.

    • However, without fractional reserve banking there are no financial intermediaries. Without intermediaries there is no functioning market economy. A bank can’t make money unless they loan out their depositors funds. If you require 100% reserves there is no reason for the bank to exist. It can’t make loans and at best it can do is make a little money letting you store your funds in their physical or electronic vault. Try getting a mortgage, starting a business or buying a car when you have to raise the funds on your own.

      The solution is simple, as explained by Murray Rothbard in What has Government Done to Our Money? and the Case for a 100 Percent Gold Dollar.

      You’ve got your “checking” account, an account from which you can withdraw all your money at any time you wish. Then, you’ve got your “savings” account, an account in which you’ve agreed to leave your money for some agreed upon length of time, at which point you can withdraw it. During that period, the bank is free to lend it out.

      • The late Murray Rothbard was the dean of the so called anarcho-capitalist movement. He is to faux Libertarianism what Marx was to the Wobblies. He was brilliant but still crank.

        He was also wrong. We had a 100% gold backed dollar until 1933. It didn’t stop financial panics and in fact was the reason the banking system collapsed at the bottom of the Great Depression. One the things that got Andrew Jackson upset about the Second Bank of the United States was that they would collect banknotes and then send agents to the bank to ask for specie. Many of Jackson’s cronies were western bankers who would open banks with little or no gold or silver reserves.

        Demand and deposits still exist. If you have a savings account you will see that the bank can impose limits on the amount and timing of your withdrawals. That they choose not to do so doesn’t mean that such restrictions don’t exist. They are usually enforced only during bank runs. If you want to see how Rothbard’s ideas work in practice I recomend reading Milton and Rose Friedman’s “Monetary History of the United States.” It was not the monetary paradise Rothbard claims.

        • Rothbard is like a socialist. SInce the 100% gold backed currency that existed from 1787-1933 failed to meet his objectives it could not have been a real 100% gold backed currency. Next time it will succeed. Bitcoin was inspired by Rothbard. It is currenly going through the same kind of instability that the world of a 100% gold backed dollar did. The bigger Bitcoin gets the bigger the periodic monetary calamity will be. Right now only a few people are getting burned but someday a Bitcoin panic could have large scale effects on finacial stability.

        • “instability that the world of a 100% gold backed dollar did.”
          Exactly when has the gold dollar ever been unstable? Got dates? Numbers? References?

    • Meanwhile, the Federal Reserve (which most people stupidly assume is a US government agency), is one massive fraud, from top to bottom…

      • The Federal Reserve was set up on free market principles. We didn’t want a government run central bank. We wanted to have a hybrid system that was run by the banks. It’s funny how the you faux Libertarians object to private enterprise having control of the banking system. The anti-Fed movement is nothing more then a reprise of Jackson’s war on the Second Bank of the United States. Jackson won the fight and the country had the longest depression in its history. That depression was of the foundations stones of the Civil War.

        • Tell me your objections to a PUBLICLY-owned central bank. I’m trusting you to not prep for your reply by doing any actual research. Since when did you ever?

        • “Tell me your objections to a PUBLICLY-owned central bank”

          Is this a serious question? It’s the same objection to “publicly owned” ANYTHING – Communism!

          Duh!

          Government has a place – the custodian of the Commons. A library, and public reference point. A hub. A node.

          But it’s criminally insane to give the registrar of deeds the authority to throw people into iron cages for refusing to submit to extortion, or smoking dried flowers.

          Oh, wait – we were talking about banks.

          The problem with the Fed is that it has a license to print counterfeit money.

        • “The problem with the Fed is that it has a license to print counterfeit money.”

          Put simply and succinctly, it can’t BE put more simply and succinctly than that!

        • I thought you were opposed to government. Perhaps you should show me how a purely private system would work. A government run central bank would be even a bigger tool of the central government than it is now. Scratch a faux Libertarian and get a socialist.

        • “Perhaps you should show me how a purely private system would work”

          I’ll try to draw a word picture. Say you’ve got a lot of gold, but don’t want to schlep it around. You go to the guy with the safe, and he puts it in a safe and gives you paper that says that the bearer of the paper is entitled to a certain amount of gold out of your store.

          But the gold is just sitting there, so you and the bank agree that they can loan out your money at interest, and they’ll pay you interest in turn.

          The banks can issue drafts or even currency, as long as everybody is confident that the debtors will make good on their payments. This is why honest bankers insist on collateral.

          And see? No government at all! 😀

          Does that help?

        • Then why does Libertarian Ron Paul want to audit or end the Fed and the Powers the Be resist the audit tooth and nail? Is it just that everybody hates Dr. Paul or do they really have something to hide?

          Libertarians – slowly taking over the country with our secret plot to leave you alone.

        • “Jay Williams says: March 6, 2014 at 15:24
          “What do you mean “we,” paleface?”

          Once, in the USAF, I had a “black” WAF (Women in the Air Force) co-worker who used those exact words (Well, she said, “White man,” but you get the point) in a snappy comeback and she killed (meaning everybody in the room almost rolled on the floor laughing.).

          Once, I made a ‘wise’crack, and got silence. Somebody said, “Tough room, Rich?” I said, “I hope it’s a tough room. I’d hate to think I’m not funny!” and then everybody laughed. It felt good! 😀

      • True, true, but at least today you can still exchange a FRN for a loaf of bread or so, knock on wood. But it will certainly be interesting times when that bubble pops.

        • Just try and buy a home with cash today, or even a new car. Not only will they probably call SWAT on you, but DHS and the IRS as well.

        • I’ve been using plastic for a couple of years now. I got one at my main bank with a $500 limit and immediately maxed it out, and I’ve been making minimum payments. A little background – I went chapter 7 in 1989 and have been broke ever since. The IRS has me listed as “uncollectable.” (uncollectible?) Recently, I got a pre-approved one from another company with a limit of $1000. Next year, I’ll see if I can get another new one with another higher limit and so on, until one day I’d like to buy a car with plastic. Maybe I’ll make it a goal to see how deep in debt I can be when I die. 😉
          (Or if – I’m a mad metascientist aiming to learn how to not die.)

        • Why should they want the car back if they got paid from my card? And why should the card folks care as long as I’m making my minimum payments?

          And after I’m dead and can’t make payments any more, how could I care about anything? 😉

  17. Not at the moment, but they should consider it. Boutique stores like a local gun store are forced to operate with tiny margins since they aren’t able to purchase goods at the bulk-discount-prices of larger retailers. When customers want to purchase one of their goods using a credit card, the retailer must pay a credit card processing fee of ~2.2%. Transaction engines using Bitcoin (like Coinbase’s Payment Processing) can lower that fee to less than 1%. Customers just need to open and fund an account and then pay for a good priced in dollars “using Bitcoin”. The customer’s coins are transferred to the merchant’s account, and are then exhanged back into dollars. Since the transaction happens instantaneously, the merchant never really “owns” Bitcoins, which also means they aren’t subject to Bitcoin’s famous volatility.

  18. To my local vendors, a BitCoin is a coin with a piece missing.

    The recent volatility in BitCoins was caused by Chinese “investors” trying to offshore money by any means possible. More likely these investors are party hacks and bureaucrats getting their embezzled funds out of the country before state security knocks at the door, around midnight.

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