Tilden Smith writes:

We are a licensed FFL, although at this time we focus on manufacturing 80% lowers and fireams accessories. We do not even sell actual firearms. Almost a year ago we chose to partner with a Bitcoin payment processing company called Coinbase to accept Bitcoin payments through our website. This decision was based on the fact that Coinbase was one of the only Bitcoin payment processors we were aware of that did not have an existing policy prohibiting them from doing business with companies in the firearms industry. They told us they welcomed firearms dealers. We went through an extensive vetting process with coinbase before they made our account active . . .

Then several months ago, without warning we stopped receiving any Bitcoin payments. We thought it was a problem with our website and spent quite a bit of time trying to figure what was wrong. Coinbase support initially indicated that they did not know what the problem was. Everything looked normal on our account. Then today, we received the email below stating “due to recent changes in the regulatory environment we are unable to provide services to firearms dealers.”

So basically, Coinbase changed their policy and didn’t tell anybody. They simply shut down the accounts of any firearms-related dealers who were doing business with them. They lacked the courtesy to even send us a letter or email after the fact. This was the only mainstream Bitcoin processor that we know of that did business with the firearms industry. The Obama administration’s Operation Chokepoint seems to be having its intended effect. We will have to stop accepting Bitcoin because we now have no other Second Amendment-friendly Bitcoin processor to turn to.

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56 Responses to Coinbase Shuts Down Bitcoin Biz for Firearms Companies

  1. This is just plain lazy… The writing was on the wall that coinbase was a bunch of sycophants… If you can’t be bothered to handle cryptocurrency yourself, being that it’s so damned easy, you really can’t blame Operation Choke Point on it…

    When convenience becomes dependency, I guess you can point the finger anywhere…

    I took bitpay off of my website long ago simply because I didn’t want a middle man defeating the whole purpose of using crypto in the first place… Never could find an FFL, much less any sort of conservative, that didn’t have their head up their ass when it comes to cryptocurrency…

    Too much entitlement, not enough clue.

    Cryptocurrency is meant to be independent of the very same system you’ve artificially and unnecessarily attached it to! Duh, all the same BS applies when you go out of your way to undermine the advantages that it would have otherwise given you…

    • dustin your a real fooking moron . this is not about the ease or lack of in using bitcoin currencies. it is about the bs feds regulatory process and the fact that these dikhead operators did not have the decency to follow their own protocol and address a customer issue.

    • When a store says they accept bitcoin, they basically exchange the bitcoins they received for dollars from the payment processing company. So while you can pay for something with your bitcoins, technically the store receives dollars anyway. The processing company gets the bitcoins.

      Bitcoin is not as safe or as valuable as people think. Unless it’s backed by gold, which one company is attempting to implement if I’m not mistaken. Until then, I’d stay away from bitcoin. Besides, don’t you have to pay capital gains tax on it? It’s more trouble than it’s worth.

      • I’ll be honest. I don’t think of myself as an idiot or tech neophyte, but I am somewhat mystified by bitcoin. If it is not tied to anything tangible like gold, or even semi-quantifiable like the value or growth of a national economy, how can anyone have confidence that it will retain value in the long-term? What is to stop the guys that invented the stuff from making a ton of it for themselves, complete with phony digital credentials good enough to fool the rest of us?

        Then again, if we think about it too much, we might come to the same conclusions about the US dollars in our wallets. It could be that economic stability and growth are dependent on a sort of voluntary mass delusion about the inherent value of any currency.

        Maybe the People of the Gun should just switch to an ammo economy, where everything is bought and sold with bullets. That I can get my head around.

        • >> If it is not tied to anything tangible like gold, or even semi-quantifiable like the value or growth of a national economy, how can anyone have confidence that it will retain value in the long-term?

          You cannot. Its value hinges solely on the desire of people to accept it as a form of payment. It works in practice because it offers something that no other currency does, namely near-instantaneous anonymous transfers that can be done over any medium that permits exchange of information (unlike cash, which requires physical contact).

          >> What is to stop the guys that invented the stuff from making a ton of it for themselves, complete with phony digital credentials good enough to fool the rest of us?

          It’s mathematically impossible to make a ton of it yourself, regardless of who you are – it’s at the very heart of the algorithm, and the entire system hinges on this. If anyone, even just one person, could arbitrarily create BTC at an unconstrained rate, it would be completely worthless.

          >> Maybe the People of the Gun should just switch to an ammo economy, where everything is bought and sold with bullets. That I can get my head around.

          It doesn’t really solve the problem of online transactions, though. Sure, you could open accounts in bullets, and transfer funds between those accounts by adding and subtracting money, but that requires a central authority to manage such accounts, and as such it is always vulnerable to government interference. BTC network, on the other hand, is entirely decentralized, and all information about all accounts is distributed across all the nodes (and in such a way that it’s impossible to tamper with, unless someone controls more than half of those nodes).

        • If you mean the value, then yes, but not quite. One thing that does give USD some intrinsic value is the fact that all taxes payable to the US government are due in US dollars. The other is that all private debts can be settled with dollars, and the creditor cannot turn down such a payment if offered. Thus, even in the complete absence of a dollar-based economy, there is still demand, and hence value. Bitcoins don’t have any similar sort of government-mandated demand – the only way to spend one is to convince some private party to accept it as payment for something else.

          In practice, I don’t think that difference matters as much as people think it might. Most of dollar’s value comes from its use in private economy, not from government-mandated demand for it. If people were to stop using dollars as a medium of exchange in their private transactions, it would collapse.

          So the only real difference is in the size of the associated economies, and the degree of regulation. Because USD is powering the largest economy in the world, is heavily used by other economies, and is regulated and has safety nets like FDIC, it doesn’t fluctuate anywhere as much as BTC.

        • Think of it as more of a transactional currency and less of an investment. Sitting on bitcoins has been a lucrative practice, but it’s inherently risky (but not for the reasons you suspect). Buying some bitcoins and then turning around and exchanging them is far less risky, and kinda the point of the currency.
          Bitcoin’s value will ebb and flow, possibly crash, but used transactionally it’s great.

        • No form of money has any intrinsic value, not even gold (sorry, gold fans – aside from a few minor industrial uses, gold isn’t particular useful or valuable, except that people agree that it is). Money is simply an agreement on a medium of exchange. The only reason money has any value at all is because we all agree that it does. BitCoin, like any other money, only has value because people have agreed to accept it in exchange for goods.

      • Not a fan of bitcoin, but if your alternative is the American dollar, and your defense is being backed by gold, you are just sadly misinformed. The American dollar is the petrodollar and nothing more, hasn’t been backed by gold for a long time

      • Bitcoin is 1000X more secure than any financial system on the world right now. It’s digital gold and is safer than any other forms of financial system or store of value.

  2. This exemplifies a failing of Bitcoin, nothing else. A medium of exchange must come without censorship and or political agendas. The loser in the end will be the medium, not the product being traded.

    • If this is true, why do credit card companies refuse to process payments for gun businesses when they are dealing with, in essence, good old American dollars?
      Also, I had read that the whole Choke Point business was being shut down by Congress. Did that not happen?

    • BTC does not have any political agenda, nor does it inherently come with censorship (indeed, its whole point is to make centralized censorship as hard as possible). But it doesn’t prevent specific companies that deal with bitcoins, such as payment providers or exchanges, to impose limitations on their own customers. The expectation is that the free market will work around those limitations, since anyone can set up such a provider or exchange. Of course, they also have to comply with laws in the jurisdictions they’re located in, or else go underground like Silk Road did.

    • This isn’t a failing of Bitcoin – Bitcoin is permissionless and users can’t be censored from accepting bitcoins. The failing is that the merchant wasn’t accepting bitcoins, they instead had a third party accepting bitcoins on their behalf. When the third party decided they didn’t want to accept bitcoins for the merchant any more, that was that.

      The moral of the story is that if you want to gain all of the benefits of a trustless cryptocurrency, you have to actually use it.

      • true, very true

        but one can’t deny that Coinbase is an easy way for merchants to accept btc. And the fact that they are now acting just like any other processor or bank, is hurting the adoption rate.
        That Coinbase never did any favors to the value of BTC vs fiat, is nothing new but they still provided a service in support of BTC usage.

  3. Not to be negative but who really cares?
    Funny story at a prepper survival show a few years back. (How long ago? Bo Gritz was on the circuit as a respected authority on prepping. He was then hawking his paradise retreat in Idaho which subsequently turned out not to be paradise. ) But I digress…..
    So, this guy was selling “information” on laminated cards that it looked like his wife had made the night before. He was asking 5 “fiat dollars” for them and he used a funny denomination symbol that looked like cents. I saw a lady walk by, slap down a nickel, and go merrily on her way. He took off after her faster than a fat man heading to a new Golden Trough (Corral). People can make Bitcoin seem exotic and revolutionary, but at the end of day we a all want dollars. So, who really cares they can’t take bitcoins?

    • BTC lets you make online payments in a way that doesn’t leave a record associated with your name, and hence not traceable to you by the state or any other third party. Think of it as offering all the privacy benefits of cash, and most of the convenience of a credit card, for online shopping.

      • No trail? Hahahaha! That’s a good one. TOR has been hacked by the NSA and I’m to think that Bitcoin is the holy grail of privacy. Ha! Let me wipe these tears from my eyes I’m laughing so hard!

        • Hacking is not magic; you cannot hack arbitrary things merely by throwing resources at them, there needs to be an actual vulnerability. To that extent, discussing the security of Bitcoin is pointless unless you’re aware of the technical details of its implementation. If you are, we can talk. If you’re not, then just take it for granted that there’s no way to trace a Bitcoin transaction, so long as the channel used to communicate with other nodes constituting the BTC network is not compromised (Tor is not the only way to do so, and is arguably not the best way, though it’s by far the easiest).

          Also, there’s no reliable evidence that NSA has actually hacked Tor. There have been claims to that effect associated with the Silk Road trial, but after more information came out, it became clear that they didn’t hack anything – the guy who set up his servers served a captcha over non-Tor connection, and that is what they used to trace it back to those servers.

          There are some rumors that NSA controls most of Tor nodes out there, which would effectively make the network useless for anonymizing purposes (but is not really a hack – it’s by design, it just happens that the design doesn’t guarantee 100% anonymity, it’s a sliding scale depending on how many legitimate nodes are available). Bitcoin has a similar problem in that someone with 50%+1 compute power can take over the network, but in its case, the flaw is very different: it doesn’t expose the parties to the transactions in any way, but it can be used to hijack the authoritative blockchain, in effect giving the guy with that 50%+1 compute the power to issue arbitrary transactions.

  4. Bite-my-Coin does not have the authority to mint currency for common commerce, nor operate a wagering operation.

    Right now VISA and MASTERCARD are going “shhhh” “shhhhhhhhhhh”, oh please just “shhhhhhhhhhh” but those stupid cards in your wallet are not currency either.

    • They do not require such authority. Everyone can “mint” money – I can take a sheet of paper and write “10 shitcoins” on it. If I can find someone who is willing to exchange some good or service for that piece of paper, then we have commerce.

      What’s prohibited is making money that resembles that officially minted by US or other countries. That’s what happened to “Liberty dollars”, for example. But it’s pretty hard to confuse Bitcoin with dollar, or any other currency.

  5. The industry is well aware of this problem, so exactly what is the industry and the NSSF doing about it?

    It’s not all that easy to establish an ISO, but it is possible with backing from the firearms industry.

  6. So an illegitimate payment system (not backed by anything so its not legitimate) can not be used for a legitimate, Constitutionally protected product? Tha’ts just precious.

    The real criminal here is Eric Holder who is using Operation Chokepoint to put legitimate companies that he does not like out of business.

        • Which word would that be? They don’t make any binding promises on the value of the dollar, not since they stopped offering to trade any banknote for a specific amount of gold (or anything else, for that matter).

    • If you have any desire to free your mind of the status quo thinking that is decaying our society into a totalitarian dictatorship, then you need to learn more about it. It is the first technology ever invented that could destroy corrupt governments and banks and restore freedom to people around the world

  7. I remember reading last year about a guy with hundreds of thousands in bitcoins on his computer and his hard drive crashed and he could not retrieve them.

    • This is basically the equivalent of having thousands of dollars in cash in a wallet, and having it burn down in a fire. With BTC, though, you can make as many backups as you want, and store those in secure places, like say a safe at a local bank (while still retaining the use of the original copy at hand – the copies would only be useful if the original is destroyed or inaccessible).

    • That story seems unlikely, but cold storage is the way to go if you have a lot of them. Meaning stored on a drive not in a computer. That way, they are safe.

  8. Bitcoin has a lot of flaws. But the concept is pretty awesome. I would say I’m surprised that supposed pro-small government, independent, freedom-lovers like the PTOG would disparage such a thing, but I’ve seen plenty of Luddites around to know better.

  9. THIS is a problem why? US currency (the Federal Reserve) isn’t backed by anything. What’s the breakdown?A 1913 dollar is now worth 2cents? Or less…

  10. If I recall correctly I believe I read an article where both the FTC and the SEC were fitting into the aft of regulating the bitcoin exchanges. They can’t regulate the BT itsself nor the transactions but they can make the exchanges behave more like a traditional financial institution. Governments worldwide are scared shit less by BT because they know they can’t control their populations through it.

  11. One of the best misinformation campaigns performed in the last 10 years is the idea that BitCoin is anonymous. It’s not. The blockchain tracks everything.

    DASH is a evolved cryptocurrency that does a lot more than BitCoin. Inluding Instant Transactions and REAL Anonymity facilitated by a 2nd Tier Masternode system. Noting else in cryptocurrency is even close to DASH.

    But there in lies the issue. Most people don’t know the truth of BitCoin, much less that which evolved from it.

    The bottom line of even crappy cryptocurrency is that crypto itself cannot be regulated. IT’s value is inhenet in this fact. The failing is in the majority of the population being too stupid to understand it and cling to government controlled money. It’s supposed to be about separation of Money and State. But since most people stil cling to Big Brother in spite of claiming to hate it… It’s most obvious in the Conservative movement’s inability to figure out email, much less cut the umbilical to nanny guv and use money The State can’t control.

    It’s the conversion point that The State can control. As long as The People insist on that connection, The People cede their money and, by proxy, freedoms to Guv Control.

    Cryptocurrency COULD be the savior it’s advocates espouse it to be, but The People won’t let it happen. Too comfortable in the arms of Guv. Freedom has come to mean Freedom from Responsibility. Relax, Big Brother will take care of you… Conservatives are the worst offenders by spouting mis-information instead of educating themselves. Too proud to admit that they don’t understand cryptocurrencies, they make up stories which can be found all over this comment thread…

    Talking to Conservatives about Cryptocurrency is like talking to Liberals about guns. Nothing but lies… Too arrogant and dumb to admit that their angle is the cause of problems, not the solution…

      • One bitcoin is currently about 242 USD.

        As I understand it, a Bitcoin nothing more than a large number, character, or some such combination.

        When I hand or e-mail you a bitcoin in exchange for something (physical object or ‘service’), how is change returned?

        Another number?

        • Those numbers don’t have to be whole, and a single Bitcoin can be split down to 0.00000001 BTC (also known as “satoshi”, by the pseudonym of the network’s creator) if necessary. Thus there’s no need to account for change – you would just “wire” the precise amount that is needed.

          Transfer itself is not like sending a number. The way it works is that, basically, there’s one large ledger, in which all transactions that ever happened are recorded, as well as “minting” of new bitcoins; and the current state of everyone’s account is thus a final product of all these transactions at any given point. That ledger is not owned by anyone specifically, but is collectively maintained by the network as a whole, using some creative mathematical trickery such that it’s impossible to falsify unless you control more than 50% of the overall computational power of the network.

          Thus, the network knows how much money you (or rather, a given “wallet”, identified by a number) has at any given point in time. If you want to wire the money, you tell the network that N bitcoins from wallet X should be transferred to wallet Y, and sign it with the private key of wallet X. Because no-one else other than you has that private key, only you can enter such a record into the ledger (and this is what the computations validate). Once validated, the record becomes a part of the ledger, and now the network knows that you (X) have N less bitcoins, and Y, whoever that is, has N more. The anonymity of this process is guaranteed insofar as X and Y are not tied to any real identity.

          The computational power in question comes from Bitcoin miners performing (intentionally) complicated computations that serve a dual effect: first, they validate the authenticity of the ledger; and second, they generate new Bitcoins at a predefined rate that is inherent to the algorithm and cannot be adjusted (to prevent someone from just minting a crapload of them and inflating the money supply, as occasionally happens with other currencies). Thus, miners have an incentive to keep those computations running, and this, in turn, provides a guarantee for all the other users of the network that the ledger is always correct and not fudged – at least for as long as there’s no single miner that has more compute power than everyone else combined.

  12. And with that I’ll be closing my Coinbase account. Not that I’ve used it months anyway (last I did was to sell off $2k worth of Bitcoin to buy a VEPR 12 (had some extra leftover).

  13. How about talking to some of your suppliers (who aren’t gun makers) about how you would like to pay them in Bitcoin if they just got a CoinBase account.

    • If you read the comments on this post, it should be clear that the problem is that they were not actually using Bitcoin, they were using a third party that has the ability to shut down their account.

  14. Not to put too fine a point on it, but what the US Dollar is backed with is debt. Simply put, the US Government says we only pay our debts with US Federal Reserve Notes (Dollars) and we only accept payment for taxes with the same. Part of what keeps the whole fiction afloat is the fear by the entire world that they won’t get paid if the US currency fails and the other side of the same coin is that to keep from starving (or having their own economy collapse) they have to keep accepting US currency. The entire world keeps trying to pretend that nothing bad is gonna happen to the Dollar, but when the Fed is loaning money to US Banks at an interest rate of zero, there is nothing left in the way of “stimulus” to prop up the economy except QE forever and that just pumps in even more inflationary dollars to the system.

    If you think we don’t have inflation, you haven’t been buying food lately. Grocery stores are either raising prices, or lowering the quantity you get for the same price. Think that jar of peanut butter is the same size as last year? Just turn it over and look at the bubble in the bottom, that dimple means less product in a jar, essentially a dishonest way to reduce what you get when you pay for the jar.

    How long can they keep juggling the always escalating debt and inflation? Five years? Fifteen? More? I don’t know, but I wouldn’t be wanting to be holding a bunch of bitcoin when it fails.

  15. So they stopped your account without telling you, stopping payment to you, but payments were still being made by your customers…. sounds like fraud to me.

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