... or, in other words:  have you thought about what will happen when somebody buys a bunch of bitcoins from you and then disputes the charge on their credit card?

Or worse:  buys a bunch from you, turns around and sells them to you.  Waits a day.  Does it again.
And then disputes all the charges at the end of the month...

I am not a lawyer.

But if you generated bitcoins and then sold them I'd think you'd only done something illegal when you fail to declare that income on your income tax return.  Just like if you grew tomatoes in your back yard and sold them to somebody.  You aren't likely to get into any trouble until you make a lot of money on tomatoes and then fail to report that income to the IRS (or you get shut down for farming in a residential zone or something).

I think that applies to what madhatter is doing (taking payment for bitcoins through the mail).  But again, I am not a lawyer.

I am not a lawyer.

But it looks to me like No, just running Bitcoin doesn't make you a "money transmitting business."  To be a "business" you have to be charging people for your service.

If you're running Bitcoin to buy or sell goods or services in exchange for bitcoins, I'd say you're not in the money transmitting business.

However, if I were to start a company in the business of buying and selling Bitcoins, or that was a Bitcoin payment processing intermediary that took a percentage of transactions between buyers and sellers, I'd talk to a lawyer and jump through all the legal hoops (looks like here in Massachusetts I'd need a license and would have to post a $50,000 bond).

Or to put it in more concrete terms:  I am not a money transmitting business when I use my credit card to pay for something from Amazon.com.
And Amazon.com is not a money transmitting business just because they accept payments.

However, Amazon Payments, Inc. (Amazon's Paypal competitor) is licensed as a money service business in a bunch of US states.

I think bittorrent would be a really good model to follow.

But it's not the only path to success; Perl is a good example of a successful technology with One True implementation and no specification beyond the One True implementation.

Then again, development of Perl 6 seems to be going really slowly.

And I think breaking up the functionality is a really good idea.  For example, if the algorithm for signing transactions and the format for public and private keys were standardized it would be possible to create a Bitcoin iPhone app that stored the private keys (wallet) on the phone and submitted signed transactions to a proxy that was connected to the p2p network.

I see the functionality broken out into these pieces:

1. p2p nodes that are constantly connected and relay blocks and transactions
2. transaction monitoring ("tell me when there are new transactions that match some set of criteria")
3. new block monitoring ("tell me when there are new blocks that match some set of criteria")
4. transaction validation (answers question "is this transaction valid, and how many validations does it have?")
5. block validation ("is this block valid, and how many validations does it have?")
6. bitcoin mining: race to generate a new block and earn ฿
7. wallet storage (generate new addresses, and store their public/private keys and any transactions that correspond to them)
8. generate new transactions (sign ฿ with private key(s) and submit to p2p network)

I did some research into money exchanging and money transfer regulations in the U.S.

The raw legal code is online at:  http://www.access.gpo.gov/nara/cfr/waisidx_08/31cfr103_08.html

I am not a lawyer; trying to understand legalese is just an odd hobby of mine.  From my reading of the regulations, if you exchange less than $1,000.USD worth of Bitcoin per day you don't have to worry:


It looks to me like if you exchanged more than $1,000.USD per day a good lawyer might be able to argue that Bitcoins do not meet the legal definition of "currency":

Then again, if Bitcoins are not legally "currency" then it might be left up to a Court to decide what, exactly, they are, and the result might be really unpleasant (if a judge decided that they're like stocks and are therefore subject to regulation by the Security and Exchange Commision you might find yourself in jail for being an unlicensed stock broker).

I think Bitcoin needs some licensed, regulated exchanges that abide by all the regulations, treating Bitcoins just like another foreign currency, and make it really easy to buy or sell a few hundred dollars worth of Bitcoins.  The regulations are not as onerous as I expected; basically you just have to get identification from customers that make large transactions and report them.

There has been quite a lot of scholarly research on reputation system in the last 10 or 15 years; see http://scholar.google.com/scholar?q=reputation+system.

This article looks particularly relevant for Bitcoin:

Reputation Systems for Anonymous Networks
Elli Androulaki, Seung Geol Choi, Steven M. Bellovin, and Tal Malkin Department of Computer Science, Columbia University
{elli,sgchoi,smb,tal}@cs.columbia.edu

Hmm, yeah, it's probably normal; I THOUGHT the default address was given an empty label; I'm wrong, they're given the label "Your Address".
So:  should work.

Or just generate a new address, either with or without a label:

You can talk to the running bitcoind either by:
 1. sending JSON-RPC calls; see http://www.bitcoin.org/wiki/doku.php?id=api for more details.
 2. re-running bitcoind and giving it extra arguments; it will figure out that there's already a bitcoind running and will pass along the commands.

For example, running "bitcoind help" gives you the list of commands it understands:

To figure out what your bitcoin address is, run:
bitcoind getaddressesbylabel ""
(your default address has the empty string as its label).
To figure out how many coins you have, run:
or

Regarding running headless:  the non-daemon bitcoin will run via remote (e.g. ssh forwarded) X-windows, if you install the necessary X11-client stuff on your server.

Turning on the CAPTCHA for everybody has slowed the flow of coins from the faucet to a very manageable trickle.

Oh, and regarding anonymity versus non-anonymity:  I was careful not to tie IP addresses to Bitcoin addresses when implementing the Bitcoin Faucet.  So I remember that somebody at IP address 96.240.216.119 received bitcoins at 12:30pm today.  And I remember that somebody with Bitcoin address 1P3rpbSybuGgeL1bRwCJFWbn4yBjRNQrbY

Scheduling should be easy; on Linux, just run a couple of 'at' jobs that either talk to Bitcoin via bitcoind command-line arguments or use curl to turn on/off coin generation.

Windows and Mac have similar, built-in abilities to schedule commands.

I think less time, effort, and attention should be paid to coin generation, and more to making bitcoin as easy to use as possible for trading.

I want to write an application that does stuff whenever bitcoins are sent to a particular Bitcoin address.

Actually, that feature would be useful for the Bitcoin Faucet (it could monitor the donation address and keep it's display of how many bitcoins are available more up-to-date; currently I memcache the balance and only update it every 10 minutes or so).

I want this new JSON-RPC call:

monitorreceivedbyaddress(address, nConfirmations, url)
 address:  bitcoin address to monitor
 nConfirmations: send notification after this many transaction confirmations
 url: POST detail of the transaction to this url (after nConfirmations)

I'm thinking the POST data would look like:

I don't think teaching the bitcoin client to do HTTP POSTs would be horribly hard; I might take a whack at implementing this myself...

Copy the wallet.dat file somewhere safe and secure.
To be 100% belt-and-suspenders safe, shut down Bitcoin before doing the copy.

wallet.dat is:
  Linux/unix:  ~/.bitcoin/wallet.dat
  Windows: %APPDATA%\Bitcoin\wallet.dat  (I think; I don't run Windows)
  Mac: ~/Library/Application Support/Bitcoin/wallet.dat

It is easy to generate them automatically (it is easy to write code that asks the Bitcoin program to generate and return a new address).

"flawed" ??

I've been telling people it is a half-baked, I've-lost-my-friggin-mind idea!

So far, I count it as a big success-- I've learned a lot that will help me with my next Bitcoin-related project, I've made a bunch of people a teeny-tiny bit happier, and I've personally invested just under $1.00 worth of bitcoins over the last two weeks.

I did throw in the towel today and turned on reCAPTCHA for everybody getting bitcoins (it looks like somebody DID bother to write a robot to harvest coins through proxies).  It was fun trying to come up with new, creative ways of detecting cheating, but I have more important things to work on.

Money can be used as both a means of exchange and a store of value.

I plan on using Bitcoins as a convenient, very-low-cost means of exchange.

I don't plan on saving a significant number of Bitcoins as a store of value.  I like to invest in people who are doing productive things that grow our economy and make the world a better place, so when Bitcoins replace dollars    I'll lend them to people by buying bonds or stocks.

If you only use Bitcoins as a means of exchange, then you don't have to worry much about a sudden loss of faith in the system.

If you use Bitcoins as a store of value... well, then you're a currency speculator, which can be highly profitable but is also highly risky.  Whether you're hoarding dollars or euros or yen or Bitcoins...

So I've been watching the IP addresses of people getting 5 free bitcoins from the Bitcoin Faucet ( https://freebitcoins.appspot.com/ ).

And I see some... uh, interesting patterns.  Like these successful requests for coins:


My apologies if there actually are a bunch of new bitcoin users using IP addresses in the 79.117 range...  but I'm guessing somebody there is getting more than their fair share of free bitcoins.

There are several suspicious requests from the 192.38.95.* address block, too.

So I've made some changes to the Faucet.  You won't notice them unless you try to cheat; if you do try to cheat, you'll have to solve a CAPTCHA to get coins.

If that doesn't discourage cheating, I'll modify the code so that if it think you're trying to cheat it requires a CAPTCHA and only gives out a bitcoin nickel (0.05 bitcoins)...

I just finished creating a clean Amazon EC2 debian 5.0 machine image with everything I needed to compile bitcoind, and it compiled (using a variation of Laszlo's makefile.unix) and is running fine (just finished downloading the block chain).  I'll let you know if it misbehaves.

I had trouble compiling the gtk version, but I think that's because I did something wrong compiling wxWidgets.  I don't need no stinkin' graphics (and am not a wxWidgets expert), so I'm not going to bother trying to fix that.

I say keep it simple; more choices isn't always better, it just makes it overwhelming and confusing for most users.

I misunderstood the problem.  I hadn't noticed that bitcoin addresses could be either 33 or 34 characters long, which is why the Faucet thought your initial address was invalid.

I've fixed it.

But remember that each bitcoins can be divided into 100 million pieces, as needed.

And the more valuable they become, the more careful people will be not to lose them.