Faiella wrote:You must understand that the people that we pay taxes to have a long reach and I like to stay away from that
Yeah? How's that working for ya?
Captain Ned is right.
What's really meaningful about this is that all the businesses that are supposedly "accepting" bitcoins aren't actually doing any such thing. They are using third-party exchangers like BitInstant. When they "accept" your bitcoin, they never touch the e-currency at all, only USD from the exchanger. Even then, it's generally such a hassle and expense for such a low volume of transactions that it's really only a PR stunt.
The real problem is that bitinstant is almost certainly not the exception. It is far more likely that it is the rule. Essentially, the *only* money these exchangers make is in selling bitcoin, never buying
it. This is precisely why Mt.Gox has a two year
waiting list for regular folk who want to sell bitcoin (but yet you can buy bitcoin with USD immediately
): There are hordes of small-timers trying to cash out but can't. Why? Because they are entirely supplanted by the big-timers (proven to exist by the block-chain) who get first dibs at grabbing the buyers. And since the big-timers have such an enormous hoard of bitcoin, the demand is entirely
So why, then, do companies like BitInstant offer services to legitimate businesses in which they'll buy bitcoins? If the demand for bitcoins to cash is completely and entirely met, why on earth would they ever want more
Easy: It's called a front.
Read the complaint against Shrem and Faiella here:http://www.scribd.com/doc/202555785/Uni ... -M-Faiella
It's clear that Shrem needed Faiella because Faiella was actually selling
bitcoins for cash. Faiella need Shrem because he needed the veneer of legitimacy and because any other nexus to the real financial world would call the Feds almost immediately. Why? Because only reason Faiella could find people who were willing to trade cash for bitcoin is because he was servicing the silk road, and banks aren't stupid.
Once Shrem and Faiella's arrangement stopped in October 2012, I imagine that Shrem had a problem, which he temporarily solved with the infusion of funding from the Winklevoss twins of "Social Network." fame. But, even then, within two months BitInstant was done for good.
More common sense people, and less unreasonable enthusiasm...