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Bitcoin Government Privacy The Almighty Buck

Bitcoin's Success With Investors Alienates Earliest Adopters 158

Posted by timothy
from the who-has-the-gold-wins dept.
holy_calamity writes "Digital currency Bitcoin is gaining acceptance with mainstream venture capitalists, reports Technology Review, but at the price of its famed anonymity and ability to operate without central authority. Technology investors have now ploughed millions of dollars into a handful of Bitcoin-based payments and financial companies that are careful to follow financial regulations and don't offer anonymity. That's causing tensions in the community of Bitcoin enthusiasts, some of whom feel their currency's success has involved abandoning its most important features."
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Bitcoin's Success With Investors Alienates Earliest Adopters

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  • by trims (10010) on Thursday May 23, 2013 @06:28PM (#43807705) Homepage

    ...I've got a bridge somewhere that needs to be sold that you might be interested in.

    Bitcoin does irrefutability (i.e. the ability to prove that a transaction occurred, and occurred only once). I can thus prove that I do, in fact, own all Bitcoin I possess.

    It never has been anonymous. There are characteristics that make it more difficult to trace the payer, but the protocol and implementation have never been configured (or designed) to be a strongly anonymous technology.

  • by Anonymous Coward on Thursday May 23, 2013 @07:03PM (#43807911)

    It is impossible to build an anonymous irrevocably currency on top of a revocable non-anonymous. Thus, you can't make something like bitcoins as a layer ontop of credit cards, traditional banks, checks etc.

    However, it is possible to do the reverse: you can (and they did) build a revocable non-anonymous payment system on top of bitcoin. This is good: now bitcoin is being used for both kinds of currency. You don't lose the ability to spend bitcoins anonymously and irrevocably just because there are now ways to use them closer to traditional payment systems. Both have benefits, and both can be powered by bitcoin simultaneously. I fail to see the problem.

    Sure, if the goal of bitcoin was to force change on the world, it failed. If the goal was to allow access to a new technology, anonymous irrevocably currency, then its working. I won't argue thats its an ideal implementation of the idea, or that its a great currency to use, but it is usable, and proves that such a thing can exist should you need it.

  • Re:Pyramid scheme (Score:4, Interesting)

    by Lehk228 (705449) on Thursday May 23, 2013 @07:38PM (#43808117) Journal
    it's a little bit of both.

    there are tons of unaccounted for bitcoins harvested in the early days they will not reenter the market until

    a) the market is large enough to not crash when whoever is sitting on them cashes out

    or

    b) whoever is sitting on them needs the money badly enough not to care.
  • by pla (258480) on Thursday May 23, 2013 @10:38PM (#43809029) Journal

    If you associate that data with a person, they're forever tied to that transaction and you can follow it.

    Yes and no. Once you associate "me" with a transaction, you can always prove I owned part of block B at time T. You can't, however, prove that when I "spent" those bitcoins, I did or did not simply send them to myself, making anonymity (at least, at the "plausible deniability" level) always just one easy transaction away.

    And for the really paranoid, you can use any of a dozen "mixing" services, that take your bitcoins along with those of thousands of other people and stir them all together to make tracing the ones you put in to the ones you take out as close to impossible as matters.

  • by pla (258480) on Thursday May 23, 2013 @11:26PM (#43809239) Journal
    The term "mixing" sounds less pejorative than "laundering", but the principle is the same: disguise the transfer of wealth. I expect that some extreme pressure will be put on these mixing services as Bitcoins gain traction with nations.

    As I pointed out, though, you don't really need to use a mixer - You can accomplish almost the same thing just by sending your bitcoins to other accounts you control in more or less random chunks. You could even, if really motivated, create your own mixer with thousands of your own accounts. A handful of illegal sources go in, along with a large volume of legit transactions, stir stir stir, and who knows that you-#1701 equals you-#42 unless you tell on yourself?

    Granted, we already have laws against "structuring", but even as blatant of a cash-grab as those laws appear, they still require "you" to deliberately make a series of related sub-$10k deposits specifically to avoid filing a CTR/8300. Key point there, they need to prove both intent (the standard defense), and the "you" part (which Bitcoin's entire structure makes all but impossible, though ironically, if they could prove all the accounts as you, that would pretty much put a nail in the "intent" coffin).
  • by g4sy (694060) on Friday May 24, 2013 @07:46AM (#43811075) Homepage
    You don't need to put your coins into a laundry if you use zerocoins [cryptograp...eering.com] instead. End of problem. Whoever wrote this article (and everyone commenting) doesn't know how to do a little research. Total anonymity and pseudymity are possible.

Numeric stability is probably not all that important when you're guessing.

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