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If transactions have perfect record keeping and are always traceable, then why stop with just blacklisting. You could go much further and correct all sorts of f
by cantrevealname 9y ago
If transactions have perfect record keeping and are always traceable, then why stop with just blacklisting. You could go much further and correct all sorts of frauds and injustices going back through layers of transactions.
But we don't always do that in the non-cyberspace world even when it is technically feasible. If a car is stolen and it changes hands ten times, then yes, it'll get returned to the original owner. But not for fungible transactions like in securities. I'll give you a concrete example of where it doesn't happen:
Canadians experienced a multi-billion dollar stock fraud due a company called Bre-X[1] that found an enormous gold deposit that turned out to be a massive lie. After the fraud was exposed and the stock had collapsed, the brokerages, exchanges, and the Ontario Securities Commission could have reversed all the transactions one by one until everyone who was unjustly enriched had their profit taken away and everyone who lost money was made whole.
All the data to do this was available to the brokers. There is no such thing as anonymous holders and anonymous exchange of shares. If Mr. Wilson was left holding 1000 worthless shares when trading was halted, you could look at the records and see that he bought it from Mr. Coolidge for $85,000. You'd seize $85,000 from Coolidge giving it back to Wilson, and return the 1000 shares to Coolidge. Then you'd look at Coolidge's transactions. You'd unwind all the transactions to the beginning of the fraud. But the brokerages and exchanges did not do this!
You're asking for stricter controls on cryptocurrencies than exist for fungible meat-space transactions.
[1] https://en.wikipedia.org/wiki/Bre-X https://en.wikipedia.org/wiki/Bre-X
- paulsutter 9y agoCountries already consider use of a mixer as a possible indication of money laundering, they don't need to strictly outlaw it. When someone tries to cash out coins that came predominantly through mixers, the authorities could hold it up and ask the individual to explain. And if they don't have an explanation, the authorities can keep the money. Sure, this sort of enforcement isn't happening yet but it can and it's simple and practical. And I'd be more surprised if it doesn't happen. Last year I closed a bank account with $11,000 in it, and just for fun I asked for the money as cash. That took a long time, the bank manager got involved and I had to sign a document stating the source of the money. Which is funny because they sure didn't ask when I deposited it. That's the world we live in, and that's where bitcoin is going.
- Frogolocalypse 9y agoAnd if you shift back and forth between entirely different blockchains? Good luck untangling that one.
- EGreg 9y agoHow hard can it be? You can easily get the transactions.
- polyomino 9y agoIt's possible to create blockchains where all of the transactions are undiscoverable by third parties (unless disclosed). Not sure if there are any completely working in practice yet.
- Frogolocalypse 9y agoThere are already several that provide that facility.
- EGreg 9y agoSo they'd be treated same as the mixing services! Bottom line, unless everyone in a community agrees to accept currency X, the external government can shut currency X down by not allowing it to be exchanged for the main one.
- Frogolocalypse 9y agoBottom line is it doesn't matter what a government wants to accept, except for transactions to they are a party. By your logic no one could use money to buy drugs because the government can always just "shut them down."
- EGreg 9y ago