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Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working. Most knowledgeable cryto enthusiasts I k

by apo 9y ago

Hey look, someone took the time to explain to cryptocurrency enthusiasts why the rest of us perceive money as working. Most knowledgeable cryto enthusiasts I know already know that fiat currencies work well enough for many people. Folks like McKenzie will see no value in Bitcoin and other cryptos because their money needs are already satisfied. Good for them, but their narrow perspective excludes many valid use cases. Consider these problems, for which Bitcoin offers a unique solution (and which folks like McKenzie may not even acknowledge as problems): - civil asset forfeiture; - capital controls; - black market trading (remember, what's illegal to a foreign government might be a fundamental human right to you); - intense privacy invasion by governments; - widespread privacy loss through corporations (Equifax, Verizon). Bitcoin doesn't need to ape the services offered by the likes of Visa, PayPal, and Chase. It needs to address those unmet needs that can't be addressed by the incumbents. That's going to be a niche audience, at least initially. But that's how all marketplace disruptions begin.

lightbyte 9y ago
>- civil asset forfeiture; How would cryptocurrencies prevent the police from seizing your private keys? They can already throw you in jail if you refuse to provide passwords, or the keys themselves.
- Spivak 9y ago
  Current situation: Government takes your money and you must sue to get it back. Crypto: Government is incapable of taking your money and must prosecute in order to coerce you to turn it over. And you could still refuse and accept your jail time. Edit: People replying to me are missing the point. This is about the case where the government is wrongfully taking your money. Under the current system your money can be seized without your knowledge and you have to prove it was taken wrongfully after the fact. With crypto the burden is shifted to the government who has to prove they have the right to seize it in the first place.
  - pja 9y ago
    And you could still refuse and accept your jail time. In most jurisdictions (including the US) the sanction for contempt of court is potentially unlimited: the convicted individual may find that they are only freed when they comply with the court’s requirements. IOW, good luck with that.
    - rphlx 9y ago
      My understanding is that in general under current law a US citizen cannot be held in contempt or put in prison indefinitely for failing to disclose a password. The 5th ammendment protection there is not entirely void, but it can be void under certain specific circumstances (such as the "foregone conclusion doctrine", where LE can prove that specific illicit content both exists, and can be decrypted, by the accused).
      - pja 9y ago
        Refusing to provide the password to a BitCoin wallet found on a computer you own is probably going to fall under that particular doctrine. I look forward to the first test case...
  - Laforet 9y ago
    Civil forfeiture is not limited to cash money. Your lambo car, mansion house or any other property could be seized just as easily under the current regime. In case of crypto, the storage media containing the private keys could be seized. Failing that, the government can always obtain an injunction to blacklist your addresses to exchanges, nodes and miners as long as those operate within their jurisdiction. You could use a brain wallet to mitigate these risks to some extent, but I doubt it is possible to put all your assets in one place and you expose yourself to the risk of cryptanalysis by torture.
    - jameskegel 9y ago
      These days, most of us use an exceedingly long 25 word mnemonic key; also, look into actually fungible currencies like Monero, where transactions are private by default, with the option to decrypt them for a regulatory body.
pja 9y ago
So essentially what you’re saying is that the unique value proposition of BitCoin is that it allows you to make payments that break the law in your jurisdiction. I mean, I agree with you entirely: that is BitCoin’s unique value proposition. It’s just good to see it out on the table.
- programmarchy 9y ago
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- placeybordeaux 9y ago
  Yeah as a proponent of bitcoin and cryptocurrencies I think it's important to recognize how they first established value. The only people that really had a self interested reason to use cryptocurrencies are people that were poorly served by the current situation. Cryptocurrencies create a minimum coverage of ability to conduct financial operations, they are assets that a third party can not freeze, they are assets that a third party can not invalidate. Of course the first use cases will be illegal ones.
  - subroutine 9y ago
    Can you explain something to me- say I wanted to transfer the equvalent of $5 USD to someone using bitcoin. How do I transfer that amount when one coin is worth $5000? If it requires having coin on an exchange is that not a 3rd party? And would it be impossible for them to freeze coins in that wallet?
    - chaosite 9y ago
      So this is Bitcoin 101 and you should really be reading up on it, but basically: Bitcoins can be divided, the smallest fraction is called a "Satoshi" and is a millionith of a Bitcoin (So a cent is 500 Satoshis). The blockchain is a peer-to-peer, which while technically 3rd party, is not something that "you have coin on". The blockchain is basically a cryptographically signed ledger that says a certain public key has this much bitcoins. If you have the matching private key, you have the coins. Exchanges are mostly used to exchange between Bitcoin and some other currency, like US Dollars or another crypto currency.
annabellish 9y ago
Bitcoin does not solve 2, 3, 4, or 5! You have a job, so you get wages. These wages are sent to a bitcoin address. Now your employer can track every transaction you make. There's no reason why this would not also have to be reported for tax reasons, so your government can also track every transaction you make. You buy something, now that company can have a decent chance of tracking your spending too! There are ways around these issues, but nothing _straightforward_ or scalable. Not everyone can or will use a tumbler for all their wages.
- marcosdumay 9y ago
  It does not solve 1 either. It just changes the action from coercively taking some papers to coercively taking a password/token.
tptacek 9y ago
Civil asset forfeiture isn't necessarily, or even usually, dollar denominated. The same mechanism that allows the police to confiscate the $10,000 you kept in a briefcase in the trunk of your care can be, and more often than not is, used to confiscate the car itself.
- dsacco 9y ago
  I'd like to see a lawyer chime in on the legality of using civil forfeiture laws to compel someone to give up their private key or password. My intuition is that law enforcement would seize literally everything peripherally related to, or capable of transacting in, Bitcoin.
golangnews 9y ago
civil asset forfeiture, capital controls Bitcoin offers no special protection against this. Your problems would arrive in the real world with guns. See shutdown of exchanges in China. Black market trading If your opsec is perfect, maybe. See Ross Ulbricht. intense privacy invasion by governments Bitcoin keeps a public record of every transaction, forever. That is trivial to tie to your real world activity, in retrospect. It has not been important enough to do yet, but the data is there and data is already collected on other selectors linked to all online activity. widespread privacy loss through corporations (Equifax, Verizon) Bitcoin solves this how? Companies checking credit record will require your real world identity and past records. Why would they want to participate in your crypto-anarchist future? Pseudo-anonymity is not anonymity, and most of the features you have listed as desirable, people simply don’t want, even if bitcoin could deliver them in a meaningful way for non technical people. For better or worse, they are revolutionary ideas which require a change of laws and government, not a change of tech.
- AgentME 9y ago
  >If your opsec is perfect, maybe. See Ross Ulbricht. The bar is so much lower than many think. Ulbricht posted the first advertisements of Silk Road with accounts publicly linked to his personal email address. >Bitcoin keeps a public record of every transaction, forever. That is trivial to tie to your real world activity, in retrospect. It has not been important enough to do yet, but the data is there and data is already collected on other selectors linked to all online activity. Privacy isn't automatic in bitcoin, but it's easy enough in practice to break the public link in the blockchain. Depositing into an exchange account or other bitcoin service and then withdrawing a few days later is usually enough. If you want privacy from the exchange too, then exchanging bitcoin for a cryptocurrency with anonymity built-in (ie. monero or zcash), and then exchange that back to bitcoin at an exchange that doesn't require user identification. (Alternatively, convince your intended recipients to accept monero/zcash directly and don't even bother with bitcoin.) (It's possible that in the future, the Lightning Network functionality for Bitcoin will add some anonymity as a byproduct to transactions using it.)
  - golangnews 9y ago
dsacco 9y ago
> - widespread privacy loss through corporations (Equifax, Verizon) Bitcoin does not offer a compelling solution for privacy concerns. Intrinsically, the blockchain is antithetical to this: it stores a record of every transaction. It was not designed to achieve privacy, full stop (unlike, say, Zcash). Extrinsically, you can use things like tumblers or anonymous wallets, but in practice this relies on trusted third parties (just not orthodox ones) and the reliability of your own personal opsec in the face of centralized parties "bolted on" to the blockchain to hide your activity. Moreover, the easiest way to buy and sell Bitcoin is through companies with extensive KYC requirements, essentially all of whom can and will participate with law enforcement. Finally, there are already companies crawling the blockchain continuously to develop creditworthiness models they can sell to financial institutions. They are extremely good at uniquely fingerprinting wallets, or wallet activity, to social media profiles elsewhere.

by apo 9y ago

lightbyte 9y ago

>- civil asset forfeiture; How would cryptocurrencies prevent the police from seizing your private keys? They can already throw you in jail if you refuse to provide passwords, or the keys themselves.

Spivak 9y ago
Current situation: Government takes your money and you must sue to get it back. Crypto: Government is incapable of taking your money and must prosecute in order to coerce you to turn it over. And you could still refuse and accept your jail time. Edit: People replying to me are missing the point. This is about the case where the government is wrongfully taking your money. Under the current system your money can be seized without your knowledge and you have to prove it was taken wrongfully after the fact. With crypto the burden is shifted to the government who has to prove they have the right to seize it in the first place.
- pja 9y ago
  And you could still refuse and accept your jail time. In most jurisdictions (including the US) the sanction for contempt of court is potentially unlimited: the convicted individual may find that they are only freed when they comply with the court’s requirements. IOW, good luck with that.
  - rphlx 9y ago
    My understanding is that in general under current law a US citizen cannot be held in contempt or put in prison indefinitely for failing to disclose a password. The 5th ammendment protection there is not entirely void, but it can be void under certain specific circumstances (such as the "foregone conclusion doctrine", where LE can prove that specific illicit content both exists, and can be decrypted, by the accused).
    - pja 9y ago
      Refusing to provide the password to a BitCoin wallet found on a computer you own is probably going to fall under that particular doctrine. I look forward to the first test case...
- Laforet 9y ago
  Civil forfeiture is not limited to cash money. Your lambo car, mansion house or any other property could be seized just as easily under the current regime. In case of crypto, the storage media containing the private keys could be seized. Failing that, the government can always obtain an injunction to blacklist your addresses to exchanges, nodes and miners as long as those operate within their jurisdiction. You could use a brain wallet to mitigate these risks to some extent, but I doubt it is possible to put all your assets in one place and you expose yourself to the risk of cryptanalysis by torture.
  - jameskegel 9y ago
    These days, most of us use an exceedingly long 25 word mnemonic key; also, look into actually fungible currencies like Monero, where transactions are private by default, with the option to decrypt them for a regulatory body.

pja 9y ago

So essentially what you’re saying is that the unique value proposition of BitCoin is that it allows you to make payments that break the law in your jurisdiction. I mean, I agree with you entirely: that is BitCoin’s unique value proposition. It’s just good to see it out on the table.

programmarchy 9y ago
-
placeybordeaux 9y ago
Yeah as a proponent of bitcoin and cryptocurrencies I think it's important to recognize how they first established value. The only people that really had a self interested reason to use cryptocurrencies are people that were poorly served by the current situation. Cryptocurrencies create a minimum coverage of ability to conduct financial operations, they are assets that a third party can not freeze, they are assets that a third party can not invalidate. Of course the first use cases will be illegal ones.
- subroutine 9y ago
  Can you explain something to me- say I wanted to transfer the equvalent of $5 USD to someone using bitcoin. How do I transfer that amount when one coin is worth $5000? If it requires having coin on an exchange is that not a 3rd party? And would it be impossible for them to freeze coins in that wallet?
  - chaosite 9y ago
    So this is Bitcoin 101 and you should really be reading up on it, but basically: Bitcoins can be divided, the smallest fraction is called a "Satoshi" and is a millionith of a Bitcoin (So a cent is 500 Satoshis). The blockchain is a peer-to-peer, which while technically 3rd party, is not something that "you have coin on". The blockchain is basically a cryptographically signed ledger that says a certain public key has this much bitcoins. If you have the matching private key, you have the coins. Exchanges are mostly used to exchange between Bitcoin and some other currency, like US Dollars or another crypto currency.

annabellish 9y ago

Bitcoin does not solve 2, 3, 4, or 5! You have a job, so you get wages. These wages are sent to a bitcoin address. Now your employer can track every transaction you make. There's no reason why this would not also have to be reported for tax reasons, so your government can also track every transaction you make. You buy something, now that company can have a decent chance of tracking your spending too! There are ways around these issues, but nothing _straightforward_ or scalable. Not everyone can or will use a tumbler for all their wages.

marcosdumay 9y ago
It does not solve 1 either. It just changes the action from coercively taking some papers to coercively taking a password/token.

tptacek 9y ago

Civil asset forfeiture isn't necessarily, or even usually, dollar denominated. The same mechanism that allows the police to confiscate the $10,000 you kept in a briefcase in the trunk of your care can be, and more often than not is, used to confiscate the car itself.

dsacco 9y ago
I'd like to see a lawyer chime in on the legality of using civil forfeiture laws to compel someone to give up their private key or password. My intuition is that law enforcement would seize literally everything peripherally related to, or capable of transacting in, Bitcoin.

golangnews 9y ago

civil asset forfeiture, capital controls Bitcoin offers no special protection against this. Your problems would arrive in the real world with guns. See shutdown of exchanges in China. Black market trading If your opsec is perfect, maybe. See Ross Ulbricht. intense privacy invasion by governments Bitcoin keeps a public record of every transaction, forever. That is trivial to tie to your real world activity, in retrospect. It has not been important enough to do yet, but the data is there and data is already collected on other selectors linked to all online activity. widespread privacy loss through corporations (Equifax, Verizon) Bitcoin solves this how? Companies checking credit record will require your real world identity and past records. Why would they want to participate in your crypto-anarchist future? Pseudo-anonymity is not anonymity, and most of the features you have listed as desirable, people simply don’t want, even if bitcoin could deliver them in a meaningful way for non technical people. For better or worse, they are revolutionary ideas which require a change of laws and government, not a change of tech.

AgentME 9y ago
>If your opsec is perfect, maybe. See Ross Ulbricht. The bar is so much lower than many think. Ulbricht posted the first advertisements of Silk Road with accounts publicly linked to his personal email address. >Bitcoin keeps a public record of every transaction, forever. That is trivial to tie to your real world activity, in retrospect. It has not been important enough to do yet, but the data is there and data is already collected on other selectors linked to all online activity. Privacy isn't automatic in bitcoin, but it's easy enough in practice to break the public link in the blockchain. Depositing into an exchange account or other bitcoin service and then withdrawing a few days later is usually enough. If you want privacy from the exchange too, then exchanging bitcoin for a cryptocurrency with anonymity built-in (ie. monero or zcash), and then exchange that back to bitcoin at an exchange that doesn't require user identification. (Alternatively, convince your intended recipients to accept monero/zcash directly and don't even bother with bitcoin.) (It's possible that in the future, the Lightning Network functionality for Bitcoin will add some anonymity as a byproduct to transactions using it.)
- golangnews 9y ago

dsacco 9y ago

> - widespread privacy loss through corporations (Equifax, Verizon) Bitcoin does not offer a compelling solution for privacy concerns. Intrinsically, the blockchain is antithetical to this: it stores a record of every transaction. It was not designed to achieve privacy, full stop (unlike, say, Zcash). Extrinsically, you can use things like tumblers or anonymous wallets, but in practice this relies on trusted third parties (just not orthodox ones) and the reliability of your own personal opsec in the face of centralized parties "bolted on" to the blockchain to hide your activity. Moreover, the easiest way to buy and sell Bitcoin is through companies with extensive KYC requirements, essentially all of whom can and will participate with law enforcement. Finally, there are already companies crawling the blockchain continuously to develop creditworthiness models they can sell to financial institutions. They are extremely good at uniquely fingerprinting wallets, or wallet activity, to social media profiles elsewhere.