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With South Korea trying to regulate anonymous trading on Korean exchanges, makes me wonder how long we have before regulations become more widespread. And if th

With South Korea trying to regulate anonymous trading on Korean exchanges, makes me wonder how long we have before regulations become more widespread. And if this happens do you think privacy coins even stand a chance?

freeone3000 9y ago
Well, the problem with regulating anonymous transactions is you don't know who's doing them.
- madeofpalk 9y ago
  You don't have to regulate the transactions, you just have to regulate the usage of them.
- cookiecaper 9y ago
  With Bitcoin that problem may be somewhat short lived. The blockchain is forever. Once unmasked, your permanent, irrevocable, and cryptographically-verified transaction log is sitting in the open for all the world to analyze. Doesn't matter how many years it's been since you've done business. Doesn't matter if you knew that the random dude you bought an antique thimble from was a political dissident or not. You still sent money to that btc address, that address owned by a terrorist, and now they're gonna wanna know why you were funding terrorism...
- JumpCrisscross 9y ago
  > the problem with regulating anonymous transactions is you don't know who's doing them Every government has departments of agents adept at tracing cash transactions. Bitcoin offers the advantage of total transactional transparency. Shady wallet? Trace back until you find a known wallet. An exchange, vendor, et cetera. Subpoena, find their counterparty, rinse and repeat. Best case: you find your guy. Consolation: money laundering charges against the schmuck who didn't keep books and records. Arrest someone who conducted a fraud, Ponzi scheme, ransomware scam or terrorist financing? If they did it with cash, the money is gone. If they did it with Bitoin, you have the option of tracing forward and seizing the funds the moment they hit a known wallet.
  - smallnamespace 9y ago
    Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society. By that same argument, the US could round up every illegal immigrant and deport them, or every casual drug user and lock them up for life. We don't do that because it'd be ruinously expensive (not to mention immoral) and transform us into a police state. The combination of privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals short of extremely draconian measures, and changes the strategic calculus for the society as a whole.
    - JumpCrisscross 9y ago
      > the point is whether the increasing marginal costs of enforcement are worth it to the government and society The same applies to cash. Investigating them is expensive. We don't bust the kid who fails to report the proceeds from their lemonade stand because (a) it's too small and (b) it's too mean. > privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals Analogs for each of these exist for cash. None of this is new, it's just shinier. (In any case, now you're talking about willful money laundering.)
      - smallnamespace 9y ago
        > None of this is new, it's just shinier Yes, but again, costs matter (this time on the other side). Money laundering with physical cash is expensive, risky, and time consuming. You need to first get a bunch of physical cash, which itself raises suspicion and is easily tracked. Then you need to find someone in the physical world that you trust to help launder for you. If you reduce the cost of 'money laundering' by 2-3 orders of magnitude, it indirectly raises the cost of enforcement significantly, because then the government will have to sort out all the 'harmless' infringement from the serious crimes that it cares about today.
    - rblatz 9y ago
      I'm shocked at how often tumblers come up on this site. It seems very clear to me that using a tumbler is straight up money laundering.
- wmf 9y ago
  That's not a problem at all; just ban them. For example, I would predict that Coinbase and Gemini will never support Monero or ZCash.
  - adventured 9y ago
    That's exactly what the authorities will do. In fact it'll be extraordinarily trivial for the G30 to regulate Monero et al. out of common use in larger markets if they want to. If you want to use it, you'll be a financial criminal, 99.9% of people in the G30 will avoid it accordingly.
    - koheripbal 9y ago
      It's not so simple. You only need one exchange, anywhere in the world, that will exchange Monero for non-banned cryptos, and the market will flow freely.
      - tempestn 9y ago
        Except that any exchange trafficking in an illegal coin could be banned as well, and so your transactions with that exchange in other coins (in order to convert to or from Monero) would be traceable and illegal.
        giblaz 9y ago
        What about coins forked from Monero? What about other privacy coins? Are certain cryptographic algorithms going to be banned when used in a cryptocurrency? These are all loopholes they'd have to tie up if they want to go down that rabbit hole. It will cost them millions of dollars and man hours to stop it. You're baiting the government to play a neverending and increasingly complex game of whack of a mole. It seems like a beyond awful use of tax dollars to me. We cannot let our government get sucked down the black hole of trying to regulate the unregulatable. They need to come up with solutions to co-exist with it, not outright ban it. That will be a disaster in the making on par with the war on drugs.
      - 9y ago
- BatFastard 9y ago
  Very few cryptocurrencies are anonymous, Bitcoin is NOT. OMG do people really think this still? Now there are anonymous currencies like Monero.
qwerty456127 9y ago
Not only they will stand a chance, they will grow substantially as the only way to mitigate the governments efforts to enforce surveillance and regulations. Darknet exchanges will emerge if not there yet. People have been dreaming of real electronic cash nobody can know you have or give to somebody for so long and wont give up easily. By the way this can even happen to be the way to the new kind of economy that relies on reputation and competition rather than surveillance and prohibition.
- Larrikin 9y ago
  How does money get in or out of such a system. If you're cut off from all sources of fiat what's the point?
  - qwerty456127 9y ago
    It can grow value of its own as the ecosystem grows and a black market can emerge for the needs of conversion.
  - lelandbatey 9y ago
    The point is that people can still use it for things, and the various dark net markets that exist prove that there's at least some kind of use for unofficial (pseudo?)-anonymous currency. Though, by no means are darknets the only way of getting some use out of unofficial currencies. There will always be desire and utility for such systems.
    - vkou 9y ago
      Those darknet markets are only used to buy illegal things, or circumvent currency controls. I understand using a darknet to buy heroin and assassinations, but why on earth would I want to use a darknet market to buy a car? To pay my rent?
      - nol13 9y ago
        So all the spammers/scammers can't see what car you just bought and how much you paid for it and use it for spear phishing?
QML 9y ago
The real threat to privacy focused coins isn’t government — its competition from within the blockchain space. If the lightning network works, it would effectively hide transaction history and activity similar to how TOR works.

freeone3000 9y ago

Well, the problem with regulating anonymous transactions is you don't know who's doing them.

madeofpalk 9y ago
You don't have to regulate the transactions, you just have to regulate the usage of them.
cookiecaper 9y ago
With Bitcoin that problem may be somewhat short lived. The blockchain is forever. Once unmasked, your permanent, irrevocable, and cryptographically-verified transaction log is sitting in the open for all the world to analyze. Doesn't matter how many years it's been since you've done business. Doesn't matter if you knew that the random dude you bought an antique thimble from was a political dissident or not. You still sent money to that btc address, that address owned by a terrorist, and now they're gonna wanna know why you were funding terrorism...
JumpCrisscross 9y ago
> the problem with regulating anonymous transactions is you don't know who's doing them Every government has departments of agents adept at tracing cash transactions. Bitcoin offers the advantage of total transactional transparency. Shady wallet? Trace back until you find a known wallet. An exchange, vendor, et cetera. Subpoena, find their counterparty, rinse and repeat. Best case: you find your guy. Consolation: money laundering charges against the schmuck who didn't keep books and records. Arrest someone who conducted a fraud, Ponzi scheme, ransomware scam or terrorist financing? If they did it with cash, the money is gone. If they did it with Bitoin, you have the option of tracing forward and seizing the funds the moment they hit a known wallet.
- smallnamespace 9y ago
  Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society. By that same argument, the US could round up every illegal immigrant and deport them, or every casual drug user and lock them up for life. We don't do that because it'd be ruinously expensive (not to mention immoral) and transform us into a police state. The combination of privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals short of extremely draconian measures, and changes the strategic calculus for the society as a whole.
  - JumpCrisscross 9y ago
    > the point is whether the increasing marginal costs of enforcement are worth it to the government and society The same applies to cash. Investigating them is expensive. We don't bust the kid who fails to report the proceeds from their lemonade stand because (a) it's too small and (b) it's too mean. > privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals Analogs for each of these exist for cash. None of this is new, it's just shinier. (In any case, now you're talking about willful money laundering.)
    - smallnamespace 9y ago
      > None of this is new, it's just shinier Yes, but again, costs matter (this time on the other side). Money laundering with physical cash is expensive, risky, and time consuming. You need to first get a bunch of physical cash, which itself raises suspicion and is easily tracked. Then you need to find someone in the physical world that you trust to help launder for you. If you reduce the cost of 'money laundering' by 2-3 orders of magnitude, it indirectly raises the cost of enforcement significantly, because then the government will have to sort out all the 'harmless' infringement from the serious crimes that it cares about today.
  - rblatz 9y ago
    I'm shocked at how often tumblers come up on this site. It seems very clear to me that using a tumbler is straight up money laundering.
wmf 9y ago
That's not a problem at all; just ban them. For example, I would predict that Coinbase and Gemini will never support Monero or ZCash.
- adventured 9y ago
  That's exactly what the authorities will do. In fact it'll be extraordinarily trivial for the G30 to regulate Monero et al. out of common use in larger markets if they want to. If you want to use it, you'll be a financial criminal, 99.9% of people in the G30 will avoid it accordingly.
  - koheripbal 9y ago
    It's not so simple. You only need one exchange, anywhere in the world, that will exchange Monero for non-banned cryptos, and the market will flow freely.
    - tempestn 9y ago
      Except that any exchange trafficking in an illegal coin could be banned as well, and so your transactions with that exchange in other coins (in order to convert to or from Monero) would be traceable and illegal.
      - giblaz 9y ago
        What about coins forked from Monero? What about other privacy coins? Are certain cryptographic algorithms going to be banned when used in a cryptocurrency? These are all loopholes they'd have to tie up if they want to go down that rabbit hole. It will cost them millions of dollars and man hours to stop it. You're baiting the government to play a neverending and increasingly complex game of whack of a mole. It seems like a beyond awful use of tax dollars to me. We cannot let our government get sucked down the black hole of trying to regulate the unregulatable. They need to come up with solutions to co-exist with it, not outright ban it. That will be a disaster in the making on par with the war on drugs.
    - 9y ago
BatFastard 9y ago
Very few cryptocurrencies are anonymous, Bitcoin is NOT. OMG do people really think this still? Now there are anonymous currencies like Monero.

qwerty456127 9y ago

Not only they will stand a chance, they will grow substantially as the only way to mitigate the governments efforts to enforce surveillance and regulations. Darknet exchanges will emerge if not there yet. People have been dreaming of real electronic cash nobody can know you have or give to somebody for so long and wont give up easily. By the way this can even happen to be the way to the new kind of economy that relies on reputation and competition rather than surveillance and prohibition.

Larrikin 9y ago
How does money get in or out of such a system. If you're cut off from all sources of fiat what's the point?
- qwerty456127 9y ago
  It can grow value of its own as the ecosystem grows and a black market can emerge for the needs of conversion.
- lelandbatey 9y ago
  The point is that people can still use it for things, and the various dark net markets that exist prove that there's at least some kind of use for unofficial (pseudo?)-anonymous currency. Though, by no means are darknets the only way of getting some use out of unofficial currencies. There will always be desire and utility for such systems.
  - vkou 9y ago
    Those darknet markets are only used to buy illegal things, or circumvent currency controls. I understand using a darknet to buy heroin and assassinations, but why on earth would I want to use a darknet market to buy a car? To pay my rent?
    - nol13 9y ago
      So all the spammers/scammers can't see what car you just bought and how much you paid for it and use it for spear phishing?

QML 9y ago

The real threat to privacy focused coins isn’t government — its competition from within the blockchain space. If the lightning network works, it would effectively hide transaction history and activity similar to how TOR works.