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> The original idea of Bitcoin was to have a currency that wasn’t in government control I've never understood this. With an immutable ledger of all transactio

> The original idea of Bitcoin was to have a currency that wasn’t in government control I've never understood this. With an immutable ledger of all transactions, governments simply have to make it illegal to transact anonymously (or pseudonymously), watch the blockchain, and investigate any un-attributed transactions. It would actually enhance governments' surveillance capabilities against anyone not willing to run the risk of trying to obscure their identity, which I expect would be most people. If you can intimidate the participants, the inescapable math of the whole thing becomes a tool that can be used against those participants. You don't need to control a currency if you can control anyone who holds it.

solosoyokaze 6y ago
1. It would be prohibitively expensive for the government to track down every blockchain transaction IRL to find the identity behind the wallet (if even possible). This cost rises with adoption. 2. Different crypto currencies have different roles. If you want to avoid traceability altogether, use zCash.
- 3np 6y ago
  Some countries have explicitly put restrictions on dealing with privacy-preserving currencies like Monero and ZCash. Japanese exchanges and service providers, for example, are not allowed to touch them.
  - solosoyokaze 6y ago
    This is why the DeFi work on Ethereum is exciting, so you can have exchanges and other financial services not tied to restrictive legislation.
- the_local_host 6y ago
  1) Why would it be prohibitively expensive? In the face of severe enough penalties, most people would simply report their transactions as required, and report who they transacted with. The number of transactions that needed to be investigated would be a small percentage of the total, and possibly traceable through means other than cracking keys. 2) Regardless of whatever zCash is, my point is that Bitcoin's immutable and complete ledger lends itself to complete surveillance. The math may be uncrackable, but the users are not, and privacy would go out the window if they're forced to transact with registered IDs.
  - solosoyokaze 6y ago
    > forced to transact with registered IDs. It's prohibitively expensive precisely because being forced to transact with registered IDs is going to be less and less of a requirement moving forward. With DeFi exchanges, we'll see more transactions that stay out of state surveillance. You're correct that BTC isn't ideal for privacy though. That's why zCash and Monero will also be important currencies.
- PragmaticPulp 6y ago
  You don't need to track down every transaction. You just need to flag the fraudulent/stolen/illegal coins on the blockchain and require exchanges to confiscate those coins as they come through the system. Blockchain is a public ledger of every Bitcoin transaction ever. It's trivial to track these things. It's trivial to identify downstream coins from upstream illegal activity. Far easier than with traditional currency. The exchanges will play ball because they want to continue exchanging (making money). The Bitcoin hodlers will play ball because it makes their investment more legitimate and reduces the supply of coins, increasing the value of their stash.
  - solosoyokaze 6y ago
    The exchanges are becoming decentralized. Not just exchanges but other financial services, including the ability to earn interest. There are also other coins that are less traceable than BTC. It's only going to get more difficult for governments to track crypto, not less.
    - PragmaticPulp 6y ago
      If all you care about is crypto and you're happy to use exchanges that don't care about regulations, that works. But if you want to get money back out of the system or spend that money on anything, it has to go through an exchange located in your jurisdiction. Also, watch out for the services that claim to deliver abnormally high interest on crypto investments. There's no free lunch.
3np 6y ago
You're absolutely right - it's a very double-edged sword. Pure on-chain bitcoin in its current form is the perfect tool for totalitarian control - guess why the CCP is hyped about their CBDC? I think that the question of if we end up being caught without an exit or not comes down to if privacy-preserving technology (on-chain like Monero and/or off-chain like Lightning) gets adopted by businesses and individuals enough for it to be too late to pull back once powers that be have the understanding, capabilities and intention to do so.
rokhayakebe 6y ago
governments simply have to make it illegal to transact anonymously Making something illegal does not give a government control over it. Many websites/apps are illegal in many countries. Yet governments have near zero control over their citizens using those products. VPN.
- hammock 6y ago
  What is the VPN for bitcoin?
- PragmaticPulp 6y ago
  VPN hides activity. Bitcoin makes it public record. Regulating Bitcoin transactions is extremely easy due to the public ledger. You simply make it illegal for exchanges to transact with coins that are known to be stolen or otherwise flagged. Then all exchanges are forced to blacklist coins on that list, as well as descendant transactions from those blacklisted coins. Now there are two classes of addresses on the blockchain: Those that are clean, and those that are tainted with illegal activity transactions. The tainted coins are worth less than untainted coins as fewer and fewer exchanges will touch them. Ironically, Bitcoin speculators will support this move because it reduces the supply of Bitcoin. Reducing the supply of Bitcoin increases the relative value of their clean Bitcoin.
  - RhodoGSA 6y ago
    I can exchange my coins on a DEX - No third party required.
    - _jjkk 6y ago
      Whether or not it's a DEX doesn't matter at all. In this hypothetical world of regulation which has made some BTC "tainted" through surveillance, it will always be in the BTC receiver's best interest to verify the coins are "clean". Only a fool (or fellow criminal) would transact with tainted coins; most people would probably not use a DEX, or else use one which verified clean coins anyway without being regulated to do so.
tshaddox 6y ago
Copyright infringement was also always illegal (and still is). That doesn't mean that Napster, BitTorrent, etc. didn't massively increase access to music outside the control of the copyright system.
- bob33212 6y ago
  Perfect analogy. From 1998-2006 it was easier to get pirated music than pay for it. Once the music industry realized that the days of people paying $20 per CD that they may only listen to a few times were over, the streamers took over and now 90+% of music is listened to with permission of the centralized gate keepers. Regulators and other parties will catch up eventually. When there is a 500% tax on homes/cars you purchase with BTC the whole "decentralization/permissionless" idea will fade away.
stale2002 6y ago
> governments simply have to make it illegal to transact anonymously How? Are you suggesting that every single government in the world would collude together to ban crypto? What if, at least one of those probably western, countries chooses to make the simple decision of not being a parody of a distopian government? Then other governments who have chosen to be a storybook parody of distopian would be unable to tell the different between these legally anonymous transactions that are in the normal country that is allowing these transaction, and between illegal transactions that are not in that country. They couldn't simply watch the blockchain, as 1 country is defecting by not acting like an absurd example of a totalitarian government that is in no way similar to how modern day western countries act. > You don't need to control a currency if you can control anyone who holds it. But multiple absurd totalitarian governments that pop up overnight wouldn't be able to control everyone who owns crypto, as there would certain be countries that decide to make the simple decision of not acting like a story book parody of an evil government.
averynicepen 6y ago
For the record, currently recommended best practice is to create a new Bitcoin address for every transaction. Although the ledger is public, using it on a regular basis would mean you have hundreds of addresses per user. For targeted investigations, blockchain crypto is already being a hugely useful tool for 3 letter agencies. But for dragnet policies of mass de-anonymized transactions, I currently can't think of a way for this to actually work with limited resources. Currently, anonymization is being defeated at the source by requiring registration with all major crypto exchanges. But once the coins start to circulate like cash, wallet to wallet, you would need to force registration on the wallets (in order to match identity to the addresses) - but there are many options that are either heavily security focused or free and open-source, so it would be difficult to find a single choke point to regulate. Depends on what the future of crypto wallet adoption looks like, I suppose. Monopolization does tend to happen...

solosoyokaze 6y ago

1. It would be prohibitively expensive for the government to track down every blockchain transaction IRL to find the identity behind the wallet (if even possible). This cost rises with adoption. 2. Different crypto currencies have different roles. If you want to avoid traceability altogether, use zCash.

3np 6y ago
Some countries have explicitly put restrictions on dealing with privacy-preserving currencies like Monero and ZCash. Japanese exchanges and service providers, for example, are not allowed to touch them.
- solosoyokaze 6y ago
  This is why the DeFi work on Ethereum is exciting, so you can have exchanges and other financial services not tied to restrictive legislation.
the_local_host 6y ago
1) Why would it be prohibitively expensive? In the face of severe enough penalties, most people would simply report their transactions as required, and report who they transacted with. The number of transactions that needed to be investigated would be a small percentage of the total, and possibly traceable through means other than cracking keys. 2) Regardless of whatever zCash is, my point is that Bitcoin's immutable and complete ledger lends itself to complete surveillance. The math may be uncrackable, but the users are not, and privacy would go out the window if they're forced to transact with registered IDs.
- solosoyokaze 6y ago
  > forced to transact with registered IDs. It's prohibitively expensive precisely because being forced to transact with registered IDs is going to be less and less of a requirement moving forward. With DeFi exchanges, we'll see more transactions that stay out of state surveillance. You're correct that BTC isn't ideal for privacy though. That's why zCash and Monero will also be important currencies.
PragmaticPulp 6y ago
You don't need to track down every transaction. You just need to flag the fraudulent/stolen/illegal coins on the blockchain and require exchanges to confiscate those coins as they come through the system. Blockchain is a public ledger of every Bitcoin transaction ever. It's trivial to track these things. It's trivial to identify downstream coins from upstream illegal activity. Far easier than with traditional currency. The exchanges will play ball because they want to continue exchanging (making money). The Bitcoin hodlers will play ball because it makes their investment more legitimate and reduces the supply of coins, increasing the value of their stash.
- solosoyokaze 6y ago
  The exchanges are becoming decentralized. Not just exchanges but other financial services, including the ability to earn interest. There are also other coins that are less traceable than BTC. It's only going to get more difficult for governments to track crypto, not less.
  - PragmaticPulp 6y ago
    If all you care about is crypto and you're happy to use exchanges that don't care about regulations, that works. But if you want to get money back out of the system or spend that money on anything, it has to go through an exchange located in your jurisdiction. Also, watch out for the services that claim to deliver abnormally high interest on crypto investments. There's no free lunch.

3np 6y ago

You're absolutely right - it's a very double-edged sword. Pure on-chain bitcoin in its current form is the perfect tool for totalitarian control - guess why the CCP is hyped about their CBDC? I think that the question of if we end up being caught without an exit or not comes down to if privacy-preserving technology (on-chain like Monero and/or off-chain like Lightning) gets adopted by businesses and individuals enough for it to be too late to pull back once powers that be have the understanding, capabilities and intention to do so.

rokhayakebe 6y ago

governments simply have to make it illegal to transact anonymously Making something illegal does not give a government control over it. Many websites/apps are illegal in many countries. Yet governments have near zero control over their citizens using those products. VPN.

hammock 6y ago
What is the VPN for bitcoin?
PragmaticPulp 6y ago
VPN hides activity. Bitcoin makes it public record. Regulating Bitcoin transactions is extremely easy due to the public ledger. You simply make it illegal for exchanges to transact with coins that are known to be stolen or otherwise flagged. Then all exchanges are forced to blacklist coins on that list, as well as descendant transactions from those blacklisted coins. Now there are two classes of addresses on the blockchain: Those that are clean, and those that are tainted with illegal activity transactions. The tainted coins are worth less than untainted coins as fewer and fewer exchanges will touch them. Ironically, Bitcoin speculators will support this move because it reduces the supply of Bitcoin. Reducing the supply of Bitcoin increases the relative value of their clean Bitcoin.
- RhodoGSA 6y ago
  I can exchange my coins on a DEX - No third party required.
  - _jjkk 6y ago
    Whether or not it's a DEX doesn't matter at all. In this hypothetical world of regulation which has made some BTC "tainted" through surveillance, it will always be in the BTC receiver's best interest to verify the coins are "clean". Only a fool (or fellow criminal) would transact with tainted coins; most people would probably not use a DEX, or else use one which verified clean coins anyway without being regulated to do so.

tshaddox 6y ago

Copyright infringement was also always illegal (and still is). That doesn't mean that Napster, BitTorrent, etc. didn't massively increase access to music outside the control of the copyright system.

bob33212 6y ago
Perfect analogy. From 1998-2006 it was easier to get pirated music than pay for it. Once the music industry realized that the days of people paying $20 per CD that they may only listen to a few times were over, the streamers took over and now 90+% of music is listened to with permission of the centralized gate keepers. Regulators and other parties will catch up eventually. When there is a 500% tax on homes/cars you purchase with BTC the whole "decentralization/permissionless" idea will fade away.

stale2002 6y ago

> governments simply have to make it illegal to transact anonymously How? Are you suggesting that every single government in the world would collude together to ban crypto? What if, at least one of those probably western, countries chooses to make the simple decision of not being a parody of a distopian government? Then other governments who have chosen to be a storybook parody of distopian would be unable to tell the different between these legally anonymous transactions that are in the normal country that is allowing these transaction, and between illegal transactions that are not in that country. They couldn't simply watch the blockchain, as 1 country is defecting by not acting like an absurd example of a totalitarian government that is in no way similar to how modern day western countries act. > You don't need to control a currency if you can control anyone who holds it. But multiple absurd totalitarian governments that pop up overnight wouldn't be able to control everyone who owns crypto, as there would certain be countries that decide to make the simple decision of not acting like a story book parody of an evil government.

averynicepen 6y ago

For the record, currently recommended best practice is to create a new Bitcoin address for every transaction. Although the ledger is public, using it on a regular basis would mean you have hundreds of addresses per user. For targeted investigations, blockchain crypto is already being a hugely useful tool for 3 letter agencies. But for dragnet policies of mass de-anonymized transactions, I currently can't think of a way for this to actually work with limited resources. Currently, anonymization is being defeated at the source by requiring registration with all major crypto exchanges. But once the coins start to circulate like cash, wallet to wallet, you would need to force registration on the wallets (in order to match identity to the addresses) - but there are many options that are either heavily security focused or free and open-source, so it would be difficult to find a single choke point to regulate. Depends on what the future of crypto wallet adoption looks like, I suppose. Monopolization does tend to happen...