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I'm not that familiar with this code, but if only specific wallet addresses and websites can be blocked, is there anything that stops people from just repeatedl

I'm not that familiar with this code, but if only specific wallet addresses and websites can be blocked, is there anything that stops people from just repeatedly cloning the service altogether and playing whack-a-mole with the government?

notch656a 4y ago
That's the same argument I've presented below. The best response I've gotten so far is that there is basically 'precedent' for dealing with that of sanctioning the offender. Precedent is a nearly 3 year lag time... although I'm sure it won't take that long the next time
acdha 4y ago
I think it's important to remember that the government agencies ignored cryptocurrency for a while because it wasn't being used enough to be worth dedicating resources to it. That changed at some point, with different thresholds for different agencies, but now they're aware of the activity and there are services like Chainalysis which make it easy for them to contract for monitoring as a service. I would bet that the time to respond is going to get increasingly fast since there's been a push for ransomware which picked up after that Colonial Pipeline attack and really picked up with the news that North Korea was laundering significant sums. There are two things which I think will change that game substantially: 1. As this is taken more seriously, companies trying to stay in compliance with the law are going to be enforcing KYC strictly. That's going to make it harder to use things like tumblers because not only will you be paying more to use the service but you'll also be getting tainted tokens which an increasing fraction of businesses either won't accept at all or will accept at a discount rate to compensate for the decreased utility. I think that ratchet effect is going to really limit future services like Tornado Cash: when there's a non-trivial risk involved for using it fewer people will participate and those who do will expect to be paid more. 2. These services depend on liquidity because anonymity is a function of how many people are running money through it. The Treasury department doesn't really care if you and and a few curious friends set up a proof-of-concept instance because unless you can also pump the equivalent of millions of dollars into the system it won't be used by the people they're concerned about (ransomware gangs, North Korea, etc.) since it would take millennia to launder money at their scale. This is similar to how the goal for counterfeiting paper money isn't set to “impossible” but rather accepted at a low frictional level as long as it's too risky for anyone to attempt a sufficiently large-scale counterfeiting operation which could actually impact the overall economy.

notch656a 4y ago

That's the same argument I've presented below. The best response I've gotten so far is that there is basically 'precedent' for dealing with that of sanctioning the offender. Precedent is a nearly 3 year lag time... although I'm sure it won't take that long the next time

acdha 4y ago

I think it's important to remember that the government agencies ignored cryptocurrency for a while because it wasn't being used enough to be worth dedicating resources to it. That changed at some point, with different thresholds for different agencies, but now they're aware of the activity and there are services like Chainalysis which make it easy for them to contract for monitoring as a service. I would bet that the time to respond is going to get increasingly fast since there's been a push for ransomware which picked up after that Colonial Pipeline attack and really picked up with the news that North Korea was laundering significant sums. There are two things which I think will change that game substantially: 1. As this is taken more seriously, companies trying to stay in compliance with the law are going to be enforcing KYC strictly. That's going to make it harder to use things like tumblers because not only will you be paying more to use the service but you'll also be getting tainted tokens which an increasing fraction of businesses either won't accept at all or will accept at a discount rate to compensate for the decreased utility. I think that ratchet effect is going to really limit future services like Tornado Cash: when there's a non-trivial risk involved for using it fewer people will participate and those who do will expect to be paid more. 2. These services depend on liquidity because anonymity is a function of how many people are running money through it. The Treasury department doesn't really care if you and and a few curious friends set up a proof-of-concept instance because unless you can also pump the equivalent of millions of dollars into the system it won't be used by the people they're concerned about (ransomware gangs, North Korea, etc.) since it would take millennia to launder money at their scale. This is similar to how the goal for counterfeiting paper money isn't set to “impossible” but rather accepted at a low frictional level as long as it's too risky for anyone to attempt a sufficiently large-scale counterfeiting operation which could actually impact the overall economy.