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I'm unclear on why everyone seems to think that Bitcoin reduces governmental power. It makes all transactions public -- no more cash deals, hard-to-subpoena in

by crygin 13y ago

I'm unclear on why everyone seems to think that Bitcoin reduces governmental power. It makes all transactions public -- no more cash deals, hard-to-subpoena international wire transfers, etc. It makes the job of law enforcement much easier.

avar 13y ago
It doesn't reduce police powers, but in the long term if it pans out it'll reduce the power of fiat currency. That's what people talk about when they say it reduces the power of the government.
- sliverstorm 13y ago
  Sure, but law enforcement isn't concerned with monetary policy and deficit spending.
  - avar 13y ago
    That's why people say it reduces "governmental power", not "law enforcement power". The "government" includes the organization that issues the fiat currency that you use. You could argue that the increase in law enforcement power would offset the decrease in power from not being able to issue fiat currency, but that would mostly be a silly line of argument to pursue.
    - crygin 13y ago
      Not least because governmental power does not derive from the ability to issue fiat currency; it derives from a legal (or socially accepted) monopoly on force. Failure of a sanctioned fiat currency could reduce governmental legitimacy, but law enforcement is the backbone of governmental power.
      - avar 13y ago
        Partly yes, but being able to control the macro economy is arguably a much greater power in a western state than the monopoly on coercive force. Force mostly has to be individually applied, and you can only take it so far before you have massive pushback in the form of civil unrest. Printing money, to pick a simple example, is much more effective and can be done across the economy as a whole. Could you imagine police forces breaking into everyone's home and taking half their cash in a matter of days? It's unthinkable that that would happen for logistical reasons alone. But that's what we've effectively seen some modern western governments do just recently by rapidly deflating their currencies. Abolishing fiat currency would take away that power, and make no mistake it is an immense power. It's the power to shape entire economies at the stroke of a pen.
    - sliverstorm 13y ago
      The original question was: Why would law enforcement be eager to support a technology which...
- PeterisP 13y ago
  Can't NSA datacenters with specialized crypto chips simply get 51% of bitcoin mining power for some time, if they want? Now that would be 'fiat currency'.
  - bigiain 13y ago
    I wonder… I've seen a lot these last few weeks about the volume of Chinese Bitcoin transactions. I wonder if the "hobbyist/geek/hacker/early-adopter" Bitcoin miners will end up attempting to "hold the balance of power" while state-backed Chinese and US crypto-clusters fight each other for 51% of the hashrate? So long as "we" can keep a few percent of the global hashrate out of US/Chinese government control, perhaps they'll both escalate at similar-enough rates that a few thousand USB ASICs and a few tens of thousand gaming-rig GPUs might keep everybodies stach of Bitcoin "safe"?
    - wmf 13y ago
      It seems unlikely that two parties would try to launch 51% attacks at the same time. And if one party started an attack it would probably take someone else at least 30 days to fab enough chips to respond, by which time the attack would be over one way or the other.
  - rictic 13y ago
    They could spend a lot of money and gain the ability to double spend and stall any (or all) transactions, but they couldn't create more coins than allowed or seize assets.
    - sliverstorm 13y ago
      If they control the network, can't they determine the mining difficulty? Difficulty is a single, unified knob that combined with the miners directly controls the rate of BTC generation. Also, if they can freeze (stall) certain wallets indefinitely, that's pretty much as good as asset seizure.
  - tlrobinson 13y ago
    51% attacks don't allow you to mine arbitrary amounts of Bitcoin. At worst they could DoS the Bitcoin network and double-spend their funds, but the recipients (their own citizens? other governments?) would find out and be pissed.
- eof 13y ago
  governments aren't exactly known for their long term outlook
bigiain 13y ago
" It makes the job of law enforcement much easier." It makes the job of law enforcement _different_. Their existing skills/procedures/relationships/precedents for dealing with cash and banking-industry-mediated finances don't work for Bitcoin - presumably that makes it scary for any change-averse members of the LEO community.
neilk 13y ago
Indeed. I think a possible scenario is that governments will legalize Bitcoin as long as you tie your address to your government-issued ID, and you're not on a blacklist. Basically you'll have a Bitcoin license. This gives them an off-switch for The Terrorists. And, side effect, a way to blockade groups they don't like. A registry may happen because businesses have an incentive to have creditworthy customers. Sometimes you want to prove you have collateral, that you have cash flow, that you've paid people in the past. Bitcoin does that nicely.
- SwellJoe 13y ago
  I'm not sure that's feasible. At least, not with the current Bitcoin design. Any individual can have as many wallets as they want, and while specific addresses and wallets are traceable, you don't have to make indentifiable transactions from any given wallet. So, for example, one might have a "public" Bitcoin wallet, and a "private" one. The private one you use in the way someone who works for cash and tips might operate today...they don't tell the government about all of it. So, you've got your public wallet to prove you have money available, for making credit decisions, for deciding whether to sell you a house, etc. And your private wallet because "fuck the police". There's not even a good way to know if a wallet is located in the US or somewhere else. And, if there are people willing to take coins from people's private wallets, there will likely be a solid economy outside the government's control; as there already is; there's a massive barter and cash economy. Bitcoin makes it slightly technically challenging (like, how do you get and spend bitcoins to and from your private wallet if you can't accept your paycheck there and can't order goods shipped to your house with it).
samolang 13y ago
You could carry a billion dollars worth of bitcoins around on a USB drive though. Easier than carrying a billion dollars worth of cash around. Take your wallet offline and you can do physical transactions that have no record. You just need to find a willing party to take the bitcoins offline.

by crygin 13y ago

avar 13y ago

It doesn't reduce police powers, but in the long term if it pans out it'll reduce the power of fiat currency. That's what people talk about when they say it reduces the power of the government.

sliverstorm 13y ago
Sure, but law enforcement isn't concerned with monetary policy and deficit spending.
- avar 13y ago
  That's why people say it reduces "governmental power", not "law enforcement power". The "government" includes the organization that issues the fiat currency that you use. You could argue that the increase in law enforcement power would offset the decrease in power from not being able to issue fiat currency, but that would mostly be a silly line of argument to pursue.
  - crygin 13y ago
    Not least because governmental power does not derive from the ability to issue fiat currency; it derives from a legal (or socially accepted) monopoly on force. Failure of a sanctioned fiat currency could reduce governmental legitimacy, but law enforcement is the backbone of governmental power.
    - avar 13y ago
      Partly yes, but being able to control the macro economy is arguably a much greater power in a western state than the monopoly on coercive force. Force mostly has to be individually applied, and you can only take it so far before you have massive pushback in the form of civil unrest. Printing money, to pick a simple example, is much more effective and can be done across the economy as a whole. Could you imagine police forces breaking into everyone's home and taking half their cash in a matter of days? It's unthinkable that that would happen for logistical reasons alone. But that's what we've effectively seen some modern western governments do just recently by rapidly deflating their currencies. Abolishing fiat currency would take away that power, and make no mistake it is an immense power. It's the power to shape entire economies at the stroke of a pen.
  - sliverstorm 13y ago
    The original question was: Why would law enforcement be eager to support a technology which...
PeterisP 13y ago
Can't NSA datacenters with specialized crypto chips simply get 51% of bitcoin mining power for some time, if they want? Now that would be 'fiat currency'.
- bigiain 13y ago
  I wonder… I've seen a lot these last few weeks about the volume of Chinese Bitcoin transactions. I wonder if the "hobbyist/geek/hacker/early-adopter" Bitcoin miners will end up attempting to "hold the balance of power" while state-backed Chinese and US crypto-clusters fight each other for 51% of the hashrate? So long as "we" can keep a few percent of the global hashrate out of US/Chinese government control, perhaps they'll both escalate at similar-enough rates that a few thousand USB ASICs and a few tens of thousand gaming-rig GPUs might keep everybodies stach of Bitcoin "safe"?
  - wmf 13y ago
    It seems unlikely that two parties would try to launch 51% attacks at the same time. And if one party started an attack it would probably take someone else at least 30 days to fab enough chips to respond, by which time the attack would be over one way or the other.
- rictic 13y ago
  They could spend a lot of money and gain the ability to double spend and stall any (or all) transactions, but they couldn't create more coins than allowed or seize assets.
  - sliverstorm 13y ago
    If they control the network, can't they determine the mining difficulty? Difficulty is a single, unified knob that combined with the miners directly controls the rate of BTC generation. Also, if they can freeze (stall) certain wallets indefinitely, that's pretty much as good as asset seizure.
- tlrobinson 13y ago
  51% attacks don't allow you to mine arbitrary amounts of Bitcoin. At worst they could DoS the Bitcoin network and double-spend their funds, but the recipients (their own citizens? other governments?) would find out and be pissed.
eof 13y ago
governments aren't exactly known for their long term outlook

bigiain 13y ago

" It makes the job of law enforcement much easier." It makes the job of law enforcement _different_. Their existing skills/procedures/relationships/precedents for dealing with cash and banking-industry-mediated finances don't work for Bitcoin - presumably that makes it scary for any change-averse members of the LEO community.

neilk 13y ago

Indeed. I think a possible scenario is that governments will legalize Bitcoin as long as you tie your address to your government-issued ID, and you're not on a blacklist. Basically you'll have a Bitcoin license. This gives them an off-switch for The Terrorists. And, side effect, a way to blockade groups they don't like. A registry may happen because businesses have an incentive to have creditworthy customers. Sometimes you want to prove you have collateral, that you have cash flow, that you've paid people in the past. Bitcoin does that nicely.

SwellJoe 13y ago
I'm not sure that's feasible. At least, not with the current Bitcoin design. Any individual can have as many wallets as they want, and while specific addresses and wallets are traceable, you don't have to make indentifiable transactions from any given wallet. So, for example, one might have a "public" Bitcoin wallet, and a "private" one. The private one you use in the way someone who works for cash and tips might operate today...they don't tell the government about all of it. So, you've got your public wallet to prove you have money available, for making credit decisions, for deciding whether to sell you a house, etc. And your private wallet because "fuck the police". There's not even a good way to know if a wallet is located in the US or somewhere else. And, if there are people willing to take coins from people's private wallets, there will likely be a solid economy outside the government's control; as there already is; there's a massive barter and cash economy. Bitcoin makes it slightly technically challenging (like, how do you get and spend bitcoins to and from your private wallet if you can't accept your paycheck there and can't order goods shipped to your house with it).

samolang 13y ago

You could carry a billion dollars worth of bitcoins around on a USB drive though. Easier than carrying a billion dollars worth of cash around. Take your wallet offline and you can do physical transactions that have no record. You just need to find a willing party to take the bitcoins offline.