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This is why we need trustless exchanges: http://www.reddit.com/r/Bitcoin/comments/1zgbza/i_am_building_a_free_and_fair_trustless_exchange/ http://www.reddit.co

by maaku 13y ago

This is why we need trustless exchanges: http://www.reddit.com/r/Bitcoin/comments/1zgbza/i_am_building_a_free_and_fair_trustless_exchange/ http://www.reddit.com/r/Bitcoin/comments/1zgbza/i_am_buildin...

unclebucknasty 13y ago
How is this insulated against the future regulatory environment? For instance, the Feds have already come down on the KYC side of things. A trustless exchange is immune to such regulation. So, why wouldn't they outlaw participation in or operation of (as a gateway or other node) same? These are earnest questions, not statements.
- dmix 13y ago
  It changes the dynamic of the regulatory environment from enforcing a few mega-exchanges organizations to having to enforce (possibly hundreds of) thousands of vendors selling BTC for currency and consumers buying it. It would be as difficult as enforcing drug dealing and we've seen how effective that has been.
- maaku 13y ago
  The exchange itself would be impossible to shutdown or regulate. However regulatory agencies would be able to apply pressure at the gateway interface with the real world: the banks which accept USD wire transfers and issue "USDcoin" crypto tokens, as well as perform the reverse redemption. It is entirely possible and I would argue acceptable that regulatory authorities require KYC compliance for these gateway entities, but that only affects people moving national currency in and out of the system. It's entirely possible that people will trade and do business in USDcoin without cashing out directly through the regulated banking gateway. This is a reality that regulators will have to get used to.
  - unclebucknasty 13y ago
    >It's entirely possible that people will trade and do business in USDcoin...This is a reality that regulators will have to get used to. I'm not sure about this one. Regulators have a tendency to "motivate" others to "get used to" things, not the other way around. With E-gold years ago, the proprietors were criminally indicted for activity that took place on their network. With your architecture, if the Feds deemed that their was laundering taking place or the exchange was otherwise being used to facilitate illicit activity, then I can easily envision them expanding the "responsible parties" definition beyond gateway operators to any node in the exchange. This, of course, would mean that anyone participating would be liable for activity that routed through them, thereby having a chilling effect on participating peers. So, if their goal is to shut down the exchange, they can effectively do so via this implicit threat of criminal prosecution. If any of this sounds far-fetched, you really have to review the E-gold case [0] to see just how much the regulatory regime will contort itself to keep financial transactions under its constant watch. [0] http://en.wikipedia.org/wiki/E-gold#Criminal_prosecution http://en.wikipedia.org/wiki/E-gold#Criminal_prosecution

by maaku 13y ago

unclebucknasty 13y ago

How is this insulated against the future regulatory environment? For instance, the Feds have already come down on the KYC side of things. A trustless exchange is immune to such regulation. So, why wouldn't they outlaw participation in or operation of (as a gateway or other node) same? These are earnest questions, not statements.

dmix 13y ago
It changes the dynamic of the regulatory environment from enforcing a few mega-exchanges organizations to having to enforce (possibly hundreds of) thousands of vendors selling BTC for currency and consumers buying it. It would be as difficult as enforcing drug dealing and we've seen how effective that has been.
maaku 13y ago
The exchange itself would be impossible to shutdown or regulate. However regulatory agencies would be able to apply pressure at the gateway interface with the real world: the banks which accept USD wire transfers and issue "USDcoin" crypto tokens, as well as perform the reverse redemption. It is entirely possible and I would argue acceptable that regulatory authorities require KYC compliance for these gateway entities, but that only affects people moving national currency in and out of the system. It's entirely possible that people will trade and do business in USDcoin without cashing out directly through the regulated banking gateway. This is a reality that regulators will have to get used to.
- unclebucknasty 13y ago
  >It's entirely possible that people will trade and do business in USDcoin...This is a reality that regulators will have to get used to. I'm not sure about this one. Regulators have a tendency to "motivate" others to "get used to" things, not the other way around. With E-gold years ago, the proprietors were criminally indicted for activity that took place on their network. With your architecture, if the Feds deemed that their was laundering taking place or the exchange was otherwise being used to facilitate illicit activity, then I can easily envision them expanding the "responsible parties" definition beyond gateway operators to any node in the exchange. This, of course, would mean that anyone participating would be liable for activity that routed through them, thereby having a chilling effect on participating peers. So, if their goal is to shut down the exchange, they can effectively do so via this implicit threat of criminal prosecution. If any of this sounds far-fetched, you really have to review the E-gold case [0] to see just how much the regulatory regime will contort itself to keep financial transactions under its constant watch. [0] http://en.wikipedia.org/wiki/E-gold#Criminal_prosecution http://en.wikipedia.org/wiki/E-gold#Criminal_prosecution