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This misses a major benefit of our current system - reversibility. Currently, if someone initiates a fraudulent billion dollar wire transfer from the fed, it w

This misses a major benefit of our current system - reversibility. Currently, if someone initiates a fraudulent billion dollar wire transfer from the fed, it would quickly be reversed. Does anyone thing the Fed or our monetary policy should be entirely subject to the rule of algorithms and undoubtedly flawed security policies and people? Isn't it better that a government agency or a court can reverse the transaction when a Putin lackey transfers $100B? I understand the benefits of irreversibility with bitcoin, however at a certain scale, this benefit becomes a handicap. Legal systems have humans who can correct things when they go terribly wrong. Cryptocurrencies as a whole are vulnerable to the next zero-day exploit, which in this case could destroy the government and all of our hard earned currency. That's not a risk I think any of us could consider rational.

awt 12y ago
Reversibility is all about trusting a third party with your wealth, which has obvious downsides. That said, reversibility will always be there for those who are not prepared to take responsibility for their wealth. Moreover, the scenario you propose is ridiculous. If Bitcoin wins, government will have to change, as it will no longer be able to coerce tax payment. Who would voluntarily give their bitcoins to the government in the first place? What individual or group could be trusted with the private key? I don't know how it would work, but it would have to be different.
- jamesaguilar 12y ago
  Nope. The government derives most of its tax base from various income-based taxes (corporate and personal), or property and use taxes at the state and local level. Only anonymous entities would be able to avoid these, Bitcoin or no. It would be hard to organize significant non-digital economic activity through anonymous entities in the face of government interference, and trivial for a government to mount that interference. Some possible mechanisms include forbidding all brick and mortar + other non-anonymous entities from interacting with anonymous ones, infiltration, etc. TL;DR: Bitcoin does not enable The Diamond Age.
  - f3llowtraveler 12y ago
    > Some possible mechanisms include forbidding all brick and mortar + other non-anonymous entities from interacting with anonymous ones That could never happen in a free country.
    - krrrh 12y ago
      But it already has been the case with many businesses that knowing who your customers are is a legal requirement of carrying out transactions with them. For instance, financial, weapons, pharmaceuticals. Restrictions on trade in these industries have been deemed constitutional by SCOTUS, and there isn't any state that doesn't have some restrictions on anonymous commerce between parties in some cases. The simpler thing that has happened in pretty much every free country already, is that a government gets to determine what currency tax debts are to be paid in. Furthermore, the state has the capacity to determine that a specific currency must be accepted "for all debts public and private". Having a standard unit of account benefits the society just as other standardizations do, by strengthening network effects. In a non-failed state with a relatively stable currency there is just no clear path for a different unit of account to overcome these advantages and gain any significant market share (if you have an example I'd love to hear it). Even without legal frameworks enforcing the old order, backwards-compatible marginal improvements to protocols like IPv6 have had weak adoption, because the simplicity and spread of the established protocol makes it good enough. Government supported currencies are even more entrenched.
      - awt 12y ago
        I suspect taxes (for as long as states provide some value) will always be due in the local inflatable scrip. The same for bond interest payments.
  - awt 12y ago
    More likely is that those with a lot of Bitcoin would exit to more hospitable states like Saverin did. In addition, the tactics you propose are not only draconian, but expensive to enforce on a large population. See the War on Drugs. Also, why would a state give up it's printing press? No clue what the Diamond Age is, but I will check it out.
- crystaln 12y ago
  > Reversibility is all about trusting a third party with your wealth, which has obvious downsides. If you do not have reversibility, you are trusting every automated intermediary, their security practices, reliability of software, hardware, etc. You have completely subjected yourself to human and computer error, and hacks. This is completely untenable. The nature of the legal system keeps the ultimate decisions in human hands, which is a good thing. I'm not saying humans should arbitrarily be able to interfere with arbitrary transactions, but you must have the ability for a human to reverse errant transactions some way or other. Imagine the headline, "Fedcoin bug results in $1 trillion dollar loss to hackers." Whoops.
f3llowtraveler 12y ago
Reversibility itself is the most extreme example of things gone terribly wrong.

awt 12y ago

Reversibility is all about trusting a third party with your wealth, which has obvious downsides. That said, reversibility will always be there for those who are not prepared to take responsibility for their wealth. Moreover, the scenario you propose is ridiculous. If Bitcoin wins, government will have to change, as it will no longer be able to coerce tax payment. Who would voluntarily give their bitcoins to the government in the first place? What individual or group could be trusted with the private key? I don't know how it would work, but it would have to be different.

jamesaguilar 12y ago
Nope. The government derives most of its tax base from various income-based taxes (corporate and personal), or property and use taxes at the state and local level. Only anonymous entities would be able to avoid these, Bitcoin or no. It would be hard to organize significant non-digital economic activity through anonymous entities in the face of government interference, and trivial for a government to mount that interference. Some possible mechanisms include forbidding all brick and mortar + other non-anonymous entities from interacting with anonymous ones, infiltration, etc. TL;DR: Bitcoin does not enable The Diamond Age.
- f3llowtraveler 12y ago
  > Some possible mechanisms include forbidding all brick and mortar + other non-anonymous entities from interacting with anonymous ones That could never happen in a free country.
  - krrrh 12y ago
    But it already has been the case with many businesses that knowing who your customers are is a legal requirement of carrying out transactions with them. For instance, financial, weapons, pharmaceuticals. Restrictions on trade in these industries have been deemed constitutional by SCOTUS, and there isn't any state that doesn't have some restrictions on anonymous commerce between parties in some cases. The simpler thing that has happened in pretty much every free country already, is that a government gets to determine what currency tax debts are to be paid in. Furthermore, the state has the capacity to determine that a specific currency must be accepted "for all debts public and private". Having a standard unit of account benefits the society just as other standardizations do, by strengthening network effects. In a non-failed state with a relatively stable currency there is just no clear path for a different unit of account to overcome these advantages and gain any significant market share (if you have an example I'd love to hear it). Even without legal frameworks enforcing the old order, backwards-compatible marginal improvements to protocols like IPv6 have had weak adoption, because the simplicity and spread of the established protocol makes it good enough. Government supported currencies are even more entrenched.
    - awt 12y ago
      I suspect taxes (for as long as states provide some value) will always be due in the local inflatable scrip. The same for bond interest payments.
- awt 12y ago
  More likely is that those with a lot of Bitcoin would exit to more hospitable states like Saverin did. In addition, the tactics you propose are not only draconian, but expensive to enforce on a large population. See the War on Drugs. Also, why would a state give up it's printing press? No clue what the Diamond Age is, but I will check it out.
crystaln 12y ago
> Reversibility is all about trusting a third party with your wealth, which has obvious downsides. If you do not have reversibility, you are trusting every automated intermediary, their security practices, reliability of software, hardware, etc. You have completely subjected yourself to human and computer error, and hacks. This is completely untenable. The nature of the legal system keeps the ultimate decisions in human hands, which is a good thing. I'm not saying humans should arbitrarily be able to interfere with arbitrary transactions, but you must have the ability for a human to reverse errant transactions some way or other. Imagine the headline, "Fedcoin bug results in $1 trillion dollar loss to hackers." Whoops.

f3llowtraveler 12y ago

Reversibility itself is the most extreme example of things gone terribly wrong.