This is one of the first posts that makes me think twice about being on the bitcoin bandwagon to the extent I've been. The thought of cashing out some bitcoins even crossed my mind. It crossed my mind. That's all I'm saying. I continue to be skeptically optimistic and mindful.

It's destructive to promote an obvious, recurring concept that makes Bitcoin (big B) far more susceptible to collectives that set restraints and often have ulterior motives that employ force. It destroys the fungibility of bitcoins. Destroying (i.e. supplanting) a relatively freely-trading thing with a system that makes those things less free and depletes their intrinsic worth?

No, sir, I don't like it.

It would mean starting fresh. People who care about bitcoin's original intrinsic value would be forced to design a system that's substantially less susceptible to the central hierarchy of a small development crew, "feature" creep, mass pooling, and provider dependency. That would not be an easy task. ...To say the least. If, however, bitcoin ever fell to that point, it would be both a shame and an honorable endeavor.

It is obvious for a government to force merchants to use it's blacklists, just pay to a merchant with tainted coins for what seems like a regular purchase and then see if he is going to report it, use fines and so on if merchant didn't report it. And before you are going to resort to the usual argument that democracy will sort it out, Bitcoin was created in the first place because democracy doesn't work in the matter of regulating financial system, majority of the people can't make an informed decisions about the matter, otherwise we wouldn't have Ben Bernanke printing money or almost legalized theft from Cyprus bank accounts. Bitcoin can bring free market into financial system, in free market smart individuals who get it right take all the benefits even if majority think they are wrong, they will be able to invent useful services and continue their work if there won't be majority of uninformed people standing in their way.

lol, are you being sarcastic? Almost everything in this comment is addressed in his original post. In fact, it's described very explicitly as a voluntary system.

But clearly appeasing the authorities to a reasonable extent can also lead to Bitcoin being more freely traded.  It's pretty hard to freely trade an outlaw currency.  Let's face reality like adults.

Haha, I know where that's from

Not starting fresh at all though.  Cryptocurrency would have already made a big name for itself.  The UTXO set (current spendable coins) can be forked, so use is incentivized, and there's no speculative risk of being "on the wrong chain".  The weaknesses and proper countermeasures would be much clearer.  I'm sure there's more.

Thanks for the thoughtful post.

Edit: Though I hope it wouldn't ever come to having to create a separate underground chain, it's nice to have a contingency plan in mind.

In fairness, this proposal does represent a well thought through attempt at a compromise; if I had significant numbers of coins stolen from me then perhaps I'd want a taint depth equivalent to Elvis' copyright extension (till they caught the thieving bastards!).

But the fungibility issue could have more macroscopic effects: multiple blacklists, each with differing reporting/fee hiking/acceptance across the network, all operating with a single USD price? Sounds unlikely. Not only could it justify more exchange rate volatility in general, it could also cause a more significant differing in the exchange rate in a given currency depending on the way each exchange handles flags.

I find this political view rather naive, as if this good faith act of providing a compromise will count for anything in the eyes of those who don't like Bitcoin. Instead it simply provides a platform and a foothold on which to build. You cite DMCA as a good example, but ignore SOPA 

This isn't really a compromise at all,
- the regulatory side are given a tool for free which may or may not be helpful, depending on the adoption of users (assuming no legislation to make it mandatory).
- the users of bitcoin get a more complicated system where some coins are less than others, in exchange for the hope that governments don't ask for more.

I'd have to respectfully disagree with that reasoning then. If the thought is that appeasing authorities is ever a route one should take just to make bitcoin more traded, it's usually inconsistent with bitcoin. I would rather spread solutions that are less dependent on central authorities and utilize more aspects of information transmission and helping others to make it more traded. It's easy to trade bitcoin already. It will get much easier and secure with more hardware wallets. The most adult way to face this, from my perspective, is to both preserve the intrinsic properties of bitcoin and to support a bitcoin-based economy -- away from the constraints of outside forces. Tainting and limiting at the majority level is one of the greatest threats to an independent bitcoin economy.

It would be like scientists someday discovering a technique to implant gold with molecular signatures or additives and then heads of centralized gold exchanges promoting this "feature", where people give more power to other collectives (e.g. uncontrollable states and others) through gold tainting, merely to be in "compliance," merely so that gold itself can be traded more by the masses. That's somewhat circular reasoning too. That in and of itself would decrease the intrinsic property of gold: a substance essentially not prone to tampering and duplication at its fundamental level. Smelting/mixing pools would form. Then to combat mixers a collective could declare that too much taint in the mix needs to be further regulated, limited, or seized -- effectively fully controlling [people and their trade] completely when it comes to gold. It's just an analogy and it applies to anything.

That betrays the original aspect of bitcoins. If people really cared about fighting crime, they'd stop funding the largest entities' (various governments, shall we say) actions and sub-entities that directly perpetrate mass, global violence and bankroll war contractors and the prison industrial complex via draconian lawmaking. That's why a lot of people were originally choosing to use bitcoins in the first place: to ethically object to violence and promote peaceful trade. Funding "criminals" is a matter of perception that's contingent entirely upon choice and consent. For instance, I would think most people here support ending the drug war. Thus, people who support bitcoin as a mechanism of free trade for those reasons (ending the drug war) are conscientiously acting.

Bitcoin itself must -- ironically, in a sense, to some -- remain free/fungible for any entity that wishes to use and exploit it.

Crime is an artifact of perception; democracy (otherwise known as mob rule) is too. It requires significant proof and authority to even begin to support systems of law, judging, and jury -- which are often wrong or morally wrong -- let alone to allow Bitcoin as a so-called-independent medium to become subject to every whim of authoritative entities.

That's why it's special: ...like gold. ...like the internet. ...like free speech. ...so long as it's freer.


I was hoping someone would.  

OK, time to make a meme pic for good measure:

http://i.qkme.me/3tidx4.jpg


So true! That's a very good point as it wouldn't start fresh per se. There's far more understanding now of why bitcoin is/could be so valuable. There's a great movement behind anything that would preserve it or something better. Thank you.

Well... where to begin. So I've read the whole thing and here is why this is idea is unworkable (I didn't say bad.):

First, I support prevention of the violation of ownership of private property through tracking. Getting your car voluntarily protected by an agency which will monitor it's whereabouts and return it in case it's stolen or just make it so damn hard to steal and get away with it no one would even try? Yeah I'm down with that.

However Mike's idea is unworkable. For two reasons:

1) bitcoins are not unique like a physical car, they are all fungible, numbers in a ledger, you only think you can tell them apart by their trail of transactions but you can't really. It's just way too hard to know whether someone being on a blacklist actually committed that crime and it would simply punish way too many users through false positives and invade their privacy if you wanted to investigate every false positive not to mention this would cost a shit ton of bitcoins

2) it's unworkable for the same reason racism will bankrupt a business. If you are a business and you decide to discriminate against your customers, you'd need a really good monetary incentive to do so, otherwise someone else will open up the same shop and outcompete you simply because they by definition have a broader customer base. It's why banks like HSBC will launder money and it's why Bitcoin transactions can't be blocked. If the current providers of these services start to discriminate someone will open up shop and put them our of their business.


So, yeah. Instead of running after criminals, why don't we instead find ways to prevent crime? Why don't we figure out how to increase security, how to get each person personal protection, how to raise kids into better people etc. IMO that's a much more sensible route to take if one wants to reduce crime.

The solution is to let them try.

...and to fight back with more instruments of decentralization, not less.
...and to most certainly not aid them.


I dare not even get started on this line of anecdotal reasoning (which, by the way, was temporarily halted specifically because people vocally resisted and rightfully shamed supporters). Yikes. Meanwhile, many of those same entities are determined to bring more convincing, slippery-tongued legislation that will eventually pass because the system is inherently dictatorial. Regarding the US, a small group of [535+1+etc] kings/queens -- [Congress + Executives] -- ruling over and deciding everyone's fate and abilities is by no definition a "democracy" either.