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Bitcoin Is an Existential Threat to the Modern Liberal State

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Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#91

Post by guard-of-terra »

coldtea wrote: post #55
guard-of-terra wrote: post #19

Earlier quoted context omitted.

If this person is a minister of interior affairs then yes, we should just turn them all off. And HSBC is something like that. It's exactly the bank that "we all the citizens" should trust in order to not be "anti-democratic" as another article put it. And you know what, we're not going to trust HSBC or any other bank, no more.

You sound surprised. But why? To trust a bank with your money, under certain conditions, I understand. But who in his right mind trusts a bank as a "moral entity"? Banks/bankers are the scum of the earth. To quote Brecht: "What's breaking into a bank compared to founding one?"

Well, there was an article which states we should just trust in banks and back them up with our promises. Because that's what democratic is.

http://blogs.reuters.com/felix-salmon/2013/04/03/why-bitcoin...

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#92

Post by skore »

eurleif wrote: post #89
skore wrote: post #88

Earlier quoted context omitted.

> just ask anyone sitting on the large piles of stolen bitcoins that have yet to be retransfered. Wow, I never thought about that. Very interesting! Does anybody have more insight into this?

I wonder to what extent it may contribute to BitCoin's deflation: drug dealers make money on Silk Road, can't readily transfer it out of BitCoins, and probably think there's a good chance BitCoins will continue to become more valuable anyway, so they leave the money sitting in BitCoins.

The other datapoint may be dead wallets. I think it's very likely there are a good number of wallets from the early days of bitcoin where mining was still possible with normal hardware. A lot of people probably tried bitcoin out, mined a couple (which would now be worth hundreds of dollars) and then lost their wallet because there was nothing you could really do with them.

Makes me wonder whether we will ever see the day when people will try to fake ownership of dead wallets. It should be possible to figure out which wallets are dead. Not sure whether it's possible or feasible to fake ownership, though.

Then again, if it IS possible and if the people who predict four digit dollar values for a single BTC end up being right, the incentive would surely be there.

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#93

Post by JulianMorrison »

Macroeconomics is the part of this that isn't FUD. The BTC money supply will remain slightly deflationary regardless of what's in your national best interests. It's not unlike being in the Euro, except that we have pitiless automation playing the part of Germany. You might want to devalue, or print money to cover your pension obligations or restart a stagflation death-spiral, but BTC does not offer you any means to do this.

The old way of maintaining control local macroeconomics was to demand that "you may use whatever variety of wooden doubloons you please, but you pay your taxes in USD". For simplicity, people use USD for everything. However if the economy starts to run on BTC, this rule's traction fails, USD becomes funny-money you buy at the government's gate, and its inflation saps the government rather than the taxpayer.

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#94

Post by coldtea »

jlgreco wrote: post #53
coldtea wrote: post #51

Earlier quoted context omitted.

The same thing that happens if you deposit them in his bank account?

Genuine question, what happens then? And would the IRS necessarily see these regular deposits as inherently dirty, or merely unknown? If I were to make structured payments over a long period of time, low enough that they were unnoticed each time, how much pleading of ignorance would it take before the IRS decided that the person really did not intend for that to happen? And could not someone disposit dirty money into…

>And would the IRS necessarily see these regular deposits as inherently dirty, or merely unknown?

Well, the logical thing is that would be perceive those as potentially dirty and have an inquiry. They might act legally as thinking they are "merely unknown", but they would be suspect of them nonetheless.

>If I were to make structured payments over a long period of time, low enough that they were unnoticed each time, how much pleading of ignorance would it take before the IRS decided that the person really did not intend for that to happen?

Well, if that was the case, why didn't the person protest the sudden influx of money over that "long period of time"?

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#95

Post by davidjohnstone »

skore wrote: post #92
eurleif wrote: post #89

Earlier quoted context omitted.

I wonder to what extent it may contribute to BitCoin's deflation: drug dealers make money on Silk Road, can't readily transfer it out of BitCoins, and probably think there's a good chance BitCoins will continue to become more valuable anyway, so they leave the money sitting in BitCoins.

The other datapoint may be dead wallets. I think it's very likely there are a good number of wallets from the early days of bitcoin where mining was still possible with normal hardware. A lot of people probably tried bitcoin out, mined a couple (which would now be worth hundreds of dollars) and then lost their wallet because there was nothing you could really do with them. Makes me wonder whether we will ever see the…

There are a lot of dead Bitcoins around. This thread [1] documents about 70,000 lost Bitcoins, and you can be sure there's a lot more.

The other way to lose Bitcoins, apart from losing a wallet or forgetting its password, is to make a transaction to a bad address (as in, a valid-according-to-the-protocol address that isn't anybodies).

If I understand how it works correctly, you wouldn't fake ownership of a wallet per se; you would need to come up with private keys to match the public keys of the transactions that belong to that wallet, which I believe is equivalent to breaking SHA256. That would be unexpected. Also, there's no way to tell if a wallet is dead or just not in use (that is, all you can know is that there are transactions that have not been spent yet, and if the same address is used to receive multiple transactions you have additional information that indicates the wallet is not in use… but it can never indicate that it's dead).

If you managed to claim ownership of a dead wallet, there's nothing at all stopping you from claiming ownership of an in-use wallet too. But SHA256 is looking pretty secure right now.

As for the way Bitcoins will inevitably be lost over time, it's generally considered in the Bitcoin community [2][3] that there's nothing to worry about (it will just add a bit more deflationary pressure). I don't like this aspect of the currency — money disappearing into the void with no hope to correct for mistakes might make it perfect for computers, but it's not so good for humans.

As for tracking stolen Bitcoins, if the transaction hashes of the thefts were made public, an exchange should be able to tell if the Bitcoins that somebody is trying to turn into real money were once stolen. This is because the blockchain contains the entire history of Bitcoins — the way Bitcoins are spent is by taking the Bitcoins from a previous transaction and making a new transaction based on them; all this information is stored in the blockchain[4]. Some work has been done[5][6] at looking at what can be discovered by looking at the blockchain — it's not nearly as anonymous as many think it is.

1. https://bitcointalk.org/index.php?topic=7253.0

2. https://en.bitcoin.it/wiki/Myths#Lost_coins_can.27t_be_repla...

3. https://bitcointalk.org/index.php?topic=109117.0

4. https://en.bitcoin.it/wiki/Transactions

5. http://arxiv.org/pdf/1107.4524.pdf

6. http://eprint.iacr.org/2012/584.pdf

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#96

Post by gojomo »

BrokenPipe wrote: post #84
gojomo wrote: post #25

FTA: Taxation: How do governments collect taxes on transactions in Bitcoin? The answer is they don't, and they can't. Though many Bitcoin fans don't quite realize it, Bitcoin's radical transparency could in fact be a tax-collector's wet dream. Every public-key, balance, and transaction is public. A government that wants to coopt and efficiently tax Bitcoin could announce the following policy, based on the idea of 'ta…

public keys are only available after you make a transaction and usually the bitcoin clients create a new address for each new transaction such that the public key for the account which actually holds the coins is never revealed.

The constant generation of new balnace-holding addresses on demand, that are not typically shown to the user unless they dig, is an arbitrary choice of the Bitcoin-QT software, not a requirement of the protocol. In the protocol/blockchain, you can see every public key that has ever received any balance. You can have all your 'change' returned to a small set of pregenerated/registered addresses.

So the government just says, "Here, use one of these 12 wallet programs, they are certified as automatically compliant by the IRS. Using other software makes compliance your own headache."

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#97

Post by SkyMarshal »

JumpCrisscross wrote: post #43
gojomo wrote: post #25

FTA: Taxation: How do governments collect taxes on transactions in Bitcoin? The answer is they don't, and they can't. Though many Bitcoin fans don't quite realize it, Bitcoin's radical transparency could in fact be a tax-collector's wet dream. Every public-key, balance, and transaction is public. A government that wants to coopt and efficiently tax Bitcoin could announce the following policy, based on the idea of 'ta…

Bitcoin is not, practically speaking, going to replace the dollar or euro. This ambition projected onto it by anarchist promoters and alarmist detractors does not have a practical base. Instead, it is competing to be the floating alternative currency of choice. The question of a state taxing on the basis of Bitcoin is thus mis-placed. The best case for Bitcoin would be inheriting the transactional characteristics of…

>The best case for Bitcoin would be inheriting the transactional characteristics of cash, i.e. facilitating transactions that one wishes to keep anonymous (or at least pseudonymous), and asset characteristics of gold

It definitely already has the first, but whether its volatility reduces to a level comparable with national currencies remains to be seen.

Even if it never achieves relative price stability, it could still make a good global money transmission system. People will continue to save in national currencies, and just convert to BTC to send money overseas, or use buy other currencies with lower fees, or buy stuff from global BTC merchant sites.

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#98

Post by sliverstorm »

tantalor wrote: post #81
sliverstorm wrote: post #78

Earlier quoted context omitted.

You're getting way off track here. The assertion was that the government is afraid that it can't stop you from spending bitcoins, the implication being that it can with cash. Bitcoin vs. USD doesn't solve your ability to purchase weaponized measles.

Generally I agree with you, but in some cases a government does interfere to limit, inhibit, discourage, or prevent purchasing to varying degrees. They make it very hard. Controlled substances for example. They can even do it automatedly, such as freezing the ability to withdraw or deposit funds electronically.

Even in those cases, they don't control your dollars, they control the companies that you have asked to hold your money.

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#99

Post by coldtea »

sliverstorm wrote: post #98
tantalor wrote: post #81

Earlier quoted context omitted.

Generally I agree with you, but in some cases a government does interfere to limit, inhibit, discourage, or prevent purchasing to varying degrees. They make it very hard. Controlled substances for example. They can even do it automatedly, such as freezing the ability to withdraw or deposit funds electronically.

Even in those cases, they don't control your dollars, they control the companies that you have asked to hold your money.

Sure, but also notice how they never (in history) tried to control your dollars in such a manner.

If they had set their mind to do just that, I bet they would succeed. For one: forbid all cash, arrest at once anyone using or accepting it (or any self issued barter system) and only allow credit cards and e-money.

Re: Bitcoin Is an Existential Threat to the Modern Liberal State

#100

Post by tantalor »

coldtea wrote: post #99
sliverstorm wrote: post #98

Earlier quoted context omitted.

Even in those cases, they don't control your dollars, they control the companies that you have asked to hold your money.

Sure, but also notice how they never (in history) tried to control your dollars in such a manner. If they had set their mind to do just that, I bet they would succeed. For one: forbid all cash, arrest at once anyone using or accepting it (or any self issued barter system) and only allow credit cards and e-money.

I doubt it.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, etc., etc.

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