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Bitcoin's Success With Investors Alienates Earliest Adopters

timothy posted about 10 months ago | from the who-has-the-gold-wins dept.

Bitcoin 158

holy_calamity writes "Digital currency Bitcoin is gaining acceptance with mainstream venture capitalists, reports Technology Review, but at the price of its famed anonymity and ability to operate without central authority. Technology investors have now ploughed millions of dollars into a handful of Bitcoin-based payments and financial companies that are careful to follow financial regulations and don't offer anonymity. That's causing tensions in the community of Bitcoin enthusiasts, some of whom feel their currency's success has involved abandoning its most important features."

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158 comments

If you... (5, Insightful)

neo8750 (566137) | about 10 months ago | (#43807671)

did not see this coming then you must be new here...

Re:If you... (1)

Anonymous Coward | about 10 months ago | (#43807867)

No, If you did not see this coming, you must not be new here...

Re:If you... (0)

Anonymous Coward | about a year ago | (#43808595)

"I saw an apple coming down." Newton.

Re:If you... (3, Funny)

Anonymous Coward | about a year ago | (#43808475)

I never read articles pertaining to bitcoin; I just read the /. comments with a bucket of popcorn.

The hysteria from both sides is going to get a lot better as the bitcoinpocalypse approaches.

Re:If you... (0)

Anonymous Coward | about a year ago | (#43808577)

I never read articles pertaining to bitcoin; I just read the /. comments with a bucket of popcorn.

The hysteria from both sides is going to get a lot better as the bitcoinpocalypse approaches.

Outside of geek circles, find me 1 person in 10,000 who even knows what the hell bitcoin is, much less uses it.

Hardly cause for even grabbing a bag of popcorn as this thing collapses about as quickly as it got started. We'll reminisce this digital coin era with about as much fever as we do Napster.

Think of the planet! (1)

Anonymous Coward | about a year ago | (#43808933)

Bitcoin == CO2 [twitter.com] Bitcoin only works because it's incredibly inefficient.

How do they remove anonimity? (5, Insightful)

Anonymous Coward | about 10 months ago | (#43807687)

I don't understand, how are they removing the anonimity of Bitcoin? They aren't changing how the algorithms work I assume?

Re:How do they remove anonimity? (5, Informative)

ShanghaiBill (739463) | about 10 months ago | (#43807769)

I don't understand, how are they removing the anonimity of Bitcoin?

They aren't. Bitcoins can now be used in new venues, but that does not stop private transactions. The article is just stupid. If I deposit cash in a bank, I will be recorded by a security camera. But that doesn't mean I can no longer buy stuff anonymously with cash at the local flea market.

Re:How do they remove anonimity? (5, Informative)

viperidaenz (2515578) | about 10 months ago | (#43807987)

But you can wipe your fingerprints off that cash. Coins don't even have serial numbers and the numbers on notes are not tracked in every transaction.

You can't wipe your bitcoin address off the block chain.
If you associate that data with a person, they're forever tied to that transaction and you can follow it.

Re:How do they remove anonimity? (5, Insightful)

Immerman (2627577) | about 10 months ago | (#43808187)

So? That's been the case with bitcoins since day one, the anonymity claims were always pure hyperbole. If you wanted anything more than security-through-obscurity grade anonymity you needed to pass your coins through an (illegal in most jurisdictions) money-laundering service and hope they didn't keep any records themselves. All that's changing is that now there's institutions joining the game who are doing their legal record-keeping duty to tie the accounts they deal with to particular people. Unless they refuse to honor any bitcoins that have passed through a money-laundering service recently nothing has really changed except the currncy is . And if they do so refuse, well then... nothing has really changed because they didn't honor *any* bitcoins previously, so your laundered coins are still just as good.

Re:How do they remove anonimity? (3, Informative)

ShanghaiBill (739463) | about 10 months ago | (#43808195)

You can't wipe your bitcoin address off the block chain.
If you associate that data with a person, they're forever tied to that transaction and you can follow it.

But you can create as many bitcoin addresses as you want. You can use a different address from every transaction. The only way it can be tracked to you is if "they" already know who you are by other means.

Re:How do they remove anonimity? (4, Informative)

viperidaenz (2515578) | about a year ago | (#43808465)

Unless you use a different address for every transaction you will ever make, "They" find out your entire transaction history as soon as they match you to a single transaction, through one of these new services popping up that keeps and shares records with "Them"

Re:How do they remove anonimity? (1)

anarcobra (1551067) | about a year ago | (#43808495)

I thought using a new address for every transaction was the advised method of using bitcoin.
I don't use it myself, but I remember reading something along the lines of "never reuse your addresses" in the documentation.

Re:How do they remove anonimity? (0)

Anonymous Coward | about a year ago | (#43809055)

The point is at some stage you are using bitcoins to purchase real things, yes most people treat them like an extremely volatile share, but if you actually try to use them as currency then at some point you either need to convert to a currency, have something delivered to you or make an in person purchase at a store. keeping anonymity at that point is incredibly hard without also being incredibly burdensome.

Re:How do they remove anonimity? (2, Insightful)

khallow (566160) | about a year ago | (#43809615)

The point is at some stage you are using bitcoins to purchase real things

And how do you lose anonymity with that? Even if you can be identified by that transaction, so what? You can't be associated with previous transactions. Buying a car with bitcoins doesn't prove that you were the same guy who sold marijuana for bitcoins a few transactions back.

Re:How do they remove anonimity? (4, Interesting)

pla (258480) | about a year ago | (#43809029)

If you associate that data with a person, they're forever tied to that transaction and you can follow it.

Yes and no. Once you associate "me" with a transaction, you can always prove I owned part of block B at time T. You can't, however, prove that when I "spent" those bitcoins, I did or did not simply send them to myself, making anonymity (at least, at the "plausible deniability" level) always just one easy transaction away.

And for the really paranoid, you can use any of a dozen "mixing" services, that take your bitcoins along with those of thousands of other people and stir them all together to make tracing the ones you put in to the ones you take out as close to impossible as matters.

Re:How do they remove anonimity? (3, Insightful)

smellotron (1039250) | about a year ago | (#43809093)

"mixing" services

The term "mixing" sounds less pejorative than "laundering", but the principle is the same: disguise the transfer of wealth. I expect that some extreme pressure will be put on these mixing services as Bitcoins gain traction with nations.

Re:How do they remove anonimity? (3, Interesting)

pla (258480) | about a year ago | (#43809239)

The term "mixing" sounds less pejorative than "laundering", but the principle is the same: disguise the transfer of wealth. I expect that some extreme pressure will be put on these mixing services as Bitcoins gain traction with nations.

As I pointed out, though, you don't really need to use a mixer - You can accomplish almost the same thing just by sending your bitcoins to other accounts you control in more or less random chunks. You could even, if really motivated, create your own mixer with thousands of your own accounts. A handful of illegal sources go in, along with a large volume of legit transactions, stir stir stir, and who knows that you-#1701 equals you-#42 unless you tell on yourself?

Granted, we already have laws against "structuring", but even as blatant of a cash-grab as those laws appear, they still require "you" to deliberately make a series of related sub-$10k deposits specifically to avoid filing a CTR/8300. Key point there, they need to prove both intent (the standard defense), and the "you" part (which Bitcoin's entire structure makes all but impossible, though ironically, if they could prove all the accounts as you, that would pretty much put a nail in the "intent" coffin).

Re:How do they remove anonimity? (0)

Anonymous Coward | about a year ago | (#43808591)

I don't understand, how are they removing the anonimity of Bitcoin?

They aren't. Bitcoins can now be used in new venues, but that does not stop private transactions. The article is just stupid. If I deposit cash in a bank, I will be recorded by a security camera. But that doesn't mean I can no longer buy stuff anonymously with cash at the local flea market.

Right. Look up, smile, and wave next time you're at the flea market. You'll look less suspicious to the drone cameras that way.

The only thing more broken than bitcoin will soon be is the concept of anonymity. Wake up. It's gone.

Re:How do they remove anonimity? (4, Insightful)

petermgreen (876956) | about 10 months ago | (#43807905)

Bitcoin is and always has been psudononymous. It's trivial to track the flow of coins between bitcoin addresses (which are essentially psudonyms). So how much anonymity there is depends on how difficult it is to associate those bitcoin addresses with real people.

How difficult it is to associate those addresses with real people depends hugely on both what records are kept and how many significant players there are in the bitcoin market (it's much easier to force a small number of large entities to hand over records to the cops than it is to force a large number of small entities to do it)

When was Bitcoin anonymous? (2)

betterunixthanunix (980855) | about 10 months ago | (#43808059)

Bitcoin has never been anonymous. There is a public record of transactions. You have to rely on a separate mixing service, which almost nobody does.

Most important, though, is this: very few people actually want to use Bitcoin. Most view it as a way to make an electronic transfer of government-backed fiat currencies, so they rely on services that do the Bitcoin transfers for them and exchange Bitcoin currency for fiat currency. Those services are going to comply with the law and require things like identification. To put it another way, cash is anonymous too -- but large numbers of people use credit and debit cards, which are not anonymous.

Re:When was Bitcoin anonymous? (1)

Deliveranc3 (629997) | about 10 months ago | (#43808109)

so they rely on services that do the Bitcoin transfers for them and exchange Bitcoin currency for fiat currency. Those services are going to comply with the law and require things like identification.

This implies that you need another agent to complete a Bitcoin transaction which is not the case.

Yes most bitcoins flow through currency exchanges (though personal transactions such as LocalBitcoins.com are pretty common still).

I suppose of Bitcoin anonymity you could say you can keep track of the contractor you paid the BTC to, but you can't tell where his employees buy their groceries.

Most fascinating about Bitcoin is that you can have it in a sense that applied to gold more than say bank notes, and the effect this will have on fractional reserve banking and other financial instruments, if someone has an article on this I would be happy to read it... or pen one if you'd pay me per word.

Re:When was Bitcoin anonymous? (1)

betterunixthanunix (980855) | about 10 months ago | (#43808183)

I suppose of Bitcoin anonymity you could say you can keep track of the contractor you paid the BTC to, but you can't tell where his employees buy their groceries.

Unless you bother to examine the public record of all Bitcoin transactions.

This implies that you need another agent to complete a Bitcoin transaction which is not the case.

Except that you need to broadcast the transaction to the Bitcoin network, which must then confirm that the transaction is valid. What I said is that most people rely on another agent to complete their transactions for them -- because most people want fiat currency, not Bitcoin currency, and they usually do not want to wait for confirmations (nor do they want to accept payments without confirmations) or deal with an ever-fluctuating exchange rate.

Most fascinating about Bitcoin is that you can have it in a sense that applied to gold more than say bank notes

Let's put it this way: try to use gold to buy a car, or even to buy something as simple as a single meal.

Re:How do they remove anonimity? (0)

Anonymous Coward | about a year ago | (#43809227)

Reading too much into it, maybe but:
These companies want to put up these ATMs and get into the business of exchanging bit coins.
Maybe the company that controls the ATMs requires you to create an account with them, and connect your bit coin wallets to them to fund, etc.
Now they have a record of your funding, withdrawing and such.

Nothing stops you from funding through other methods, but if they make this mainstream, they still "control" the cash flow. Something like that.

Hipsters (5, Funny)

Anonymous Coward | about 10 months ago | (#43807693)

"I liked Bitcoin before it was cool. It's too mainstream now"

Re:Hipsters (5, Funny)

seepho (1959226) | about 10 months ago | (#43807789)

I encode my wallet file using touch tones and pressed a recording of it onto vinyl. The smoothness on the waveform of the 3/6/9 keys adds a certain warmth to my financial transactions.

Re:Hipsters (-1)

Anonymous Coward | about 10 months ago | (#43807939)

Awww poor anonymous money shifters.

How will they buy their drugs and child pornography now?

Re:Hipsters (-1)

Anonymous Coward | about 10 months ago | (#43808093)

Dunno. Ask your Grandad.

Pyramids (0, Offtopic)

Anonymous Coward | about 10 months ago | (#43807695)

Lots of suckers on the bottom feeding bottom suckers on the top

nothing acceptable without "sellout" (2, Funny)

swschrad (312009) | about 10 months ago | (#43807701)

also, no "free as in beer" and no "quality goes in before the name goes on." the news knocked me right off my unicorn, and I am so embarassed...

If you think Bitcoin was ever Anonymous... (4, Interesting)

trims (10010) | about 10 months ago | (#43807705)

...I've got a bridge somewhere that needs to be sold that you might be interested in.

Bitcoin does irrefutability (i.e. the ability to prove that a transaction occurred, and occurred only once). I can thus prove that I do, in fact, own all Bitcoin I possess.

It never has been anonymous. There are characteristics that make it more difficult to trace the payer, but the protocol and implementation have never been configured (or designed) to be a strongly anonymous technology.

Re:If you think Bitcoin was ever Anonymous... (3, Informative)

hguorbray (967940) | about 10 months ago | (#43807719)

here's a pretty good technical overview of Bitcoin from El Reg today:

http://www.theregister.co.uk/2013/05/23/bitcoin_spam_byzantine_generals/

-I'm just sayin'

Re:If you think Bitcoin was ever Anonymous... (2, Insightful)

Anonymous Coward | about 10 months ago | (#43807741)

I would agree with you if Silk Road was not still operating strongly, and with the only related busts being from tracking criminals through something other than the bitcoin trail.

In theory it may not be anonymous but in practice it is.

Re:If you think Bitcoin was ever Anonymous... (2)

tftp (111690) | about a year ago | (#43808641)

I'm not even sure if it is legally significant who paid for the drugs. I'd think it's more important to know who received them. Two quick scenarios to illustrate; one is legal, another is not.

1) You approach the drug dealer and give him $10. You never receive anything in return.

2) You approach the drug dealer and receive a dose of a drug for free.

Re:If you think Bitcoin was ever Anonymous... (0)

Anonymous Coward | about 10 months ago | (#43807821)

It's all about the addresses. You can use a different identity for each transaction with nothing tracing back to you. Masking your IP is another (solved) problem, but it's unrelated to bitcoin.

Re:If you think Bitcoin was ever Anonymous... (2)

Qzukk (229616) | about 10 months ago | (#43808121)

Masking your IP is another (solved) problem

I fully expect that tor will be completely mappable by this time next year, with every packet in tracked to the exit out (or onionsite) and back, especially as we get closer to universal data retention laws making it trivial to find out who sent every packet where.

Re:If you think Bitcoin was ever Anonymous... (1)

h4ck7h3p14n37 (926070) | about a year ago | (#43809477)

That's why you hack into someone else's wifi connection. Or, if you're old school, you tap into a hardline somewhere :)

Re:If you think Bitcoin was ever Anonymous... (1)

Immerman (2627577) | about 10 months ago | (#43808239)

Yes, but you'll still need to at some point transfer money from account A to account B before you can spend it in another transaction, and unless you're a brilliant information-theorist or use a money laundering (excuse me, "mixing") service it won't be terribly difficult to link your various accounts to the same entity.

Re:If you think Bitcoin was ever Anonymous... (0)

Anonymous Coward | about a year ago | (#43808295)

So, just send a polite man to an operator of that service to tell him government won't press charges for violating money mixing... err, laundering laws, but in return could he pretty please retain the transaction logs (if he didn't already) and provide access when needed?

Re:If you think Bitcoin was ever Anonymous... (1)

cheater512 (783349) | about 10 months ago | (#43808035)

It is...kind of.

The transactions are fully public of course.
The semi-anonymous part is tying a bitcoin address with a specific person. You'll have a lot of difficulty doing that if they are being careful.

Re:If you think Bitcoin was ever Anonymous... (2)

Immerman (2627577) | about a year ago | (#43808315)

You and I will (for now). I seriously doubt it'd be more than a minor project for the FBI or other institution that deals with the pattern analysis necessary to identify tradtional money laundering operations.

Now of course you could use any of the numerous mixing (aka money-laundering) services out there to "disconnect" your public and anonymous tranactions - but they have two major problems that I can see:
  * money laundering is illegal in most jurisdictions, and you've just publicly announced that you're using one to everyone who ever looks at your transaction history.
  * You're trusting the service themselves to not keep their own transaction records, which considering the blackmail potential seems rather... optimistic.

Re:If you think Bitcoin was ever Anonymous... (1)

Anonymous Coward | about a year ago | (#43809009)

Laundering is complicated. And seldom effective. It also requires trust, somewhere along the line.

Microsoft has been exploring the ZeroCoin protocol, which - when added atop bitcoin - provides for real anonymity.

Here's a Microsoft Research video presentation:

http://research.microsoft.com/apps/video/dl.aspx?id=192058

Enjoy.

Re:If you think Bitcoin was ever Anonymous... (0)

Anonymous Coward | about a year ago | (#43809161)

I always wondered what stopped people from making a massive number of wallets and then thrashing their coins around to make extremely long cert chains. At some point, someone's going to balk at receiving a coin with a chain length that's too long to fit on their device, or some exchange is going to balk at spending an hour transmitting the chain for a $0.01 purchase, etc.

Bitcoin is a novel success (2)

TrollstonButterbeans (2914995) | about 10 months ago | (#43807709)

But at the end of the day, once something becomes successful it loses its identity.

Loss of anonymity and regulation happens to anything that becomes large enough to be noticed.

Misleading about "anonymous" (0)

Anonymous Coward | about 10 months ago | (#43807723)

Bitcoin transactions still are and always will be anonymous.

Using certain bitcoin-related services will require disclosure of some personal information.

I don't see how this is news. It just is what it is.

The ultimate laissez faire capitalist technology (3, Insightful)

Ukab the Great (87152) | about 10 months ago | (#43807725)

Is selling out to the highest bidder. How dare they.

Re:The ultimate laissez faire capitalist technolog (1)

VortexCortex (1117377) | about 10 months ago | (#43807777)

Is selling out to the highest bidder. How dare they.

Duuuuuuuuude, this is some chronically dank stank you got. I need to buy ME some bitcoins, man!

Simmons, he's the one. That's the highest bidder. Sell Now!

Re:The ultimate laissez faire capitalist technolog (0)

Anonymous Coward | about a year ago | (#43808539)

Well now that google and amazon need to find new ways to hide their tax receipts..... :p

Not So Much Really (0)

Anonymous Coward | about 10 months ago | (#43807735)

I think the bigger issue is...

It's a what?

Why?

So who runs/manages/backs accepts it?

So it's used for drugs.

Why should I care, I don't use drugs?

This is some kind of nerd thing isn't it? It sounds too shady, I really don't see the point nor do I want to be a part of it.

I still don;t see what's wrong with money. Cash, credit cards, they just work and are accepted everywhere.

The only anonymity lost it the ability to convert (5, Insightful)

rahvin112 (446269) | about 10 months ago | (#43807743)

Bitcoin is and always will be just as anonymous as it was promised. No one EVER said exchanging Bitcoin for other currencies would be an identity protected venture. In fact it's always been assumed by anyone with any brains at all that Bitcoin is only anonymous as long as you keep it Bitcoin and don't trade it for any hard goods or currency.

There have always been regulatory requirements that make transaction tracking easy for government when you convert to currency or goods. And this has ALWAYS been BitCoins greatest weakness because at the end of the day the currency is only as valuable as it's ability to exchange it for goods. That exchange will never be anonymous.

Re:The only anonymity lost it the ability to conve (1)

Anonymous Coward | about 10 months ago | (#43807929)

In fact it's always been assumed by anyone with any brains at all that Bitcoin is only anonymous as long as you keep it Bitcoin and don't trade it for any hard goods or currency.

But if no one ever trades Bitcoins for hard goods or currency, then they are worthless.

Re:The only anonymity lost it the ability to conve (0)

Anonymous Coward | about 10 months ago | (#43807967)

In fact it's always been assumed by anyone with any brains at all that Bitcoin is only anonymous as long as you keep it Bitcoin and don't trade it for any hard goods or currency.

But if no one ever trades Bitcoins for hard goods or currency, then they are worthless.

Your insight is overpowering. Yes, people need to participate in the economic and social life of their community is they are to get any worth out of their own money.

Re:The only anonymity lost it the ability to conve (1)

mysidia (191772) | about 10 months ago | (#43808003)

That exchange will never be anonymous.

I wouldn't say that... I would say that exchange will sometimes not be anonymous. Especially when that exchange is made from bitcoins to a currency, and one of the trading partners is a large institution with regulatory requirements to meet.

But there will be other cases where it could be nearly anonymous. Mainly when neither of the trading partners keeps records of the identity of the other trading partner; or when they trade without learning the identity of whom they are trading with in the first place -- probably for intangible goods like data.

Re:The only anonymity lost it the ability to conve (0)

Anonymous Coward | about a year ago | (#43808285)

One can theoretically exhange BC for cash via a strawman.

Every transaction is in the blockchain already. (0)

Anonymous Coward | about 10 months ago | (#43807745)

Bitcoin is not anonymous, all it would require is someone willing to do the leg work.

The methods of investigation rolling up the little guys and pulling on the threads is how the police "solve" the bulk of crimes committed with cash.

The only way for Bitcoin to be anonymous would be if you created/mined the coins and never transferred them to anyone not part of you plan.

Re:Every transaction is in the blockchain already. (0)

Anonymous Coward | about 10 months ago | (#43807767)

So you can get wallet IDs... what's your point? Good luck accurately identifying the owner of a bitcoin wallet.

Re:Every transaction is in the blockchain already. (1)

Zan Lynx (87672) | about 10 months ago | (#43807893)

It is super-easy if the contents of that wallet were created by a credit card purchase and the transfer from a Bitcoin exchange wallet. The exchange then has the identity of the credit card holder linked to the wallet.

Re:Every transaction is in the blockchain already. (0)

Anonymous Coward | about a year ago | (#43808983)

But then you find the Bitcoins were transferred to a different wallet. Now you have to track down whether that wallet is owned by the same person, or by someone else who did business with him. And by the time you track down that information, the Bitcoins have moved to another wallet... and they'll be in yet another wallet tomorrow.

Re:Every transaction is in the blockchain already. (1)

Rhacman (1528815) | about 10 months ago | (#43807907)

As soon as you sell someone something for bitcoin you have some amount of information about that persons identity if only where you shipped the product to. If you also happen to know the wallet ID of a popular sex-toy shop from either shopping there or from a list someone published of wallet IDs you can then note if there is a transaction between this vendor and the person you just did business with. Heck, if someone mentions buying a particular item from a particular vendor at a particular time, since the database is public I can narrow down the wallet ID for that person and start working out what other vendors they may have purchased from. Once you have a handful of known wallet IDs you can build all sorts of correlations to help determine who's who. If someone tries to hide by creating a new wallet, you can also see that money from a known account got transferred to a wallet for which no previous transactions exist. Perhaps this is a different person, but when you see the same transaction patterns in the new account you can start narrowing your assumptions.

Re:Every transaction is in the blockchain already. (1)

mysidia (191772) | about 10 months ago | (#43808053)

If someone tries to hide by creating a new wallet, you can also see that money from a known account got transferred to a wallet for which no previous transactions exist. Perhaps this is a different person, but when you see the same transaction patterns in the new account you can start narrowing your assumptions.

You could generate a large number of holding wallets in advance of any transaction, and retain a set amount of money in each wallet.

Then when you are planning to make another transaction, you generate a new transaction-specific wallet, and execute some sequence of transfers from a random assortment of your holding wallets to your transaction wallet, and then execute the transaction.

You could also have multiple layers of holding wallets and transaction wallets, and conduct some bitcoin rotations with friends to shuffle things around.

I envision if a few people are doing that, it could be very difficult indeed to correlate transaction to holder; now, I won't say impossible, because there are probably bound to be some patterns that might be detected through statistical analysis...

Not general problems, but implementation-specific problems that would be likely to occur.

There is also the issue about transaction cost, since the 'holding' and temporary/thorwaway wallets generates spurious non-transactions that look like transactions, and therefore, would use part of the bitcoin network's capacity.

Plausible deniability (0)

Anonymous Coward | about a year ago | (#43808289)

You have to go through some effort to make your transactions difficult to trace, which I suspect most people don't do.

If both the sender and receiver use a single or small number of real-world exchange accounts linked to their real identity, but split the transaction into a bunch of fake addresses leading to other fake addresses eventually leading to a set of addresses linked to the recipient's account, then it's conceivable that someone with a lot of processing power and knowledge of the real-world identities and endpoint addresses could find the connection between them.

However, you could argue that those pseudo-identities were actually other people, and any transactions further down the chain were perpetuated by them. Can't blame me if they money I donated to Bitcoins for Orphans ended up being used to buy illegal drugs.

Re:Every transaction is in the blockchain already. (1)

Rhacman (1528815) | about a year ago | (#43808631)

The clues are always there, albeit obscure. It's just a cat and mouse game bounded only by the interest / resources of the respective party.

Re:Every transaction is in the blockchain already. (0)

Anonymous Coward | about 10 months ago | (#43807963)

That's simple, just buy/sell something from him. You'll have to exchange information about the goods/services somehow. Then that becomes a link to track back to the person's real identity, then you have the transaction history in the blockchain without the need of a warrant. In a lot of ways using bitcoin would help investigators, rather than hinder. Its like securely encrypting everything with AES-512 ... but not using any chaining method.

Like the sad ECB penguin.

http://en.wikipedia.org/wiki/File:Tux_ecb.jpg [wikipedia.org]

Funny thing about the real world (0)

Anonymous Coward | about 10 months ago | (#43807753)

Existing law still applies to new technology. If you want access to the vast majority of the world's commerce, you need to obey existing laws. If the SEC, IRS, and FTC all want to know where and how your money is moving, they don't really give a shit whether you are using giant stone discs or Awesome McCool Stealth Currency. They really just want their share.

i need attention (0)

Anonymous Coward | about 10 months ago | (#43807803)

there sure are a lot of pompous windbags around here pretending to know what they're talking about.

Re:i need attention (0)

Anonymous Coward | about 10 months ago | (#43807951)

What a whiny piece of shit you are. Bet everyone hates you in RL.

a feature, not a bug (0)

Anonymous Coward | about 10 months ago | (#43807831)

The important thing to remember about bitcoin is that it's not the end-all-be-all of digital currency, it's simply the first cryptocurrency to gain traction. In my mind, the value (socially, not economically) of bitcoin is simply as kindling to the fire that it promises. So it can be corrupted; we should be thrilled that such problems exist, as it serves to entice others to make a more perfect cryptocurrency.

Maybe not such a bad thing.. (0)

Anonymous Coward | about 10 months ago | (#43807847)

These developments will help the currency and the idea of digital currencies gain wider adoption. The fact that some institutions destroy anonymity by cooperating with the Man doesn't matter so much, so long as alternatives continue to exist.

Although I can imagine a scenario where the biggest players gain too much influence and shut out anyone (anonymous exchanges, coin tumblers, Silkroad et al) who aren't part of the Government approved elite club. This would probably just result in a fork of Bitcoin though. Bottom line is, as long as parties exist who wish to trade things anonymously, the technical infrastructure now exists for them to continue doing so, whether you call it Bitcoin, Bitcoin2, or LibreBitcoin.

Re:Maybe not such a bad thing.. (1)

Anonymous Coward | about 10 months ago | (#43807921)

Value of BitCoin - just like any other currency - is based purely on faith of people trading in it.

Faith in real world currencies is supported by government and regulations limiting what you can do with alternative currencies on country's territory. This is pretty unique for every currency - Russia props up faith in RUR and China does the same for RMB.

BitCoin's value is exact opposite, lack of government and regulations. What do you think happens when there are a hundred competing BitCoin branches, all wanting to be valued on the same no-government behind it?

Re:Maybe not such a bad thing.. (1)

Anonymous Coward | about a year ago | (#43808247)

Faith in real world currencies is supported by government and regulations limiting what you can do with alternative currencies on country's territory

I know of no real world cases where that sentence even makes sense. Do you mean everyone had great faith in the Z$ when Mugabe banned all use of all other currencies? Or great faith in it when they gave up and started letting people use whatever currency they wanted? Faith in currency is directly tied to the production of that currency.

when there are a hundred competing BitCoin branches, all wanting to be valued on the same no-government behind it?

Supply and demand. If EZCoins flood the market, then the value of EZCoins drop compared to HarderCoins. If exchanges manage to operate smoothly (something that we don't seem to be able to count on, based on history so far) then the multitude of currencies simply becomes an inconvenience, even if merchants decide they only want to deal in one particular coin (though if they become the only dealer in that kind of coin, they'd probably have a lot of trouble.

the bottom line.. (2)

wbr1 (2538558) | about 10 months ago | (#43807853)

For a currency to be useful it has to be trusted. Unfortunately it would appear that after a certain critical mass is reached the people using it also want the other people using it to be trust able. Not easy to do whilst remaining anonymous.

Pyramid scheme (1)

gTsiros (205624) | about 10 months ago | (#43807891)

why do i have this suspicion that the whole bitcoin is some elaborate, very drawn out, convoluted, mutated version of a pyramid scheme?

Re:Pyramid scheme (0, Troll)

Anonymous Coward | about 10 months ago | (#43807935)

Because it is a monetary system.

Re:Pyramid scheme (2)

drcheap (1897540) | about 10 months ago | (#43807969)

why do i have this suspicion that the whole bitcoin is some elaborate, very drawn out, convoluted, mutated version of a pyramid scheme?

You tell me why... because I don't see it. No referrals, no downlines, none of that telltale pyramid stuff.

First they were worth squat, then there was all kinds of marketing hype, the value skyrocketed as a result, and then bam...it crashes. A lucky few got in before the marketing (knowing it was coming) and bailed out while it was spiked. To me that more closely represents a pump & dump.

Re:Pyramid scheme (3, Interesting)

Lehk228 (705449) | about 10 months ago | (#43808117)

it's a little bit of both.

there are tons of unaccounted for bitcoins harvested in the early days they will not reenter the market until

a) the market is large enough to not crash when whoever is sitting on them cashes out

or

b) whoever is sitting on them needs the money badly enough not to care.

Re:Pyramid scheme (0)

Anonymous Coward | about a year ago | (#43808613)

It wasn't a pyramid, but it was a scheme.

Bitcoin versus Real Money (3, Insightful)

CuteSteveJobs (1343851) | about 10 months ago | (#43807903)

The whole idea that you could create money by having your computer crack at a cryptographic algorithm is ridiculous, but so too is the fact that some professions earn so much more than others, that those professions form unions (oops! I mean 'professional associations') that limit supply of their professionals, or that during the GFC the Fed could pull billions of dollars from out of their ass and give it to banks who could then earn themselves interest off that. Bitcoin may be a bubble, but so is the entire stockmarket where you have computers buying and dumping stock microseconds later without any idea what is being traded. Hey did you know the big investment banks pay a premium so they connect their computers closer to the exchange's computers? As soon as they detect buys on a certain stock, they start grabbing massive amounts of it on the assumption others will follow and they can dump it microseconds later? http://en.wikipedia.org/wiki/High-frequency_trading [wikipedia.org] Please tell me how this is good for the economy and sensible investment?

Bitcoin may have its problems and speculators are really bad for anything, but so called 'real money' is just as bad and maybe worse.

Re:Bitcoin versus Real Money (1, Flamebait)

GenieGenieGenie (942725) | about 10 months ago | (#43807989)

Nice tirade. Can you explain to us in what sense is cracking a crypto problem more ridiculous than figuring out where there are more shiny bits of rock that people like to wear in their jewelry? Both require dedicated equipment, know-how, time and effort; Both produce something that other people find valuable and want to own, but are ultimately useless on their own (oh, alright, cue the wedding ring jokes...); Both are subject to market laws of supply and demand that determine their price. After you're done with that, we'll deal with the rest of the ridiculous stuff you seem to have in the same bag as Bitcoins (HFT? seriously?).

Re:Bitcoin versus Real Money (0)

Anonymous Coward | about 10 months ago | (#43808191)

Both are ridiculous... ...which is part of why fiat money makes sense.

Re:Bitcoin versus Real Money (1)

Anonymous Coward | about a year ago | (#43808419)

...which is part of why fiat money makes sense.

Yes, and there are reasons why fiat money does not make sense...like being able to create more by more fiats.

Re:Bitcoin versus Real Money (4, Funny)

Anonymous Coward | about a year ago | (#43809025)

I paid cash for a Fiat. Worst car I ever owned.

Re:Bitcoin versus Real Money (2)

Immerman (2627577) | about a year ago | (#43808375)

If you think about it cash is at least as ridiculous. That's just some guys with a fancy printing press and government backing saying "Hey, let's print a few million bucks more today". Works great so long as the government is responsible about it, but as every case of hyperinflation in history shows there's no guaranty on that front.

This is as it should be. (1, Interesting)

Anonymous Coward | about 10 months ago | (#43807911)

It is impossible to build an anonymous irrevocably currency on top of a revocable non-anonymous. Thus, you can't make something like bitcoins as a layer ontop of credit cards, traditional banks, checks etc.

However, it is possible to do the reverse: you can (and they did) build a revocable non-anonymous payment system on top of bitcoin. This is good: now bitcoin is being used for both kinds of currency. You don't lose the ability to spend bitcoins anonymously and irrevocably just because there are now ways to use them closer to traditional payment systems. Both have benefits, and both can be powered by bitcoin simultaneously. I fail to see the problem.

Sure, if the goal of bitcoin was to force change on the world, it failed. If the goal was to allow access to a new technology, anonymous irrevocably currency, then its working. I won't argue thats its an ideal implementation of the idea, or that its a great currency to use, but it is usable, and proves that such a thing can exist should you need it.

A replacement for BitCoin! (1)

Rhacman (1528815) | about 10 months ago | (#43807955)

I'm going to start a new currency called KidneyCoin! The currency is kidney stones! The proof of work is passing the kidney stone!

Re:A replacement for BitCoin! (1)

Deliveranc3 (629997) | about 10 months ago | (#43808219)

You can tell what level people got stupid cynical and stopped figuring out Bitcoin:
Level 1. - Internet Money
Level 2 - Mining
Level 3 - Anonymous
Level 4 - Pyramid Scheme
Level 5 - Specific Theft vs Overall security
Level 6 - Government shutdown

If you're so sure that BTC will drop in value then sell it short, there are resources available.

Selling Short: I talk to someone who owns some Bitcoins or more likely has clients who own Bitcoins. I agree with him to sell those Bitcoins now with an agreement that I will provide them at a future date. The biggest difference between investing (buying long) and short selling is that the money you give the agent is used as a guarantee against (possible)(and potentially unlimited) growth. I.E. if you buy a stock you can lose the price of the stock, if you sell short you can lose everything because the price never hits a 0 point.
If you're interested let me know, bakerfinancialinstruments@gmail.com

Re:A replacement for BitCoin! (1)

stinerman (812158) | about a year ago | (#43808357)

I'd be more than happy to short the hell out of Bitcoins if I had the resources. And even if I did, a smart man once said the market can remain irrational longer than I can remain solvent.

Re:A replacement for BitCoin! (1)

Rhacman (1528815) | about a year ago | (#43808599)

I never said BitCoin will drop in value. I have no expectation / confidence that it will rise, fall, nor stay the same value relative to other currencies.

SilkRoad as an example (1)

Anonymous Coward | about 10 months ago | (#43808155)

Lets look at the structure of silk road and we can come to some sort of understanding of how this may play out for anonymity.

You have a account with Mt. Gox, So they know your starting wallet number. They then trace it to a ID over at silk road, however they have no idea that it is silk road, for all they know it is simply another wallet of yours, or your friends. Then silk road handles the transaction between the two wallets it has. After that the seller needs to transfer the bitcoins back to a agency like mt. gox (or another seller on silk road). Even if they have the information for the start and the end of this transaction they have no real way of finding the in-between. You could also do a simple money laundering exercise by creating multiple wallets to protect yourself.

It may not help if the government comes knocking and asks where you got the bitcoins though.

Re:SilkRoad as an example (0)

Anonymous Coward | about a year ago | (#43808791)

You mined them.

Yeah, they may control the gates to Disney Land... (1)

argoff (142580) | about a year ago | (#43808255)

... but once you get in, you can take any ride you want.

without anonymity (0)

Anonymous Coward | about a year ago | (#43808521)

Might as well use a visa card.

I trust in the Great Chain... (0)

Anonymous Coward | about a year ago | (#43808705)

...until the Great Chain pulls away from me.

You guys are missing the point (1)

Anonymous Coward | about a year ago | (#43809173)

The weakness is not with bitcoin itself, but with trading traditional currency for them. There will be a point where only people with extravagantly modern mining rigs will be able to make any profit from mining.

Therefore, the average person will have to buy bitcoin from an exchange where it will undoubtedly be regulated.

another untruthful bitcoin article (1)

slashmydots (2189826) | about a year ago | (#43809501)

Yay, another one. This is one side of the story. They're getting shut down by the feds EVERYWHERE. There's the banking secrecy act that killed some big time operators. MTGox is even getting screwed with with Dwolla lately and they're around 85% of all exchange transactions. Small little operations don't attract attention. The big ones are under so much scrutiny, it's like the feds are just waiting for any reason to shut them down (they actually are by the way). It's so hilariously stupid too because by design, it's stoppable. They could throw $50 billion at it and not destroy the network unless they literally but all bitcoins with it and then delete them, lol. Actually, that wouldn't "destroy" the network either.
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