This is yet another step on the path of Bitcoin exposing that it is not the operational-semantics/capability/irreversibility based cryptocurrency many people wishfully thought that it was. The POW-based solution to the Byzantine agreement problem was quite novel. It's unfortunate that this novelty was wasted on the same old title-based accounting rather than something more appropriate for a fungible commodity.
A system based on accounts with default linkability invites all the tired old thinking that plagues our modern transactions - fraud, taxes, involuntary/post-facto regulation, etc. In this instance, the status-quo masses, having developed an interest in Bitcoin, will be reading this comment and thinking 'but of course the SEC should pursue fraud', because it fits their pattern of how the world works - it feels like someone has been wronged, so the big man with the big stick comes and sets things right. The underlying idea of irreversible transactions and "it is how it works" won't enter their world view. And these status-quo infusions of ambient authority will encourage additional ones until the novel autonomy-attempting properties of Bitcoin have been completely mitigated.
I just hope adequate electronic currencies don't end up stillborn due to the Bitcoin vaccine.
This is good news, all things considered. A digital currency truly out of reach of regulators would just be outlawed. Exchanges would be raided and shut down. If regulators feel comfortable with bitcoin, it can grow and thrive for now. Then, when someone invents a truly anonymous currency, call it A-coin, bitcoin will be a stepping stone to it. Here's how it could work:
You will buy bitcoins at regulated, fully legal and non-anonymous exchanges. Then, you will exchange bitcoins for A-coins at anonymous, online-only exchanges. Since they can operate only on digital currency they need no physical presence and no connection to the regulated global financial system and will thus not be vulnerable to government regulation or control.
Except the exchanges will be heavily regulated and required to record your identity, and converting them to A-coins will be illegal. Even if enforcement is spotty, one can't take the process for granted and the common view will be that A-coins are for criminals. Primarily functioning as a temporary medium of exchange for identity-based systems means it's only a matter of time until the ambient authority infects the system through the exchanges, imposes changes to conform to its view of the world, and demands respect as middle man and final arbiter. The only way to create an anonymous digital currency is to concurrently develop the anonymous digital economy.
Even if the government made conversion to A-coins illegal, they couldn't really stop it because they wouldn't be able to shut down the exchanges. It would be the same as P2P filesharing. It's technically illegal, and people do get identified and arrested, but that doesn't stop it. There are just too many people doing it, and there's no popular support for a crusade against filesharers.
Comments
This is yet another step on the path of Bitcoin exposing that it is not the operational-semantics/capability/irreversibility based cryptocurrency many people wishfully thought that it was. The POW-based solution to the Byzantine agreement problem was quite novel. It's unfortunate that this novelty was wasted on the same old title-based accounting rather than something more appropriate for a fungible commodity.
A system based on accounts with default linkability invites all the tired old thinking that plagues our modern transactions - fraud, taxes, involuntary/post-facto regulation, etc. In this instance, the status-quo masses, having developed an interest in Bitcoin, will be reading this comment and thinking 'but of course the SEC should pursue fraud', because it fits their pattern of how the world works - it feels like someone has been wronged, so the big man with the big stick comes and sets things right. The underlying idea of irreversible transactions and "it is how it works" won't enter their world view. And these status-quo infusions of ambient authority will encourage additional ones until the novel autonomy-attempting properties of Bitcoin have been completely mitigated.
I just hope adequate electronic currencies don't end up stillborn due to the Bitcoin vaccine.
This is good news, all things considered. A digital currency truly out of reach of regulators would just be outlawed. Exchanges would be raided and shut down. If regulators feel comfortable with bitcoin, it can grow and thrive for now. Then, when someone invents a truly anonymous currency, call it A-coin, bitcoin will be a stepping stone to it. Here's how it could work:
You will buy bitcoins at regulated, fully legal and non-anonymous exchanges. Then, you will exchange bitcoins for A-coins at anonymous, online-only exchanges. Since they can operate only on digital currency they need no physical presence and no connection to the regulated global financial system and will thus not be vulnerable to government regulation or control.
Except the exchanges will be heavily regulated and required to record your identity, and converting them to A-coins will be illegal. Even if enforcement is spotty, one can't take the process for granted and the common view will be that A-coins are for criminals. Primarily functioning as a temporary medium of exchange for identity-based systems means it's only a matter of time until the ambient authority infects the system through the exchanges, imposes changes to conform to its view of the world, and demands respect as middle man and final arbiter. The only way to create an anonymous digital currency is to concurrently develop the anonymous digital economy.
Even if the government made conversion to A-coins illegal, they couldn't really stop it because they wouldn't be able to shut down the exchanges. It would be the same as P2P filesharing. It's technically illegal, and people do get identified and arrested, but that doesn't stop it. There are just too many people doing it, and there's no popular support for a crusade against filesharers.