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Bitcoin's Success With Investors Alienates Earliest Adopters
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."
did not see this coming then you must be new here...
I don't understand, how are they removing the anonimity of Bitcoin? They aren't changing how the algorithms work I assume?
"I liked Bitcoin before it was cool. It's too mainstream now"
Lots of suckers on the bottom feeding bottom suckers on the top
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 this is supposed to be a new economy, how come they still want my old fashioned money?
...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.
There are always four sides to every story: your side, their side, the truth, and what really happened.
Loss of anonymity and regulation happens to anything that becomes large enough to be noticed.
Priest: "Universe from nothing, no laws of physics, sped up time"+ huge discrepancies. Creationism? No. Big Bang Theory
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.
Is selling out to the highest bidder. How dare they.
is miffed that bitcoins are too mainstream now.
Welcome to the Panopticon. Used to be a prison, now it's your home.
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.
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.
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.
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.
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!
there sure are a lot of pompous windbags around here pretending to know what they're talking about.
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.
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.
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.
Silence is a state of mime.
why do i have this suspicion that the whole bitcoin is some elaborate, very drawn out, convoluted, mutated version of a pyramid scheme?
Looking for people to chat about multicopters, coding, music. skype: gtsiros
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 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.
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.
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.
I'm going to start a new currency called KidneyCoin! The currency is kidney stones! The proof of work is passing the kidney stone!
Account -> Discussions -> Disable Sigs
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.
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.
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.
Palm trees and 8
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.
... but once you get in, you can take any ride you want.
One can theoretically exhange BC for cash via a strawman.
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.
Might as well use a visa card.
Well now that google and amazon need to find new ways to hide their tax receipts..... :p
...until the Great Chain pulls away from me.
Bitcoin == CO2 Bitcoin only works because it's incredibly inefficient.
Bitcoin NEVER afforded real anonymity. It only afforded slight obfuscation. See: http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html
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.
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.
The regulatory agencies that control the major banks won't permit overt laundering schemes that are within the reach of any but the most sophisticated bankers.
That said, f' them. By all means, allow bitcoin to become whatever it is going to become. But the technology that built it can be made again and again and again.
Set up another bitcoin currency. And this time learn from the mistakes. We might have to proxy the money into and out of the system through cash. That is... no electronic deposits or withdrawals. Rather, use cash. Cash is by its nature opaque. Set up accounts like pre paid debit cards. The cash in the system but no names. Only ID codes linked to the money but not to people.
This will shield the next system behind the legitimacy of physical currency itself. Physical currency won't go away. The governments say they don't like it because its hard to trace but there are many purchases they make that are intentionally murky. Remember the giant bricks of cash sent to Iraq? Literally pallets of 100 dollar bills stacked and shrink wrapped. Why did they do that? Think we couldn't have come up with an electronic and documented system? We chose not to do that. And think the big banks are entirely upfront about all the money that flows through their systems? Most of it is tracked and documented. But some of it is intentionally obfuscated. Go to Switzerland or Luxemburg and you'll find whole industries based on the practice.
All Bitcoins would do is let the middle class have access to the same financial toys afforded to the very rich.
I believe in the freedom of money. I understand that controlling money makes law enforcement easier. You can track what people are doing by following money. But you could say the same thing about putting cameras in people's homes or tapping every phone in the country.
I have the right to privacy. And while many will disagree with me, I will respond that they can TRY to stick cameras down my throat to see what I ate for breakfast but I won't make it easy for them.
We can be free. If even 1 percent of the economy flows through these systems it will break the control the government has on us.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
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."
boohoo.
Accountability is important you ignorant amateurs.
did not know that bitcoin is still popular with investors. learned something new.
This 1,000,000% increase in Bitcoin's value has made it soooooo uncool.
As many posters have pointed out, this definitely seems to be the logical conclusion of bitcoins being recognized as having real economic value. I wonder how far off bitcoin futures are from being listed on a major exchange, especially considering the CFTC is interested and has taken notice
Worthless? Tell that to the merchants and customers of the Silk Road!
Bitcoin is NOT immune to https://en.wikipedia.org/wiki/Pump_and_dump
Unless https://en.wikipedia.org/wiki/Information_asymmetry#Adverse_selection is implemented in Bitcoin protocol, I'd not invest in it.
Casteism
You are actually proving GP's point.
Bitcoin is not worthless because merchants are able to sell their hard goods and convert their earnings into hard currency.