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Bitcoin's Success With Investors Alienates Earliest Adopters

Posted by timothy on from the who-has-the-gold-wins dept.

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."

11 of 158 comments (clear)

  1. If you... by neo8750 · · Score: 5, Insightful

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

  2. How do they remove anonimity? by Anonymous Coward · · Score: 5, Insightful

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

    1. Re:How do they remove anonimity? by petermgreen · · Score: 4, Insightful

      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)

      --
      note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
    2. Re:How do they remove anonimity? by Immerman · · Score: 5, Insightful

      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.

      --
      --- Most topics have many sides worth arguing, allow me to take one opposite you.
    3. Re:How do they remove anonimity? by smellotron · · Score: 3, Insightful

      "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.

    4. Re:How do they remove anonimity? by khallow · · Score: 2, Insightful

      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.

    5. Re:How do they remove anonimity? by viperidaenz · · Score: 3, Insightful

      Or a search warrant is issued and your wallet file is taken from you, containing all your addresses.

  3. The ultimate laissez faire capitalist technology by Ukab+the+Great · · Score: 3, Insightful

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

  4. Re:If you think Bitcoin was ever Anonymous... by Anonymous Coward · · Score: 2, Insightful

    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.

  5. The only anonymity lost it the ability to convert by rahvin112 · · Score: 5, Insightful

    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.

  6. Bitcoin versus Real Money by CuteSteveJobs · · Score: 3, Insightful

    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.