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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."

14 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 ShanghaiBill · · Score: 5, Informative

      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.

    2. 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
    3. Re:How do they remove anonimity? by viperidaenz · · Score: 5, Informative

      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.

    4. 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.
    5. Re:How do they remove anonimity? by viperidaenz · · Score: 4, Informative

      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"

    6. Re:How do they remove anonimity? by pla · · Score: 4, Interesting

      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.

    7. Re:How do they remove anonimity? by g4sy · · Score: 4, Interesting

      You don't need to put your coins into a laundry if you use zerocoins instead. End of problem. Whoever wrote this article (and everyone commenting) doesn't know how to do a little research. Total anonymity and pseudymity are possible.

      --
      somewhere, on a Big Red Sign:
      if(color==blue){speed--;}
  3. Hipsters by Anonymous Coward · · Score: 5, Funny

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

    1. Re:Hipsters by seepho · · Score: 5, Funny

      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.

  4. If you think Bitcoin was ever Anonymous... by trims · · Score: 4, Interesting

    ...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.
  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. Re:Bitcoin versus Real Money by Anonymous Coward · · Score: 4, Funny

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