Bitcoin Forum

The libertarian mantra is usually that the only role of government is to protect from the initiation of force or fraud.

But how important is it to protect from fraud? If there were no protections from fraud, would systems not get put into place over time to protect ourselves? Look at Bitcoin and the amount of fraud that happens and the way that the ecosystem is adapting to deal with it with things like multi sig transactions and cold storage.

Or like on ebay where reputation can make or break you, if you commit fraud you are destroying your reputation and thus penalized without any required laws.

Perhaps protection from fraud is just a luxury we would like from the government but is not certainly necessary as a core tenet.

It depends on the scale of the fraud, if it's small term then it is fairly easy for people to deal with it on their own but sometimes with something like MTGOX for example you need the combined resources of a government to carry out a proper investigation and make sure the fucker doesn't run off. I mean, in theory and ideally yes, we should be able to do it, but there's always the problem of mob rule, where an angry crowd would much rather lynch somebody they suspect than bother to investigate properly and that's the case with any crimes, you often need a third party with a level head who doesn't have any stake in what's going on to look at things.

It is good that people are coming up with all sorts of ideas to combat fraud, but even I'll admit this is why we need a very limited form of government to handle crime and fraud cases but that's why I like Libertarianism in the first place.

Yes. Protect everybody from fraud by taking away their freedom to do anything except exactly the things you fraudulently say. 

:)

Whether or not we need government for that is besides the point. What we need is a society that doesn't reward fraud, instead of one that encourages it. A lot more progress would be made if we started by reducing inequality for example. It doesn't mean fraud would stop taking place, but it would be more manageable.

IMO the problem with this logic is that anytime that someone decides to "leave" the ebay market they could potentially scam their customers as their reputation would no longer be worth anything to them. Additionally self regulation via reputation would not stop scams/fraud that occurs because of people impersonating others and/or hacking reputable accounts.

There does need to be some level of fraud protection as most people are not savvy enough to spot potential scams and as a result would end up losing money via scams and as a result there would be a lower overall level of commerce

But wouldn't people evolve to the point where they become more savvy with their money. Like any time they let someone hold their money there would need to be a lot of trust and assurances. Maybe it would reach the point, using multisig, that the likelihood of fraud becomes so rare that laws would be meaningless.

But we are granted a convenience in the thought that the government will step in if anything goes wrong so we can trust everyone.

It may just evolve on its own and the laws will become unnecessary on their own. The freedom that Bitcoin has provided is providing the solutions that laws have been providing for decades.

@Eisenhower34 Those aren't the only problems with using reputation as a way to avoid fraud. The main problem I see is that it depends on your access to that information (reputation). Whoever controls that access, and determines its content, has a lot of power. Look at the media for example.

@both of you - any transaction between two people requires that trust be given to at least one of the parties to a transaction. You will always have the issue/problem that you could potentially be dealing with someone who has decided they want to leave the marketplace and as a result does not intend on completing their end of a transaction. Their reputation would be ruined however this would not matter because they do not intend in participating in the marketplace in the future.

Any market based on reputation will also put any new entrants of the market at a huge competitive disadvantage as they have no real way to earn the appropriate level of trust necessary in order to conduct business.

If you buy a car and say you buy a 5 year warranty from company B.  Suppose the insurance turns out to be a fraud and they just pocket the money.  You want it to end there?  What if you buy a 100K motorhome on credit and you deault on your loan, you want it to end there?  What if you buy a bed and you say you want to load it in your car first, then you take off without paying.  What if you buy an insurance policy and it turns out not to be insurance but just a piece of paper.  What about all the bitcoin sites that defrauded their users.  What if you buy something in a magazine send your money in and get nothing?

No offense but fraud is a pretty simple crime to prosecute.

What if you put your money in Wells Fargo, then one day the CEO decided to take all the money?  Why is reputation important if you can just change your name and location.

This. It is easy to fake reputation and to "change" your "identity" therefore any reputation should always be taken with a grain of salt. If there are no consequences for someone impersonating someone (a form of fraud) then what would deter them from attempting to impersonating someone with a lot of reputation?