BTW, did anyone notice that the Zercoin anonymity extension was sponsored by the Office of Naval Research, DARPA, and the Air Force Research Laboratory  ?


Interesting ...

Zerocoin is NOT an alternative currency. It is a proposed extension to Bitcoin to solve the lack of anonymity in Bitcoin transactions. Since all transactions of every Satoshi ever spent is recorded in the blockchain, you can imagine how easy it is to map out the connections, deduce owners, and see who has how much, and where it went. It is like a built in mixing service.

The Zerocoin name is unfortunate, as everyone seems to *assume* it must be some derivative cryptocurrency, when in fact it is an anonymity extension to Bitcoin.

While I'm sure that the realization (to those who never bothered to learn anything) that every Satoshi you ever spend will, by default, by traceable - and those networks of transactions can serve to identify and profile you - will scare some people, I'm believes that this transparency is important to Bitcoin's survival. For one, it will help to deter government regulation to some degree, as intelligence agencies have a wet dream about building tracing Bitcoins around the network. Two, it serves as a means to verify that taxes have been paid, and deter money laundering.

Zerocoin was wise to make it clear their design allows for a backdoor mechanism. That serves to allow anonymity (e.g. to hide how much you have), while allowing trace-ability by government agencies. It's superior to the Bitcoin mixing services, which are sure to be targeted sooner or later under money laundering laws.

OT: Reading the comments of many here, I am disturbed by the lack of understanding some have. If you're going to be enthusiastic about Bitcoin, you should at least learn its principles. It is not a panacea for all problems with currency and/or all problems in the world. It has many issues of its own, inherent to the design. It also has lots of positive attributes.