Western governments should love Bitcoin's privacy features, not fight them

[m2017]

snip

True, an interesting observation.

If governments voice the rhetoric that they are doing everything for the benefit of the people and democracy, the ban on bitcoin is a direct contradiction to these statements. Democrats should first of all advocate for the “freedom to use bitcoin”, but as you can see, this is not happening.

But I have no doubts that most developed countries will not allow the confidential use of bitcoin, and some will even ban any use.

It is also extremely naive to expect that authoritarian governments will worry about the opposition being deprived of funding due to the ban on bitcoin. Such governments use such bans to weary competitors who are laying claim to their power. This is to their advantage and they will not refuse such an opportunity.

[d5000]

I've recently heard Legarde speak about stable coins in the EU and the need to advance CBDC and it was obvious she wants to control the money flow.

Stablecoins aren't exactly known to be privacy tools. Thus I interpreted this speech differently, that the ECB doesn't want the Euro to be replaced by USD stablecoins, or even worse, "basket"-type stablecoins like Libra was meant to be.
This is not meant to defend the ECB here, but it's two different problems imo. CBDC fear is a bit overrated (even if I don't like the concept), banks will always try to keep a portion of the digital transaction cake, so there will probably never be a "CBDC-only" system some people fear. Maybe in North Korea.

The question that should still be asked here is: Does a state want its citizens to be able to act as privately as possible (and thus possibly not controllable)?

It depends who is in charge in the state. And who demands certain "values" from the state (e.g. focusing more on security and not on privacy). See my answer above to @pooya87 and this one to Alpha Marine.

The problem has much to do with fears, people feel unsafe in the digital world and thus are demanding "strong leaders" and "strong law and order policies". And politicians give them what they want.

But the call for privacy is also weakened by the current tendency to form groups and defend every idiocy the own gang says. I'm referring here e.g. to left-leaning hackers who defend privacy but have too high hopes the state could protect their privacy, and reject "anarchist" methods like Bitcoin because it's not compliant with the group's ideology. Thus there are relatively few people defending Bitcoin's privacy. This thread is also a call to these groups, if someone of them is reading here (wishful thinking imo ).

If Bitcoin privacy had a strong movement protecting it, like those movements who have prevented the public connection storage in European countries like Germany, I think the state would not be acting as aggressively as it does currently. Both due to big voter groups demanding privacy, and perhaps even to more knowledge about the subject.

[...] democracy and freedom are illusions that politicians very skillfully sell us every four or five years when they need votes in elections. Let's be realistic, something like BTC is just a nuisance in the existing centralized system

I believe the problem lies deeper. See answers to @Lakai01 and @Alpha Marine some posts above.

You have to wonder why most countries are afraid of this concept, especially those countries that have directly intervened to destroy the regimes of other countries and thus created a lot of enemies that they now have to be careful not to retaliate against. [...] In order to try to prevent this, they must have absolute control over everything

I don't fully understand your logic here. So they need control to prevent someone, in their name, retailiates against a stronger enemy? If you want you can elaborate a bit ...

Also imo currently the control can't be that absolute, otherwise there would be no crime at all and also no international conflict. There are cities in China where at least regarding crime in the public space, total control is close to reality (e.g. Shenzhen). In most other countries, the control is quite deep (see NSA) but not absolute.

(for some reason my browser refuses to quote your post correctly)

[henry_of_skalitz]

snip

True, an interesting observation.

If governments voice the rhetoric that they are doing everything for the benefit of the people and democracy, the ban on bitcoin is a direct contradiction to these statements. Democrats should first of all advocate for the “freedom to use bitcoin”, but as you can see, this is not happening.

But I have no doubts that most developed countries will not allow the confidential use of bitcoin, and some will even ban any use.

It is also extremely naive to expect that authoritarian governments will worry about the opposition being deprived of funding due to the ban on bitcoin. Such governments use such bans to weary competitors who are laying claim to their power. This is to their advantage and they will not refuse such an opportunity.

Aren't all the guys in the offices thinking more about their own abilities and how they can work toward centralizing everything they touch?

It's obvious that they would work for their reserves of BTC and so on, but to develop ways for the common folk to properly use BTC accordingly, no.

[Lucius]

You have to wonder why most countries are afraid of this concept, especially those countries that have directly intervened to destroy the regimes of other countries and thus created a lot of enemies that they now have to be careful not to retaliate against. [...] In order to try to prevent this, they must have absolute control over everything

I don't fully understand your logic here. So they need control to prevent someone, in their name, retailiates against a stronger enemy? If you want you can elaborate a bit ...

Perhaps I expressed myself clumsily - what I want to say is that countries like the US, the UK or France have a great burden and responsibility on their shoulders - there is no doubt that their attack on Iraq was completely wrong and based on false information, that the invasion of Afghanistan was one of the biggest failures (and extremely expensive) - and that with these actions (and some others) they created a bunch of enemies who dream of only one thing - and that is to attack those same countries and cause as many more victim.

If you say "stronger enemy", what does that even mean? How is it possible that weaker enemies could have carried out such a sophisticated attack with passenger jets on the heart of the US? I can also ask you the following question - why doesn't something like that happen today, why have terrorist organizations become rare?

My conclusion is that there is perhaps not absolute, but almost absolute control of everything that is online or serves for communication (mobile networks), as well as regular financial flows of money.

Also imo currently the control can't be that absolute, otherwise there would be no crime at all and also no international conflict. There are cities in China where at least regarding crime in the public space, total control is close to reality (e.g. Shenzhen). In most other countries, the control is quite deep (see NSA) but not absolute.

Crime (of all kinds) simply must exist - because the saying "bread and games" may be hiding something else - and that is precisely crime as one of the pillars of the society in which we live.  Do you want a concrete example? Let's say my country has been in the EU for 10+ years and during that period the same party has been in power, and during the same period around 30 ministers were forced to leave their positions because they were found to have criminal activities.

At the same time, this same party is receiving praise from the EU leadership for its excellent work, and how could it not when the head of the EU, Queen Ursula, is secretly negotiating with companies on deals worth tens of billions of EU euros and is not accountable to anyone for it.

(for some reason my browser refuses to quote your post correctly)

It's possible that it's because the post is long and has a lot of quotes - it happens to me too sometimes that I can't make a post the way I want. I think it's a forum thing, not a browser thing.

[DonaldCryptoTalk1]

Western governments claim that they promote freedom in the world. They call themselves "democratic" and "liberal".

Well, Bitcoin could help them with that mission. Above all in today's times that authoritarianism is on the rise again.

But they seem to chose to not do so, but instead they try to eliminate Bitcoin's main freedom-providing feature: censorship resistance.

An example: Bitcoin is one of the few ways to fund opposition movements in authoritarian countries. It's unlikely dictators can detect these Bitcoin transactions if they use well known privacy techniques, like CoinJoins, mixers and non-KYC services. Most dictatorship cut off other (fiat) sources, only cash may still work but is a hassle.

But where should these movements spend the money donated to them, if no exchange or merchant accepts their coins, because they are "high risk" and linked to "suspicious" services?

Another example: People in democracies are protected by strict privacy protection laws. Nevertheless, a lot of services thought to be "safe" were hacked in the past, even government-owned data was massively stolen. Thieves use these data for identity theft.

Bitcoin could solve that problem because in contrast to banks and services like PayPal, it is a way to transact money privately without having to store personal data on some server due to KYC requirements. With these KYC requirements, western governments put their citizens in danger to be victims of serious crimes. They also restrict their freedom to buy everything they want (which in 99% of all cases is not illegal stuff) with nobody having insight to the transactions. Because due to the FATF travel rule, many transactions, their originators and beneficiaries are also stored on servers. And if somebody hacks that data and connects them in the right way, everybody can see what you bought.

"Money laundering", "sanctions evasion" and "terrorist financing" are the excuses used by the anti-privacy governments. But available statistics about that issue show that cryptocurrencies are a very minor tool for money launderers, compared to the vast options provided by fiat money. Cryptocurrencies do not even provide what money launderers most want: "clean" money. Privacy services like mixers only are able to blur some tracks. But they can never provide "clean" money, only "cryptocurrencies of uncertain origin." They are maybe useful for small criminals, but not for the "big fishes".

Thus: Western governments should re-think their stance about cryptocurrency privacy. If they want to fight authoritarian dictatorships, they should not treat their citizens like them. Instead, they should respect their freedom to transact privately.

(That also is valid for governments which are not part of the classic definition of the "West", but claim to promote similar democratic values, like Japan, India, South Korea, South Africa etc.)

This is a very thoughtful point. Western governments often say they defend freedom and democracy, but by attacking Bitcoin’s privacy features they risk contradicting those values. Privacy isn’t only about hiding crime, it’s about protecting citizens from surveillance, data breaches, and even abuse of power.

If governments are truly concerned about illicit use, then the better approach would be to regulate exchanges sensibly while allowing individuals to maintain transactional privacy, just like we still have the right to use cash. Otherwise, they might end up weakening the very freedoms they claim to promote.