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Author Topic: Former Fed Chair Bernanke: Bitcoin's Real Problem is Its Anonymity  (Read 411 times)
bitcoinmarkets
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November 20, 2015, 07:28:00 PM
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source here: http://www.bitcoinfuturesguide.com/bitcoin-blog/former-fed-chair-bernanke-the-real-serious-problem-that-bitcoin-has-is-its-anonymity



Matt Phillips at Quartz had an interview with former Fed chair and current hedge fund consultant Ben Bernanke: http://qz.com/553407/ben-bernanke-on-bubbles-bitcoin-and-why-hes-not-a-republican-anymore/ and he used the opportunity to bring up Bitcoin. His response was positive on the technological front, but he had some arguments against it on economic theory grounds. His full response was:

"It’s interesting from a technological point of view. We’re in a world where the payments system is evolving quickly and new approaches to managing payments are proliferating, and some of the ideas around bitcoin will no doubt be useful in doing that. But I think bitcoin itself has some serious problems. The first is that it hasn’t shown to be a stable source of value. Its price has been highly volatile and it hasn’t yet established itself as a widely accepted transactions medium.

​But the real serious problem that it has is it’s anonymity, which is a feature, and is also a bug, in that it has become in some cases a vehicle for illicit transactions, drug selling or terrorist financing or whatever. And you know, governments are not happy to let that activity happen, so I suspect that there will be oversight of transactions done in bitcoin or similar currencies and that will reduce the appeal."

​Let's take a closer look, his criticism boiled down to two main points:

  • Its volatility shows that it's not a suitable store of value
  • Its anonymity poses regulatory problems


So, where to begin. Let's grant him the first point. It's a volatile currency, okay fine. That's the nature of a the free market and a new instrument. However, Dr. Bernanke is dead wrong on his second point.

Is bitcoin anonymous? No, it is not. The blockchain is, after all, a public ledger of all transactions. It's a forensic accountant's wet dream: the ultimate paper trail.

This is why organisations like the Blockchain Alliance exist. Because there doesn't need to be "regulatory oversight" beyond what already exists. People who deal in bitcoin are money transmitters.  If investigators are trying to find who the owner of coins are, they can trace the transaction they found back to the original person who exchanged them for fiat.

Bitcoin is just digital cash. We know governments are trying to eliminate cash also, but when the elites are making false assumptions about new technologies like Bitcoin, and then base their policy decisions on this misinformation, then everyone loses.

Let's be clear: Bitcoin can be anonymous. But it's not really a selling point of the protocol. Pseudonymous at best, but anonymous? Dr. Bernanke, do your homework a bit more before you start making such policy analysis.

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November 20, 2015, 07:43:31 PM
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Bitcoin is less anonymous than fiat bills. At least there is a whole ledger to analyse. With a super computer and clever algorithm, leads can be found. Regulators can do that with fiat bills.

Benanke is correct about it being a problem for bitcoin. Government do not like it and they are not going to turn a blind eye to bitcoin. But in time, I think this hostility will change when it's legit uses becomes more widespread. They will have to accept the norm. We don't eliminate credit card because there are credit card fraud, we accommodate the downside.
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November 21, 2015, 03:20:13 AM
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Psychopathic Fed puppet has problem with bit coin.  This is surprising.

Get off my c@ck !
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November 21, 2015, 05:28:10 AM
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I bet their real problem with Bitcoin is not anonymity. Their problems with Bitcoin are that they dont control it, cant reverse transactions and cant print it when they need more money.
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November 21, 2015, 05:33:48 AM
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This is true.  For all we now Satoshi might have been 'eliminated' and not just disapeared. And there's no doubt many of the large failures, scams and hacking were done to sabotage bitcoins reputation.

Get off my c@ck !
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November 21, 2015, 10:44:16 AM
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I bet their real problem with Bitcoin is not anonymity. Their problems with Bitcoin are that they dont control it, cant reverse transactions and cant print it when they need more money.

That's exactly it, their problem isn't anonymity, they're just making excuses so they can come in and control it, anonymity to a lot of morons is this big scary thing that enables criminals and terrorists to hide from the law, they're trying to spread misinformation and scare people away from it.
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November 21, 2015, 11:35:30 AM
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https://www.cryptocoinsnews.com/ben-bernanke-worried-terrorists-use-bitcoin/

Personally ive always worried about bitcoin being used by terrorists. Its an easy scape goat for the argument of terrorists being financed by big anonymous sources in the east.
Look at the poll on this site for example (http://www.mirror.co.uk/news/technology-science/technology/isis-owns-small-fortune-bitcoin-6860698)

While we know bitcoin isnt truely anonymous, because of its decentralisation and the fact that its difficult to manipulate it by any one party, bitcoin transactions still can be obfuscated is a manner that makes it difficult to track down whos finacing who (not impossible, but currently beyond the capability of most government agencys).

If Bitcoin gets linked to terrorism its popularity could be destroyed since so few of the masses really understand it so its an easy target to get people to hate. Though the question remains if such a thing happens how much damage would it do to the name and value of bitcoin ?

Another controversial topic...if (for arguments sake) Bitcoin was beyond doubt being used as a method to fund terrorists, from an ethical standpoint would you still support bitcoin even though you are pro bitcoin ? Especially once certain people (e.g Sarah Palin supporters) start throwing bricks through your windows once they find out you're a miner, cause they think you are supporting terrorists by mining.
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November 21, 2015, 12:33:31 PM
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https://www.cryptocoinsnews.com/ben-bernanke-worried-terrorists-use-bitcoin/

Personally ive always worried about bitcoin being used by terrorists. Its an easy scape goat for the argument of terrorists being financed by big anonymous sources in the east.
Look at the poll on this site for example (http://www.mirror.co.uk/news/technology-science/technology/isis-owns-small-fortune-bitcoin-6860698)

Money is used by terrorists. They don't care what currency they are in: US dollars, British pounds, Euros, Russian Ruble or Bitcoins.
By this logic you have to ban all money.

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