Do we want to work with money regulators, or keep Bitcoin unregulated?

[helohe]

Bitcoin will remain unregulated.  It doesnt matter if people in the community want it regulated or if government(s) want it regulated.  Bitcoin, by nature, is unregulated.  They cannot seize your btc unless under duress, etc.  You are your own bank.

Until the devs fork it and say: "Here is the regulated Bitcoin 2.0 which will be worth 10000USD because of big company involvement, if you don't want use it then use the unregulated Bitcoin 1.0 for illegal activities which will be worth about 2USD."

Looking at the majority of people involved in Bitcoin i'd place my money on that everybody would go for 2.0. Of course, the Bitcoin Foundation together with other large companies (paypal, banks etc), will make a plan to slowly manipulate us into believing that a regulated Bitcoin will be much better for everyone. If you ask me, it has already begun.

I'm still confused by this whole discussion, and I think people aren't thinking this through and are failing to appreciate the nuance of what it would even mean to regulate bitcoin, or any other payment system built on the distributed, blockchain model.

Can we all pause for a moment and try to explain what it would even mean to "regulate bitcoin"?  By its nature, a distributed, majority rules rule, blockchain system is resistant to top-down, state imposed regulation of itself.  In that sense, neither bitcoin, nor litecoin, nor any other system based on this model can simply be regulated upon in the sense that some authority declares it should behave a certain way and then it is so.  Again, the system is resistant to that by design.  I get the sense that people are worried that the system will be regulated in this sense.  It practically cannot be.

On the other hand, points of contact with the traditional financial system (e.g. banks) can be regulated upon in a top-down authoritarian way.  Regulation at these points of contact is practically impossible to prevent.  In some cases regulation in this sense may even be desirable.

Can we please get clear about which sense of regulation we're talking about here.

I have no problem with regulating exchanges whatsoever, I think it is actually a good thing. But I do have a strong problem with the following:

In the last round of grant proposals at one point Gavin suggested someone submit a grant for a trust-free mixer service to help people make the coins in their wallet more anonymous by mixing them with a large pool of other users. I asked Gavin about that later, and he said the foundation lawyers nixed the idea because efforts to make Bitcoin users more anonymous could be seen to be aiding money laundering, especially if the foundation itself was paying for development and to run the servers.

We can work with regulators to make sure Bitcoin is acceptable to them. For instance we can ensure that it remains possible to track the flow of money through Bitcoin. We can also ensure that there are options if certain funds need to be frozen and blacklisted, due to fraud, theft, or because they encode illegal data. We can work with them to find ways to apply AML rules to Bitcoin transactions and to the exchanges. There are ways to put taxation into Bitcoin itself, so that taxes are automatically applied when a transaction is made. Maybe even one day we'll be required to prevent dangerous levels of deflation. A lot of these changes are technical, such as improving scalability so transactions can remain on the blockchain, developing P2P blacklist technologies, and preventing deflation.

Sounds freakin' dandy. Count me out if it goes this direction.

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[yona]

Regulation of bitcoin in some sense is inevitable and probably desirable, but it's important to recognize that the only sense in which bitcoin can be realistically regulated has to do with the ways that bitcoin interfaces with the traditional financial system.  So, exchanges, like MtGox, can be compelled to behave in certain ways by the financial regulations of their jurisdictions.  They can be held to standards of accounting and reporting, say, and face fines or interference for not complying.

A unique aspect of bitcoin is that transacting only in the bitcoin ecosystem, away from points of contact with the traditional financial system, is to transact in a system that is pretty strongly resistant to typical top-down regulation from entities like states.  Users can more easily choose whether they operate in the regulated space or the unregulated space.

In a discussion on regulation, I think it's important to make this distinction.  If somebody, like some members of the Foundation, are pro-regulation, it doesn't necessarily mean they believe that bitcoin itself should or will be regulated - it probably just can't be regulated in a practical way.  What they are likely talking about are regulations to do with certain ways that bitcoin comes in contact with traditional financial systems where states already enforce regulations.

yes there are two questions at hand.
be part of creating new government regulations to the traditional financial system or help regulate the bitcoin development.

but either way once the foundation sits to the table it's a negotiation, and both options will be discussed.

[cypherdoc]

Let me ask you a question.

What stops someone from putting a bullet in your head and stealing all your stuff?

The answer is regulations.

This is not right. The answer is The Law.

One depends on an immutable understanding between human beings.

The other is political.

[c0rw1n]

NO regulation.

Not that I care. I'll still do whatever the hell I want, I'll create tumbling services, I'll run mirrors of SilkRoad, I'll fund a p2p exchange -since I can't code myself- that will happily ignore and make all existing KYC/AML laws unenforceable on it, I'll use so-called military-grade crypto in onioned layers, I'll use all the tools that exist to bring down a system that stole two thirds of all that humanity has made and gave it to 1% of humans.

The faster solution is to kill off the 1% and distribute their wealth to everyone else (90% of all wealth divided by seven billion would ERADICATE poverty overnight.)
The HUMANE solution is to simply disconnect their power from under their feet. Back btc with "all of the money" and all govts and banks are DEAD. Implement distributed markets, dominant assurance contracts and pay-to-policy outputs, and BOOM : DIRECT DEMOCRACY.

All we have to discuss is the terms of their surrender. They can't control us because they can't raid us all. They'll try to stop us by fining a handful of poorly-anonymized ones to create the urban legend that someone, somewhere got ruined for doing it. That will work exactly as well as it did to stop filesharing - that is, near-zero effect.

I refuse that we castrate a tool that can bring more equality and liberty to the world to appease the iniquitous slavers who manage it currently.

NO regulation.

[c0rw1n]

Let me ask you a question.

What stops someone from putting a bullet in your head and stealing all your stuff?

The answer is regulations.

This is not right. The answer is The Law.

One depends on an immutable understanding between human beings.

The other is political.

You're both wrong.

What prevents someone from putting a bullet in your head and stealing all your stuff is that you and bulletguy have neighbors, and cameras on every street corner, and two cameras and three localizers in every smartphone, and a blockchain to trace which wallet bought the gun and the bullet, and families, and a whole fucking society of 7 billion humans who don't like to receive bullets in their heads.

So they'd rapidly stop interacting (or worse) with antisocial pieces of shit that shoot people to take their stuff.

Moreover, there are ways to implement Basic Income in cryptocoin. That alone would stop all of crime committed for purely monetary reasons, if it's enough to survive on.

[Brushan]

To nwbitcoin:
I'm not an ideological Bitcoin user but a logical Bitcoin user. My understanding of your argument is that we will lose if we don't follow laws and regulation. The only loss i see is that 1BTC won't go up in value as quickly as if we stayed legit and connected with big businesses. But then why would you want to use Bitcoin? You're still a part of the system that Bitcoin was made to counter. I understand that some people only entered Bitcoin to get rich quick but for me it goes much deeper than this. Bitcoin in it's current state is unstopable. We can make an alternative economy and compete with todays economy which would force, for example, banks to offer better service. People that are tired of the regulated world economy which is regulated just so rich can stay rich and poor are forced to keep being poor can just leave and enter the free market of Bitcoin. I don't hate todays economy but we are facing problems that naturally come with monopolies and we need competition. Something that todays technologies like the internet and p2p can offer. My thoughts about Bitcoin has always been that you shouldn't get rich by HOLDING bitcoins. You should USE this wonderful technology to make money because it makes it much easier without the regulations of the elite made by them for you so they can keep their power.

To proudhon:
This is what scares me. Just like you and me, they know that they can't regulate Bitcoin in its current state. That is why the talk about confiscating tainted bitcoins makes me believe that they are planning to either fork Bitcoin or start a central banking type service. They probably will do it with the excuse that it is required to invite big businesses and then everybody will become rich. And most will probably agree because they want their BTC to rise in value. It shocks me that people remain calm when head devs make suggestions like these. Soon Bitcoin will be the same as fiat or gold. Regulated and manipulated by the banks and the government will keep track of everything you do.

[DeeSome]

Bitcoin will remain unregulated.  It doesnt matter if people in the community want it regulated or if government(s) want it regulated.  Bitcoin, by nature, is unregulated.  They cannot seize your btc unless under duress, etc.  You are your own bank.

Until the devs fork it and say: "Here is the regulated Bitcoin 2.0 which will be worth 10000USD because of big company involvement, if you don't want use it then use the unregulated Bitcoin 1.0 for illegal activities which will be worth about 2USD."

Looking at the majority of people involved in Bitcoin i'd place my money on that everybody would go for 2.0. Of course, the Bitcoin Foundation together with other large companies (paypal, banks etc), will make a plan to slowly manipulate us into believing that a regulated Bitcoin will be much better for everyone. If you ask me, it has already begun.

I see Bitcoin moving in this direction.
This quote needs to be kept bumped to the top of this thread.

[bassclef]

+1

Eternal vigilance is the price of liberty.

[Stampbit]

A self regulating coin will spring up in the next few years that will eliminate alot of the volatility we are seeing today. As for the government/banks controlling the coin itself, it cant or it would be worthless.

[MGUK]

Handling bitcoins is already pretty much regulated, at least when it comes to converting to fiat.
 - Exchanges have to abide by AML/KYC.
 - UK Exchanges need to register with HMRC.
 - They have to justify and explain all sources of income so the banks don't close them for suspicious activity.
 - Any transactions that are suspicious must be reported to UK intelligence agencies otherwise exchange owners face prosecution.
 - Any earnings from Bitcoin must be declared to be taxed.

A lot of these things are in place to prevent money laundering, but a lot of this still relies on goodwill, of which not everyone has.

Society is about compromise. In the UK, we have a usable transport infrastructure, a usable energy infrastructure, a usable education system, and for that, morally, we should probably pay something some how.

It sounds kinda cliché and and "what they want you to think" but not at least considering supporting legislation to stop that sort of evasion is just aiding theft.If we say no to legislation & regulation, on some level not agreeing to try hinder tax evasion, we're no better than the huge corporations in the news every week paying 0 tax and holding everything in off shore accounts.

Although I think morally we should at least entertain the idea of regulation and cooperation, I think a lot of consideration does need to be made to get the right balance between enforceability and protection of freedoms and privacy.

[proudhon]

A self regulating coin will spring up in the next few years that will eliminate alot of the volatility we are seeing today. As for the government/banks controlling the coin itself, it cant or it would be worthless.

How would a distributed, blockchain currency self regulate to dampen volatility?  In order to do that it would be dependent on some source for its information about what price people were trading it at.  Would it use one source?  Many sources?  Who would maintain these price feeds?  Would not the price feeds be susceptible to hacks where invalid or disruptive data could be delivered to influence the way the currency self-regulates?

It's a nice thought, but it just adds a layer of complexity and potential exploitation to something that in its growing up years can already be manipulated and exploited pretty easily.  It's easy to forget how young this idea is.  If it's to persist into the future at all and become a significant player in global economics its journey there will be volatile, that's just the way it will go.

[benjamindees]

Retep is opposed to improving scalability so transactions can remain on the blockchain. He has some opinions about what the blockchain should be used for, and he wants to cap the network at 7 transactions per second, and blow fees through the roof so that most of the current uses of Bitcoin will have to go somewhere else.

Confirm/deny?

[Stampbit]

A self regulating coin will spring up in the next few years that will eliminate alot of the volatility we are seeing today. As for the government/banks controlling the coin itself, it cant or it would be worthless.

How would a distributed, blockchain currency self regulate to dampen volatility?  In order to do that it would be dependent on some source for its information about what price people were trading it at.  Would it use one source?  Many sources?  Who would maintain these price feeds?  Would not the price feeds be susceptible to hacks where invalid or disruptive data could be delivered to influence the way the currency self-regulates?

It's a nice thought, but it just adds a layer of complexity and potential exploitation to something that in its growing up years can already be manipulated and exploited pretty easily.  It's easy to forget how young this idea is.  If it's to persist into the future at all and become a significant player in global economics its journey there will be volatile, that's just the way it will go.

Read up on some of the alt-coin ideas floating around, some of them are working with the idea of lifting artificial limits like fixed/descending block rewards, demurrage to encourage its use as a currency and not a commodity, and  introducing some level of AI to have the network automatically perform the functions of a central bank.

[nwbitcoin]

To nwbitcoin:
I'm not an ideological Bitcoin user but a logical Bitcoin user. My understanding of your argument is that we will lose if we don't follow laws and regulation. The only loss i see is that 1BTC won't go up in value as quickly as if we stayed legit and connected with big businesses. But then why would you want to use Bitcoin? You're still a part of the system that Bitcoin was made to counter. I understand that some people only entered Bitcoin to get rich quick but for me it goes much deeper than this. Bitcoin in it's current state is unstopable. We can make an alternative economy and compete with todays economy which would force, for example, banks to offer better service. People that are tired of the regulated world economy which is regulated just so rich can stay rich and poor are forced to keep being poor can just leave and enter the free market of Bitcoin. I don't hate todays economy but we are facing problems that naturally come with monopolies and we need competition. Something that todays technologies like the internet and p2p can offer. My thoughts about Bitcoin has always been that you shouldn't get rich by HOLDING bitcoins. You should USE this wonderful technology to make money because it makes it much easier without the regulations of the elite made by them for you so they can keep their power.

To proudhon:
This is what scares me. Just like you and me, they know that they can't regulate Bitcoin in its current state. That is why the talk about confiscating tainted bitcoins makes me believe that they are planning to either fork Bitcoin or start a central banking type service. They probably will do it with the excuse that it is required to invite big businesses and then everybody will become rich. And most will probably agree because they want their BTC to rise in value. It shocks me that people remain calm when head devs make suggestions like these. Soon Bitcoin will be the same as fiat or gold. Regulated and manipulated by the banks and the government will keep track of everything you do.

I totally agree with your ideological reasons for using bitcoin, and the sooner we can buy and sell stuff with it, the better - however reality is what actually happens, rather than what you'd like to happen!
People always speculate with new stuff, its human nature - and the big problem for bitcoin at the moment is that there is very little else you can do with it!

As for your argument for the regulations not increasing the value of bitcoin, you are missing the reality of the situation.  What if the free market decide, after its got bored of speculating, that without regulation bitcoin becomes valueless? Of, more likely, the value of bitcoin drops to nothing as the alternative coins which are willing to play ball go up in value?

Regulations don't mean centralisation, it means playing by the rules.  It means more stabilisation, it means big business has a far lower risk to deal with, which means higher valuations. 

However, I don't really need to justify any of my thoughts because the final bit of this situation is that its going to happen anyway - regardless of what we think.  You might as well be ready for it!

[nwbitcoin]

Let me ask you a question.

What stops someone from putting a bullet in your head and stealing all your stuff?

The answer is regulations.

This is not right. The answer is The Law.

One depends on an immutable understanding between human beings.

The other is political.

And what is the law?  Just a set of regulations that we all agree to live by as the cost of being a part of society.

If you don't agree, you are kidnapped and held against your will until common opinion says you have learnt your lesson. Sometimes, in some places, they kidnap you and kill you.  I think that may be Texas!

[nwbitcoin]

Let me ask you a question.

What stops someone from putting a bullet in your head and stealing all your stuff?

The answer is regulations.

I have been posed this question numerous times and have thus had much incentive to think about it a lot. And my answer(s) differ from your answer. Please consider:

I came to the conclusion that what stops people from stealing from me/putting a bullet in my head can be summarized in 3 points:

1. people have little reason to randomly kill me. I admit that they can have reasons to steal from me, though.
2. What stops them from stealing my stuff even when they have reasons to do so is FEAR of retribution. This is the crucial point imo. Right now this fear of retribution manifests itself as fear of getting arrested, sentenced, fined and put into jail by the authorities. This is where we fail massively as a society I think, but I won't go into detail on why I think it's not a good idea to relegate responsibilities for the most crucial parts of your life (such as protection of your property, your education, health care, retirement etc.) to a monopolistic central authority. I'm certain you can find some arguments for why that might be the case. Fear of retribution can also take the form of the belief that if found stealing my stuff, he'll get shot in the face (by me) or found out and otherwise punished by my friends or some people/organization I paid for protecting my stuff. Ultimately we don't need regulation for this, but this is what we use as of now.
3. Finally please have some trust in people. Let me ask YOU a question: is regulation the only thing stopping you from stealing other peoples stuff and shooting them in the face? Or is it just there to protect YOU against those OTHER people, who might want to do that. Who told you people are like that? Oh yes, might have been the same people, who are regulating you to keep you safe But my question still stands.

In the end I'm just allergic to central power, I heard it's a chronic condition, feel free to ignore me

I like your thoughtful answer, so I will give you an alternative viewpoint.  Please remember that while I also hate regulations, I am very aware that there is no way you can stop it happening, it would just be nice to be on the winning side for once!

You notice that there is very little to stop someone from shooting you in the head except regulations!
The FEAR of retributions is the other side of regulations.  If you break them, either by laundering bitcoins, or by shooting someone dead, its the fear of of enforcement of regulations that make regulations work.

You ask what stops me from shooting people in the head? This is where it gets difficult because you are asking someone, with a similar moral compass to you.  I wouldn't go and do something like that because its morally wrong.  For 70% of the population, this is the only answer you will get.  However, that last 30% is the problem.  We might like to think they are all the criminals in prisons, but its not actually true.

Most of them are the psychopaths who have never been outed.  They run companies, they are your managers, the people who would say anything to get ahead. Without regulations, there are no retributions, and without retributions, there are no reasons not to do what it takes to get what you want.
Why do you think bitcoin keeps getting DDos'ed?  Why do the coins keeps getting pumped and dumped?  Because there are no rules saying you can't do it.

It does feel infantile to have rules stating the obvious to stop us hurting ourselves, and that is when regulations are done badly.  However, a few well written rules help everyone.  The question is, who is the best people to write those rules?
Us!

[marcus_of_augustus]

We need regulation because that is how you keep others from creating regulations and it makes far more sense to create the regulations in house, than to give it to someone who has an unknown agenda.

I have seen many users post this argument and i don't understand it. HOW can you regulate a currency that was designed impossible to regulate? To me it looks like the people in charge are trying to make either a fork or a central bank-type layer so that it can be regulated. Because let's face it, Bitcoin right now CAN'T be regulated if we don't let them regulate it. They want to close all the exchanges? Fine! We have TOR, we can meet in the streets and people will find other ways to bypass that. That's why 'm not afraid of the government forbidding Bitcoin. But it looks to me like they want to change the whole nature of Bitcoin and that is what's dangerous. And even more because many Bitcoin users have no problem with that.

Think of it this way.
You have a wonderful Apple pie on your kitchen window, which is warm, and smells delicious.
If you give the bully a small slice, he will leave you alone, happy that he got some pie.
If you don't, he might take the whole pie, and give you a small slice.
If you run away with the pie, he might come after you and not only steal your pie, but also smash it into your face.
If you run away, you might out run the bully, but also end up away from the house, not able to watch TV while eating your pie with no plate, cutlery, or lemonade!

The point is, when you have something that someone else might want, the first move is to be reasonable, because it stops them being unreasonable!

Bullies never settle for "a small slice" ... they always come back for more and more and more because they are getting it for free ....

And the "we don't negotitate with terrorists" doctrine applies here also.

[BigJohn]

In the last round of grant proposals at one point Gavin suggested someone submit a grant for a trust-free mixer service to help people make the coins in their wallet more anonymous by mixing them with a large pool of other users. I asked Gavin about that later, and he said the foundation lawyers nixed the idea because efforts to make Bitcoin users more anonymous could be seen to be aiding money laundering, especially if the foundation itself was paying for development and to run the servers.

We can work with regulators to make sure Bitcoin is acceptable to them. For instance we can ensure that it remains possible to track the flow of money through Bitcoin. We can also ensure that there are options if certain funds need to be frozen and blacklisted, due to fraud, theft, or because they encode illegal data. We can work with them to find ways to apply AML rules to Bitcoin transactions and to the exchanges. There are ways to put taxation into Bitcoin itself, so that taxes are automatically applied when a transaction is made. Maybe even one day we'll be required to prevent dangerous levels of deflation. A lot of these changes are technical, such as improving scalability so transactions can remain on the blockchain, developing P2P blacklist technologies, and preventing deflation.

Sounds freakin' dandy. Count me out if it goes this direction.

+1

This basically sums up my feelings on the topic. If they do any sort of thing to work with the government, like taxation, anti-anonymity measures beyond what's in the nature of Bitcoin itself, that's the day that I cash out and stop recommending it to people.

[tvbcof]

We can work with regulators to make sure Bitcoin is acceptable to them. For instance we can ensure that it remains possible to track the flow of money through Bitcoin. We can also ensure that there are options if certain funds need to be frozen and blacklisted, due to fraud, theft, or because they encode illegal data. We can work with them to find ways to apply AML rules to Bitcoin transactions and to the exchanges. There are ways to put taxation into Bitcoin itself, so that taxes are automatically applied when a transaction is made. Maybe even one day we'll be required to prevent dangerous levels of deflation. A lot of these changes are technical, such as improving scalability so transactions can remain on the blockchain, developing P2P blacklist technologies, and preventing deflation.

Sounds freakin' dandy. Count me out if it goes this direction.

The trouble(*) is that at this time, and possibly for some time to come, for every '1' in the real world who is turned off by such things, there will be '10' who will think they sound great(**).  Their response will be 'Count me in.'

(*) Of course "One man's trash is another man's treasure." so 'trouble' may not be the right word exactly.

(**) I'm not standing by and exact 1/10 ratio.  Just making a point as I see it.

[ErisDiscordia]

Thanks for the reply nwbitcoin.

I think I understand your position better now. Let me explain why I still don't like it, though

But first...

You ask what stops me from shooting people in the head? This is where it gets difficult because you are asking someone, with a similar moral compass to you.  I wouldn't go and do something like that because its morally wrong.  For 70% of the population, this is the only answer you will get.  However, that last 30% is the problem.  We might like to think they are all the criminals in prisons, but its not actually true.

Do you really think the % is this high? I think we have different degree of trusting people in general, I consider the % of troublemakers (shaped that way by upbringing, society, or simply born that way) to be considerably less. Basically I work with the assumption that people are generally a decent bunch. Put them into a tough spot, though and they can quickly become selfish or downright evil. That's why I feel it's important to help shape society - because the very environment we live in might just be the biggest influence in what sort of people we are. In other words - a society like ours is bound to produce an abundance of sociopaths. For a sociopath is one who fears society and today it's easy to fear society, especially while conflating society with government and the state.

Most of them are the psychopaths who have never been outed.  They run companies, they are your managers, the people who would say anything to get ahead. Without regulations, there are no retributions, and without retributions, there are no reasons not to do what it takes to get what you want.

As you say, sociopaths (I assume when you use the word psychopath you mean something like I mean by sociopath) are rampant in our society. Not surprising at all. And there is nothing a sociopath likes better than a position of power. For when he has power, he has control over that which he fears. I agree this is a problem.

But don't you see that if we are creating regulations, meaning universal sets of rules and coupling them with institutions (backed by force) to enforce them, we are giving the sociopaths exactly what they want and need? Now instead of going around stealing other peoples stuff and randomly shooting pedestrians in the face, like you feared they would do - they run your government, your police force, your money and what have you.

Power corrupts and power also attracts the corrupted. The way to deal with this is not by trying to find the right people to write the right set of regulations - universal sets of rules, but to let everybody find their own rules.

People are afraid of Anarchy as of being a state without rules. This is nonsense, people are so obsessed with rules, they will instantly make up new ones. The crucial difference is whether we accept diversity, or try to force everyone to live by a single universal set of rules. The best ones, written by the brightest and most well-meaning people of all, of course.

My signature sums it up.