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

[Chief Satangkai]

...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...

Thats just so immensely insane and wrong!  I mean... WTF!

[1713464661]

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[nwbitcoin]

This has been one of the most thoughtful threads on here for a while and we do have a dilemma, which can't really be fixed.

My opinion is that you don't want to put your head in the sand, because things will happen without us.

However, as the regulations on the Internet has shown, its a never ending battle of not having too many rules, as regulators love to create new ones, rather than use the ones they have more creatively!

In the long term, all the wonderful elements of bitcoin, the Rand ideal of total freedom, will disappear. It will be exactly how posting what you like on the Internet went from 'What copyright?' to 'Desist and remove notices' in only 10 years.

We are in a wonderful position at the moment to be able to guide the direction of regulations, and I would agree that Bitcoin the protocol, should be left alone.  If we help by creating a best practice approach to exchanges, and other areas where fiat and Bitcoin mix, then we will prevent a more hard nosed approach to the rest of what bitcoin is about for the forseeable future.

Maybe the answer is to use bitcoin as the public face of crypto currency, and as the whole idea matures, the freedom element is taken by some new altcoin, much like TOR is the internet for the minority who demand privacy.  But don't expect these coins to ever be worth a fraction of a bitcoin!

[marcus_of_augustus]

Maybe the answer is to use bitcoin as the public face of crypto currency, and as the whole idea matures, the freedom element is taken by some new altcoin, much like TOR is the internet for the minority who demand privacy.  But don't expect these coins to ever be worth a fraction of a bitcoin! Wink

Winks and grins aside .... the market decides which is the best money, not any arrogant, regulation-pusher on the Intertubes.

Now ask yourself this, would you rather hold a currency that allows for total privacy in transactions or one that does not?

[Dharmadog]

5 pages in and it's still a stupid path to go down.

[benjamindees]

the first dollar bills and coins inscribed  'IN GOD WE TRUST' as a motto for the united states

The first US coins were inscribed 'MIND YOUR BUSINESS'.  That was the belief upon which the United States was founded.  It wasn't until we got fraudulent fiat ponzi money that it was replaced with the phrase 'IN GOD WE TRUST'.

[gmaxwell]

The first US coins were inscribed 'MIND YOUR BUSINESS'.  That was the belief upon which the United States was founded.  It wasn't until we got fraudulent fiat ponzi money that it was replaced with the phrase 'IN GOD WE TRUST'.

Today I learned!

This thread is kinda weird— it seems to suggest that there is a OR here, but I don't see how any answer can be anything other than yes, both. Bitcoin is just another thing you can own, like coal or beanie babies— and it would be very unusual for it to be highly regulated itself at least according to the norms of the more free nations. ... but it interacts with the banking world, which is highly regulated.  Some people will see it in their interest to try to work with regulators to achieve good outcomes for themselves (and everyone else), other people will go off in a multitude of directions which are not regulatory centric (and which, as a result, don't interact much with traditional banking).  Both things will happen no matter what folks want overall.  This doesn't bother me: The fact that Bitcoin is diverse is part of what makes it strong.  Not only would "regulating bitcoin" (itself) be inconsistent with the expected freedoms in first world nations, it's not obviously viable so long as bitcoin is thoroughly decentralized.

The OP also brought up another question though... how do we fund useful developments which are highly decenteralized— and thus can't easily fund themselves— when they don't really mesh well with the banking/regulation universe that many of the big name business players that we'd hope to bankroll development?

I don't really have an answer— I think ultimately our inability to answer it might be our downfall. Eventually the people currently working on Bitcoin technology for the love and principle of it will wear out. Will we only be left with serious work being done by people deeply in bed with large regulatory-target businesses?

[Peter Todd]

This thread is kinda weird— it seems to suggest that there is a OR here, but I don't see how any answer can be anything other than yes, both. Bitcoin is just another thing you can own, like coal or beanie babies— and it would be very unusual for it to be highly regulated itself at least according to the norms of the more free nations. ... but it interacts with the banking world, which is highly regulated.  Some people will see it in their interest to try to work with regulators to achieve good outcomes for themselves (and everyone else), other people will go off in a multitude of directions which are not regulatory centric (and which, as a result, don't interact much with traditional banking).  Both things will happen no matter what folks want overall.  This doesn't bother me: The fact that Bitcoin is diverse is part of what makes it strong.  Not only would "regulating bitcoin" (itself) be inconsistent with the expected freedoms in first world nations, it's not obviously viable so long as bitcoin is thoroughly decentralized.

I was talking about core technology - for that it is mostly an OR decision strongly based on decentralization. Heck, I would have followed it up with something similar to this pull request but John went of and did it first.

The OP also brought up another question though... how do we fund useful developments which are highly decenteralized— and thus can't easily fund themselves— when they don't really mesh well with the banking/regulation universe that many of the big name business players that we'd hope to bankroll development?

I don't really have an answer— I think ultimately our inability to answer it might be our downfall. Eventually the people currently working on Bitcoin technology for the love and principle of it will wear out. Will we only be left with serious work being done by people deeply in bed with large regulatory-target businesses?

Probably one of the hardest things we may face is that even just working on those technologies and having your name linked to doing so isn't something one should take lightly - yet, building trust in software is difficult enough when the people involved are known publicly, and a key non-monetary reason people work on opensource software is recognition.

Beyond that, there are always foundations, but I can't think of a single one that has operated anonymously.

[marcus_of_augustus]

Eventually the people currently working on Bitcoin technology for the love and principle of it will wear out.

... this has a sad ring of truth to it ... pioneers don't tend to hang around when the maddening throngs show up.

[jdillon]

The OP also brought up another question though... how do we fund useful developments which are highly decenteralized— and thus can't easily fund themselves— when they don't really mesh well with the banking/regulation universe that many of the big name business players that we'd hope to bankroll development?

I don't really have an answer— I think ultimately our inability to answer it might be our downfall. Eventually the people currently working on Bitcoin technology for the love and principle of it will wear out. Will we only be left with serious work being done by people deeply in bed with large regulatory-target businesses?

Assuming money from those interested in a decentralized Bitcoin was available, what suggestions do you have from getting that money from those people to developers in a reasonable way that respects that decentralization? It seems to me that is a big part of the problem by itself. The Dread Pirate may be rich, but if he pops up funding things many would not take his money.

One must also be careful not to distort natural incentives, or at least to weigh the damage against the gain.

http://www.ted.com/talks/dan_pink_on_motivation.html

[tvbcof]

...
The OP also brought up another question though... how do we fund useful developments which are highly decenteralized— and thus can't easily fund themselves— when they don't really mesh well with the banking/regulation universe that many of the big name business players that we'd hope to bankroll development?

I don't really have an answer— I think ultimately our inability to answer it might be our downfall. Eventually the people currently working on Bitcoin technology for the love and principle of it will wear out. Will we only be left with serious work being done by people deeply in bed with large regulatory-target businesses?

I favor halting development of Bitcoin right now (and I wish it happened sooner) and just focusing on hardening and dealing with bugs.  In that case there need not be more than a few highly talented people spending a modest amount of time on things.

I do not believe that this would severely limit the 'growth' of the system in terms of user-base though obviously it would change the trajectory.

As I said in the silly thread about who takes over for Gavin, I think it would make sense to attempt to enlist a person from 'outside' based on a long history of credibility whether or not they have had much to do with Bitcoin itself to weigh in with community direction recommendations.  Bitcoin is important and interesting enough that it may be able to attract some very promising candidates.  If that someone was already highly regarded for their past exploits (i.e., Kaminski or Shnier) and especially if they had taken a vow of poverty (a-la Stallman) I personally would feel a lot more confidence in following their suggestions and staying with the herd.

[cypherdoc]

The OP also brought up another question though... how do we fund useful developments which are highly decenteralized— and thus can't easily fund themselves— when they don't really mesh well with the banking/regulation universe that many of the big name business players that we'd hope to bankroll development?

I don't really have an answer— I think ultimately our inability to answer it might be our downfall. Eventually the people currently working on Bitcoin technology for the love and principle of it will wear out. Will we only be left with serious work being done by people deeply in bed with large regulatory-target businesses?

i thought you said you didn't care about my money?  on the contrary, i think you do (metaphorically speaking  ).

this is going to come down to, quite simply, your attitude .

what i was trying to say in our rather heated github debate was that the majority opinion on various Bitcoin issues should guide your actions, contrary to what you said about the importance of minority opinion of the devs on the Press Center debate.  i think the outcome of that debate should be a lesson to you.  

i think that you are confused as to how to handle yourself.  you devs are being scrutinized closely by the entire Bitcoin community and you can't afford to ignore the opinions of users, merchants, miners, and speculators.   you seem to think that by keeping one foot in the real world arena (regulation, political correctness) that some big money institution will come along and fund you.  that's not going to happen anytime soon b/c of Bitcoin's decentralization and economic tenets.

in case you hadn't noticed, there is plenty of money floating around within the Bitcoin community to fund your dev activities.  look at the $5M that Coinbase just got, or the $1M for BitPay, or the $500K for CoinLab, etc, etc.  if you insist on ignoring the majority opinion of the community, money will not flow to you.  the reason this money is flowing to these ppl is that it likes the principles upon which Bitcoin is built and these ppl are upholding that.  and yes, that means it challenges the State.

once you realize this, you will be much better off.  my advice to you is to voluntarily continue to work hard to improve on the concepts of the original Satoshi code.  as tvbcof said, it doesn't take much since Satoshi seems to have gotten all the economic concepts right.  then build/sell add on services or products on top of Bitcoin, much like etotheipi has done with Armory.  his plan is to eventually monetize that concept and i'm sure he will be successful.  things to be learned from him are: don't be too political, try to determine the majority opinion, help ppl often, treat ppl well, and make a good product.  profit.

money will then flow to you w/o any resistance.  not to mention your Bitcoin value will go up as well.

[Walter Rothbard]

As usual, I have to ask: What is this "we" business?

[2weiX]

As usual, I have to ask: What is this "we" business?

exactly.

[Loozik]

1. I suggest everyone who thinks that the so called government regulation is good or can be good should have a look at this website http://marcstevens.net/ I recommend Call of Shame - this is real fun http://marcstevens.net/cos

2. I also suggest people who think a government exists or a state exists watch this: http://www.youtube.com/watch?v=XdEUR-Xhob8 a government = unicorn = bizarre delusion

3. People who thinks there is evidence that regulations / constitutions apply to him should watch this: http://www.youtube.com/watch?v=ngpsJKQR_ZE&list=UUFeK8ZdHbCqAq3gekWs8aEQ&index=35

4. Allowing people calling themselves a government or USA to mess with Bitcoin = end of Bitcoin.

5. Developers should be paid by Bitcoin system users for work the developers provide; if users want new features in Bitcoin-Qt they crowd-finance such features. I personally do not mind paying a few BTC per year.

6. If point 5 is achieved there is no need for Bitcoin Foundation to do anything therefore people who call themselves a government have nobody to talk to, and no so called regulation can be imposed.

GIVE ME FREEDOM OR GIVE ME DEATH!

[xcsler]

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.

Essentially, I envision keeping your savings on the BTC 1.0 "gold fork" and converting it to the BTC 2.0 "fiat fork" when needed for spending.


The private "gold fork" would be BTC as we know it today outside of government regulation and used by people as a store of value and for "other purposes".

The big brother "fiat fork" would be like the US dollar (and other fiat) with complete government regulation and endorsement. It would be like fiat on steroids. Every transaction would be monitored and taxed at various rates depending on the transaction type. Salaries would be paid in BTC 2.0 with income taxes, social security taxes, medicare taxes being levied. All addresses of businesses and individuals would be known and registered with the authorities. The supply of BTC 2.0 would be managed by the central BTC bank. Etc.

BTC 1.0 would not disappear and its exchange rate would rise in value compared to BTC 2.0.

All in all, this change won't spell the end of Bitcoin but rather mean the conversion of fiat to an all digital currency.
 

[melvster]

There was an interesting post on the Bitcoin Foundation's private forum today:

Hi! I would like the board to discuss opening up lines of communication with money regulators - particularly FinCEN and AUSTRAC (I'm from Australia). FinCEN and other government money regulators need to write new rules as they obviously don't understand Bitcoin's inherent structure.

I think it would be better if some organisation like the Bitcoin Foundation could offer guidance draft rules and work with the regulators.

Otherwise we'll have a situation pretty soon where they try to implement something unworkable, the criminals flood into the Bitcoin system then the argument for 'shutting down bitcoin' grows in popularity.

-Bitcoin Foundation board meeting agenda requests (only viewable by foundation members)


You know, Bitcoin is at an interesting stage of it's development. We've got a lot of money flowing in to the ecosystem and for the first time we're seeing interest from big businesses - even PayPal and Western Union are looking into accepting Bitcoin.

We're also under a lot of attack; big heavily protected exchanges and other websites like Mt. Gox, blockchain.info, and The Silk Road are getting DDoSed; services like Instawallet and mining pools are having funds stolen; exchanges getting shutdown by regulators; (including Mt. Gox suddenly shutting down their off-chain payment service) even child porn related data being uploaded to the blockchain:

It is widely speculated, based on common forum comments in the crypto-anarchist community, that this current round of data spam is intended to force bitcoin users, developers and governments of the world to take action to censor -- or not -- certain bitcoin transactions.  Trying to force the issue, to establish a precedent one way or the other.  Or, more pessimistically, a party could be simply trying to shut down bitcoin.

-Jeff Garzik

The Bitcoin Foundation itself is in a difficult position: we all know who it's funded by, and everyone involved is publicly known. This can be a problem: 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.

We can also go the other route, and give Bitcoin users even more tools to remain anonymous and transact on their own terms. Technologies like mixing and off-chain transactions to let you make transactions without revealing where the coins came from, technologies like P2Pool to ensure mining stays decentralized, and colored coins to let us trade our assets without involving third party exchanges.

I think this discussion needs to happen out in the open, and we need to have it now. I'm sure you have a pretty good idea what I think, but what does the rest of the community think?

Obviously work WITH, depending on the geographical region that is interested.

First step needed is education and there is no better explanation than:

[[

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as
trusted third parties to process electronic payments. While the system works well enough for
most transactions, it still suffers from the inherent weaknesses of the trust based model.
Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes. The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions,
and there is a broader cost in the loss of ability to make non-reversible payments for non-
reversible services. With the possibility of reversal, the need for trust spreads. Merchants must
be wary of their customers, hassling them for more information than they would otherwise need.
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties
can be avoided in person by using physical currency, but no mechanism exists to make payments
over a communications channel without a trusted party.

What is needed is an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party. Transactions that are computationally impractical to reverse would protect sellers
from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In
this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed
timestamp server to generate computational proof of the chronological order of transactions. The
system is secure as long as honest nodes collectively control more CPU power than any
cooperating group of attacker nodes.

]]

The benefits of bitcoin to society should be explained and also it is in the self interest of the given region given that bitcoin can create a competitive advantage to that region.

It goes without saying that the foundation does not speak for Satoshi, but anyone, be it an individual or group, explaining things in helpful way is always beneficial. 

[Loozik]

-Jeff Garzik

We can work with regulators to make sure Bitcoin is acceptable to them [...] There are ways to put taxation into Bitcoin itself, so that taxes are automatically applied when a transaction is made.

Obviously work WITH, depending on the geographical region that is interested.

Please tell me you are joking.

[melvster]

-Jeff Garzik

We can work with regulators to make sure Bitcoin is acceptable to them [...] There are ways to put taxation into Bitcoin itself, so that taxes are automatically applied when a transaction is made.

Obviously work WITH, depending on the geographical region that is interested.

Please tell me you are joking.

Of course not.  Have you ever met a regulator?

Most are good folks just trying to do their job against people that earn 100 or even 1000 times as much as them.

Regulators are employed by us, we can do more working together.  Namely showing the competitive advantages that bitcoin gives that country, and allowing them to have input into good ways to leverage that. 

[Loozik]

Have you ever met a regulator?

No I have not. Neither have you. There are no ''regulator'' object class on this planet.

Most are good folks just trying to do their job against people that earn 100 or even 1000 times as much as them.

What I think you should have meant is these folks are individual men and women providing their service at gun point to people who may not want that service at all.

This is how it works: if you do not pay taxes, you get a letter from people doing business as (DBA) IRS. When you ignore it, you get a letter from people DBA judges to appear in a building called a court for a trial. When you ignore a letter to appear in a court, people DBA police show up at your door. If you ignore them because you may have better stuff to do, e.g. watch TV, they will brake into your house. If you object phisically, you'll get grounded and shit will be beaten out of you, your legs and hands will be broken. Then when in jail, if you want to go out home, you will be shot dead by a guy DBA prison guard.

Tell me what are factual differences (if any) between theft under threat of killing and taxes?

Regulators are employed by us, we can do more working together.

Where did you get the idea I or you employ a regulator. Do you have any facts or evidence to prove it?

[Jace]

Tell me what are factual differences (if any) between theft under threat of killing and taxes?

The latter is legalized (ironically by the very same people who collect those taxes).