2013-05-18 Economic Policy Journal: 3-Part Report from Bitcoin Conference

[n8rwJeTt8TrrLKPa55eU]

AustroLibertarian Bob Wenzel reports on various topics including the quite evident ideological divide at the Bitcoin conference.

The sense I am getting is that the Bitcoin world is going to end up very heavily regulated. Many of those involved with Bitcoin here at the conference are talking compliance with the government. Even the Winklevoss twins brought this up as something that will be necessary. The libertarian dream of anonymity seems like a distant memory to this crowd. It will be name and social security number in the not too distant future for anyone trying to open a Bitcoin account to buy or sell bitcoins through an exchange. Thus, Bitcoin, if it is not completely closed by government, will be no more than a faster PayPal type system, with a fluctuating value.

I also had a good talk with Steve Michaels of Keep Your Assets. He sees Bitcoin developing on a two tiered level similar to what I have discussed. He compares it to the fiat based currency system, where we have many using bank accounts that can be tracked, while other transactions are done in cash. With bitcoins, there will be a registered world and an unregistered world.

Part 1, May 18:
http://www.economicpolicyjournal.com/2013/05/the-not-so-impressive-winklevoss-twins.html

Part 2, May 19:
http://www.economicpolicyjournal.com/2013/05/reporting-from-bitcoin-conference-2013.html

Part 3, May 19:
http://www.economicpolicyjournal.com/2013/05/more-from-bitcoin-2013-conference-part-3.html

[cypherdoc]

he's right in that i also detected this sentiment among the bigger actors on the panels to capitulate towards regulation.  but what else are they going to say publicly?

certainly if you want to run a biz in the US you probably will have to follow all regs.  but that won't stop the Buttonwood ppl.

[n8rwJeTt8TrrLKPa55eU]

Insert Quote
he's right in that i also detected this sentiment among the bigger actors on the panels to capitulate towards regulation.  but what else are they going to say publicly?

certainly if you want to run a biz in the US you probably will have to follow all regs.  but that won't stop the Buttonwood ppl.

Agree with this, however if the reference client or even the protocol someday incorporates, say, taint tracking & blacklisting support (to use a topic seriously discussed at the event) in order to facilitate US regulatory compliance, then it becomes much easier for repressive regimes worldwide to piggyback on top of that to keep the average joe under their thumb.  I love making money as much as anyone here, but personally I'd prefer that the planet's last chance at financial privacy not be sold down the river just so some guys in Sand Hill Road can buy themselves a second jet.

The vibe I got from Vessenes and several others was that they would attempt to steer Bitcoin in whatever direction was necessary to maximize business use scenarios, even if that meant changes and prioritizations at the expense of decentralization and privacy for individuals.  My clear take after this event is that that the code & network will at some point fork between those who see Bitcoin as a vehicle for political change, versus those who want Bitcoin to be sanitized into just a cheaper PayPal/SWIFT.  Those two visions are simply not compatible in the long run.

[TraderTimm]

What isn't addressed is what regulation will end up doing.

If the USA becomes the "register all addresses used to transfer BTC" and other things, it will just "squeeze the balloon" of commerce and things will go elsewhere, while the US action remains in a complacent stupor. This will also enable those who have better business climates in regard to Bitcoin to take up the slack and gain advantage.

Just because the USA does something, not everyone has to toe the line or follow suit. The dominance of a bully that spends more on their military than the top 13 countries combined will eventually end - by the hand of international trade instead of violence.

[n8rwJeTt8TrrLKPa55eU]

What isn't addressed is what regulation will end up doing.

If the USA becomes the "register all addresses used to transfer BTC" and other things, it will just "squeeze the balloon" of commerce and things will go elsewhere, while the US action remains in a complacent stupor. This will also enable those who have better business climates in regard to Bitcoin to take up the slack and gain advantage.

Just because the USA does something, not everyone has to toe the line or follow suit. The dominance of a bully that spends more on their military than the top 13 countries combined will eventually end - by the hand of international trade instead of violence.

I hope you're right.

During the last decade, everyone was predicting that the Yuan would eventually displace the USD as the world's reserve currency and China would become the world's dominant economy.

But perhaps, the wild card (or white swan) no one foresaw, is that the US might in fact cede its economic preeminence not due to being overtaken by another country, but due to a misguided attempt to censor and regulate a brand new currency with no allegiance to any country whatsoever.

It would be interesting to see some enlightened despot push for a strategic Bitcoinitization of some small country's economy, and reaping the rewards of transactional efficiency and economic freedom.  Basically a Singapore scenario, but with Bitcoin as the main enabler.

[aigeezer]

My clear take after this event is that that the code & network will at some point fork between those who see Bitcoin as a vehicle for political change, versus those who want Bitcoin to be sanitized into just a cheaper PayPal/SWIFT.  Those two visions are simply not compatible in the long run.

I think you are saying that the two visions are not compatible in a single product. If so, I agree. I would guess that, after the fork, two viable products would emerge, say a transparent-BTC and an opaque-BTC such that anyone might routinely use a wallet of either type, depending on the transaction of the moment. "Render unto seizure" for one, so to speak, and "none of Big Brother's business" for the other. In that sense, I'm thinking the two visions could be compatible and could usefully coexist. If this kind of fork is viable, it could prevent unnecessary community infighting to make only one vision dominant.

The officially-sanctioned version could die out from lack of use over time.         

Yet another approach to this stuff is to set up transactions with no privacy whatsoever - for anyone. If a teen buys a bottle of gin, the whole world can see it and if some corporation buys a legislator the whole world sees that also. Sometimes I think a perfectly transparent "money" system would be better than a perfectly opaque one. The present mix in fiat-world favors the villains most though, whether they be in government or the private sector. Duffygate anyone? (Topical Canadian joke).


 

[n8rwJeTt8TrrLKPa55eU]

My clear take after this event is that that the code & network will at some point fork between those who see Bitcoin as a vehicle for political change, versus those who want Bitcoin to be sanitized into just a cheaper PayPal/SWIFT.  Those two visions are simply not compatible in the long run.

I think you are saying that the two visions are not compatible in a single product. If so, I agree. I would guess that, after the fork, two viable products would emerge, say a transparent-BTC and an opaque-BTC such that anyone might routinely use a wallet of either type, depending on the transaction of the moment. "Render unto seizure" for one, so to speak, and "none of Big Brother's business" for the other. In that sense, I'm thinking the two visions could be compatible and could usefully coexist. If this kind of fork is viable, it could prevent unnecessary community infighting to make only one vision dominant.

Yep.  Forks and altchains are not necessarily a bad thing.  The USA forked from England in 1776 on ideological grounds, and that experiment turned out fine.

Possibly a privacy-preserving "anarcholibertarian" fork will be get some help from (or be based on) something like this:

https://bitcointalk.org/index.php?topic=213685.0

[Mike Hearn]

I didn't get much of a sense of an ideological divide.  I don't recall hearing anyone advocate open lawbreaking. People who turn up at conferences are, you know, arrestable. The penalty for money laundering convictions can be up to 20 years in jail.

The law should not be written this way, there are very many arguments for why this kind of regulation is nonsensical and fails to achieve its own goals. However it IS written that way, and there are only two approaches to dealing with that reality: comply, and try to get the law changed (means lobbying).

The idea that you can build an alternative currency whilst ignoring these rules is absurd, the graveyard of previous attempts should be enough to persuade anyone of that. eGold got whacked just months before the Bitcoin white paper was released. If you do try and build an entirely underground currency, how would you convert fiat into it? Street traders? How would you know if the person sitting opposite you was not a government agent? There are no examples of such a thing ever working at scale and I don't anticipate seeing one anytime soon.

Ultimately, there needs to be a serious debate by representatives around the world as to the value of anti-money laundering. The USA is an especially serious case because the implementation is so dysfunctional, with each state doing things independently and often adding new requirements on top. If I wanted to make progress in this space, I'd start by lobbying Congress to try and bring AML regulation under federal control and thus create a single market, as has been done in Europe. This is not as good as simply rolling back these laws, but any attempts to do so at this point will bring about furious counterlobbying from all kinds of people with agendas (banks, money transmitters, police, regulators themselves, etc). Contrasting the messy American situation with the much less burdensome European situation is at least a pragmatic approach that has a chance of gaining traction as I doubt Congressmen like the idea that the EU is more business-friendly than the USA, and it'd be massively easier to run Bitcoin businesses in America if such a change was made.

Once the burden has been significantly reduced, you can then start to argue that various other provisions aren't helpful, e.g. the anti-structuring rules or the "politically exposed persons" nonsense, and that they should also be removed as part of freeing up businesses to create jobs, etc.

Eventually if such lobbying is continuous and backed up by democratic pressure from an ever-increasing number of bitcoiners, the idea of a full repeal of AML laws wouldn't be considered unthinkable. But it will take years to reach that point. The idea you can achieve it overnight is naive - go look at what happens to prior attempts to understand why.

By the way, I'm talking about the sort of rules exchanges and ATM operators have to follow. I don't see any legal reasons why Bitcoin itself would have to change in the core protocol.

[BTC Books]

The idea that you can build an alternative currency whilst ignoring these rules is absurd, the graveyard of previous attempts should be enough to persuade anyone of that. eGold got whacked just months before the Bitcoin white paper was released. If you do try and build an entirely underground currency, how would you convert fiat into it? Street traders? How would you know if the person sitting opposite you was not a government agent? There are no examples of such a thing ever working at scale and I don't anticipate seeing one anytime soon.

You're correct - but keep an eye on the P2P exchange people.  This could be falsified.  I hope so.

Also, I will point out that you are a believer in incrementalism.  I am not.  And I've been racking my brain trying to recall a case where incrementalism in the face of stupid and/or anti-people laws has ever been successful.  I can't.  It's always been pretty much all or nothing - and trying to chip away at things after the fact usually (not always) appears to result in making things worse - in direct proportion to how much power the chippers have - rather than better.

If you do try and build an entirely underground currency, how would you convert fiat into it?

Follow the bouncing P2P ball...

[n8rwJeTt8TrrLKPa55eU]

I didn't get much of a sense of an ideological divide.  I don't recall hearing anyone advocate open lawbreaking. People who turn up at conferences are, you know, arrestable. The penalty for money laundering convictions can be up to 20 years in jail.

The law should not be written this way, there are very many arguments for why this kind of regulation is nonsensical and fails to achieve its own goals. However it IS written that way, and there are only two approaches to dealing with that reality: comply, and try to get the law changed (means lobbying).

The idea that you can build an alternative currency whilst ignoring these rules is absurd, the graveyard of previous attempts should be enough to persuade anyone of that. eGold got whacked just months before the Bitcoin white paper was released. If you do try and build an entirely underground currency, how would you convert fiat into it? Street traders? How would you know if the person sitting opposite you was not a government agent? There are no examples of such a thing ever working at scale and I don't anticipate seeing one anytime soon.

Ultimately, there needs to be a serious debate by representatives around the world as to the value of anti-money laundering. The USA is an especially serious case because the implementation is so dysfunctional, with each state doing things independently and often adding new requirements on top. If I wanted to make progress in this space, I'd start by lobbying Congress to try and bring AML regulation under federal control and thus create a single market, as has been done in Europe. This is not as good as simply rolling back these laws, but any attempts to do so at this point will bring about furious counterlobbying from all kinds of people with agendas (banks, money transmitters, police, regulators themselves, etc). Contrasting the messy American situation with the much less burdensome European situation is at least a pragmatic approach that has a chance of gaining traction as I doubt Congressmen like the idea that the EU is more business-friendly than the USA, and it'd be massively easier to run Bitcoin businesses in America if such a change was made.

Once the burden has been significantly reduced, you can then start to argue that various other provisions aren't helpful, e.g. the anti-structuring rules or the "politically exposed persons" nonsense, and that they should also be removed as part of freeing up businesses to create jobs, etc.

Eventually if such lobbying is continuous and backed up by democratic pressure from an ever-increasing number of bitcoiners, the idea of a full repeal of AML laws wouldn't be considered unthinkable. But it will take years to reach that point. The idea you can achieve it overnight is naive - go look at what happens to prior attempts to understand why.

By the way, I'm talking about the sort of rules exchanges and ATM operators have to follow. I don't see any legal reasons why Bitcoin itself would have to change in the core protocol.

I agree that there wasn't an ideological divide overtly visible at this particular conference.  Attendees and presenters in San Jose were fairly homogeneous, mostly first-world enterpreneurs and businessmen and techies.  Nothing wrong with that, those are valid and important constituencies.

The divide I see, is within the more heterogeneous community of worldwide Bitcoin users.  The overall direction of Bitcoin and the role of the Foundation was a topic that definitely came up with the more politically active folks that I talked to in San Jose.  For instance:

Your proposal for evolutionary improvement of money tracking laws through established channels + lobbying, is reasonable for anyone living in northern Europe or North America, where the some hope might exist that politicians can be reasoned with and savings are not drastically evaporating or being confiscated.  But in countries such as Cyprus or Cuba or most of Africa, telling people that they should follow laws and wait till things evolve positively, is very cruel.  Those people are desperate for immediate solutions *right now*, illegal or otherwise, to protect themselves from inflation, confiscation, and other kinds of economic theft.  As an example, the Argentinian peso has devalued 50% in the past year alone.  Should those people just sit there and not defend themselves and their families against that kind of disaster, even if it means breaking exchange controls and other laws?  Legal compliance and lobbying are not sane options for those 40 million Argentinians.

The world is a much bigger place than the snapshot presented in San Jose.  If you had the chance to talk to the Argentinian guys attending the conference, you know that Bitcoin, warts and all, is solving personal problems down there *right now* thanks to its ability to store and transmit value outside of the restriction of their government's currency controls.  Illegal?  Perhaps.  Should we accept or encourage whitelists, taint detection, and other such features knowing full well that many governments on the planet will leverage that  functionality to clamp down on people trying to escape perverse exchange controls?  This is unequivocally a moral question.  Would you answer differently if your life savings were stored in Cyprus, or if you had friends and family there?

We all know that Bitcoin has the potential to eventually touch the lives of everyone on the planet.  And you, Mike Hearn, are tremendously influential within the Bitcoin universe.  Your actions and those of people like Gavin, have a potentially massive multiplier effect on billions of people.  So please, please, please: always think globally and consider worst-case scenarios under economically repressive regimes.  People, real people in adverse conditions, are counting on you to help them out.  That's not an exaggeration, I make that assertion from first-hand experience.  Don't underestimate the traction that Bitcoin is gaining worldwide as an escape valve.

Anyway, this topic is probably too complex and sensitive to discuss efficiently in a written public forum.  I acknowledge that your viewpoint might be legitimate in specific contexts, though definitively not in others.  I regret not seeking you out to discuss this stuff in person while in London or San Jose, so I'll make a mental note to try to persuade you over alcohol at some future event.

[lonelyminer (Peter Šurda)]

Engaging in lobbying does not require that you follow laws. I have the impression that some people have a mental block here and can't conceive of a criminal paying the lawyers. Maybe the more efficient solution for Argentinians and Cypriots is to bribe the politicians or the cops. Who knows? But this does not preclude lobbying in the US either.

There are infinite possible options and most of them aren't mutually exclusive. The state is not monolithic nor do its branches move in the same direction. At the economics panel I made the joke that when China "51% attacks" Bitcoin, the US will probably react by requiring them to register with the FinCEN. Of course, it was a joke. They wouldn't do it, because that requires it to act consistently with respect to the law. You don't expect the state to act in accordance with the law, yet it is nevertheless creating the law. So why is there an implicit assumption that when someone lobbies for a law they intend to follow it?

We need to have more imagination rather than abstract formalism. More Sun Tzu and "A Lodging of Wayfaring Men" and less Rothbard.

[aigeezer]

... there are only two approaches to dealing with that reality...

Plod on then, but I'd guess that some third approach will catch you by surprise. Time will tell.

[stevegee58]

...It will be name and social security number in the not too distant future for anyone trying to open a Bitcoin account...

What a "bitcoin account?"

[Raoul Duke]

Awesome, they're trying to regulate a bunch of code.
Mike Hearn, they can maybe arrest YOU but they can't arrest Bitcoin, but if you fear that outcome, then maybe you should just step the fuck out, because maybe, just maybe, Bitcoin isn't for you and the likes...
The cat is out of the bag and it won't listen to regulation.

[Akka]

Yet another approach to this stuff is to set up transactions with no privacy whatsoever - for anyone. If a teen buys a bottle of gin, the whole world can see it and if some corporation buys a legislator the whole world sees that also. Sometimes I think a perfectly transparent "money" system would be better than a perfectly opaque one. The present mix in fiat-world favors the villains most though, whether they be in government or the private sector. Duffygate anyone? (Topical Canadian joke).

Year! ..and the Girl from the highly religious family that buys a pregnancy test and the world can see it...

The points where anonymity or pseudonymity are legitimately needed in financial transaction are maybe not very many but they are so important that the ability to be able to pay anonym needs to be available at any price in all monetary systems.

[aigeezer]

... The points where anonymity or pseudonymity are legitimately needed in financial transaction are maybe not very many but they are so important ...

What are they, or rather can you offer some examples? I'd be interested to see if there is consensus.

As I try to think of some, all I can imagine are situations where one entity might gain an (unfair?) advantage over another, or save itself some (deserved?) embarrassment.

If I put myself in the shoes of the entity that might gain, say "the authorities" catching "bad guys" through a sting operation or "the bad guys" dodging "the authorities" through secrecy, then I'd be tempted to support anonymity in the service of the goal. However, I'm very wary of ends-justifying-means arguments and if I try to step back from a particular viewpoint and take a big-picture neutral view then I rather like the notion of "all cards on the table" for everyone, all the time. Just a thought experiment.

[Akka]

Here is a good Article on this: http://www.americanbanker.com/bankthink/why-some-payments-should-remain-anonymous-1056656-1.html?zkPrintable=1&nopagination=1

Also not everyone lives in a free / democratic country. Most humans don't and all the surveillance points one might see as "conspiracy theory nutjob" arguments are actually true in oppressive governments.

Try to buy alcohol in Saudi Arabia for example. Or better yet, purchase some condoms as a women.

And just think about, if movements would not had the ability to finance and therefore organize themselves without being seen, do you think the important movements of the past would have been successful?

Oh, this colonists in America just purchased 20,000 Rifles, probably nothing to worry about...

All the people that supported Martin Luther King logged in one Database. Nice if a extremist group gets their hands on that one, a racist Bank manager would be all that's needed and at this time there where many racists. Or better jet, open to see for everyone.

Basically that would stop every movement that is against the current norm in it's roots.

[aigeezer]

Here is a good Article on this: http://www.americanbanker.com/bankthink/why-some-payments-should-remain-anonymous-1056656-1.html?zkPrintable=1&nopagination=1

Also not everyone lives in a free / democratic country. Most humans don't and all the surveillance points one might see as "conspiracy theory nutjob" arguments are actually true in oppressive governments.

Try to buy alcohol in Saudi Arabia for example. Or better yet, purchase some condoms as a women.

And just think about, if movements would not had the ability to finance and therefore organize themselves without being seen, do you think the important movements of the past would have been successful?

Oh, this colonists in America just purchased 20,000 Rifles, probably nothing to worry about...

All the people that supported Martin Luther King logged in one Database. Nice if a extremist group gets their hands on that one, a racist Bank manager would be all that's needed and at this time there where many racists. Or better jet, open to see for everyone.

Basically that would stop every movement that is against the current norm in it's roots.

Thanks for the link. The AB article describes various situations for which AB claims a transaction should be anonymous because revelation of the truth would cause a person embarrassment (teen pregnancy, or HIV test) or where "the authorities" might jump to the wrong conclusion about a person's motives (anarchist cookbook) or because some laws are bad laws and widely ignored.

I do not find those arguments compelling at any deep level - they are arguments from expedience. The embarrassment issue should be dealt with at source, imho - the possibility of pregnancy, HIV, whatever is the underlying truth that must be handled and covering it up (briefly) is not the optimal way to handle it.  Similarly, "the authorities" will do what 'the authorities" will do, and sometimes they will harass the wrong citizen and the citizen will have to explain and defend himself as best he can. Reducing the number of such events by use of anonymous transactions helps, but does not solve the underlying problem - and of course "the authorities" would point out that it provides a window of opportunity for "bad guys" to exploit.

Situationally, I would welcome such anonymity in the same way that a child welcomes a ringing phone when he gets caught with his hand in a cookie jar, but it would only be to temporarily dodge something that I should really handle at a deeper, more mature level. I could not feel comfortable within myself relying on such crutches to get by in life but I can certainly feel their attraction.

Your other examples (colonists, surveillance etc.) illustrate various scenarios where one group/entity needs anonymity to counter the excesses of another group/entity that does have anonymity. I agree that such one-sided situations are unreasonable, and I contend that one-sided model prevails in all societies today. Remember though that in my thought experiment NOBODY has anonymity. While there might be a record for all to see that John Citizen bought an illegal substance, there would also be a record for all to see that "the authorities" plan to kick down John Citizen's door at 4 am, and another record for all to see that "the authorities" decided not to kick down Jane Citizen's door. Jane Citizen also bought an illegal substance and is the daughter of Senator Bob Citizen. On and on... no secrets for the good guys, no secrets for the bad guys, however defined. Cameras on 24/7 in Gitmo, senate washrooms, massage parlors, whatever? I realize I've drifted far beyond financial anonymity, but what the heck.

There is an old metric in law "would the person have done what he did if a policeman were looking over his shoulder?". This was invented when "policeman" represented a benign, honorable, unbiased agent of justice so it is a bit hard to identify with today, but... the notion I'm trying to float of "no anonymity for anyone" is an attempt to encapsulate the idea of how we might behave if we knew we could not hide what we were doing. Could a Pol Pot or a Stalin or a (pick a villain) do their dirty deeds if all eyes were on them?

As I write this it occurs to me that this is a variant of a thought experiment offered by my favorite philosophy prof long ago. He invited us to think about what society would be like if everyone was entitled to "one free murder". Would you use it in a schoolyard squabble or would you save it for a dustup in the nursing home? Would you use it the first time your mother-in-law bugged you or when some jerk cut you off in traffic? Would you wait, year in and year out in case something really outrageous came along? More importantly, of course, how might you conduct your affairs knowing that anyone you came into contact with might decide to use their freebie on you? Would we have a kinder gentler society? I don't know, but I like to think about that kind of thing.

BTC will fix some of society's problems. The law of unintended consequences guarantees that it will introduce some new ones. If we see them coming we will probably fix them as they arise, some through forks. Despite my "no anonymity" thought experiment I'm paradoxically strongly drawn to its zerocoin opposite. Maybe what these two opposites have in common for me is the idea of "no exceptions" - total privacy for all or total anonymity for all, such that no group/entity gets special rules as at present.

Today's problems are yesterday's solutions. Twas ever thus. Thanks all for the chance to think out loud about this stuff.

[Akka]

Thanks for the link. The AB article describes various situations for which AB claims a transaction should be anonymous because revelation of the truth would cause a person embarrassment (teen pregnancy, or HIV test) or where "the authorities" might jump to the wrong conclusion about a person's motives (anarchist cookbook) or because some laws are bad laws and widely ignored.

I do not find those arguments compelling at any deep level - they are arguments from expedience. The embarrassment issue should be dealt with at source, imho - the possibility of pregnancy, HIV, whatever is the underlying truth that must be handled and covering it up (briefly) is not the optimal way to handle it.  Similarly, "the authorities" will do what 'the authorities" will do, and sometimes they will harass the wrong citizen and the citizen will have to explain and defend himself as best he can. Reducing the number of such events by use of anonymous transactions helps, but does not solve the underlying problem - and of course "the authorities" would point out that it provides a window of opportunity for "bad guys" to exploit.


Situationally, I would welcome such anonymity in the same way that a child welcomes a ringing phone when he gets caught with his hand in a cookie jar, but it would only be to temporarily dodge something that I should really handle at a deeper, more mature level. I could not feel comfortable within myself relying on such crutches to get by in life but I can certainly feel their attraction.

Well if you argue that rather the underling problem harassment and even punishment of behavior that is simply not the social standard should be fixed, you can simply argue in the opposite direction. If all of societies problems would be fixed there where no need for non anonymous transactions at all.

Simple fact is they aren't and there is a need for anonymous transactions for a society to work.

Your other examples (colonists, surveillance etc.) illustrate various scenarios where one group/entity needs anonymity to counter the excesses of another group/entity that does have anonymity. I agree that such one-sided situations are unreasonable, and I contend that one-sided model prevails in all societies today. Remember though that in my thought experiment NOBODY has anonymity. While there might be a record for all to see that John Citizen bought an illegal substance, there would also be a record for all to see that "the authorities" plan to kick down John Citizen's door at 4 am, and another record for all to see that "the authorities" decided not to kick down Jane Citizen's door. Jane Citizen also bought an illegal substance and is the daughter of Senator Bob Citizen. On and on... no secrets for the good guys, no secrets for the bad guys, however defined. Cameras on 24/7 in Gitmo, senate washrooms, massage parlors, whatever? I realize I've drifted far beyond financial anonymity, but what the heck.

There is an old metric in law "would the person have done what he did if a policeman were looking over his shoulder?". This was invented when "policeman" represented a benign, honorable, unbiased agent of justice so it is a bit hard to identify with today, but... the notion I'm trying to float of "no anonymity for anyone" is an attempt to encapsulate the idea of how we might behave if we knew we could not hide what we were doing. Could a Pol Pot or a Stalin or a (pick a villain) do their dirty deeds if all eyes were on them?

Here you assume that everyone has something to hide, to not be embarrassed or punished. That's also not the case. This would simply lead to an oppression of minorities that live outside the social norm.

If there was no way to hide what we are doing, we are stuck at the status quo.

In the times a policeman represented a benign, honorable, unbiased agent of justice. Justis was for example that women are not allowed to vote and Black People have to sit in the back of the bus.

Every Generation is wrong including this one (ours). Absolute transparency blocks the natural change of society by putting to much power into that hands of the people that are currently "right".

As I write this it occurs to me that this is a variant of a thought experiment offered by my favorite philosophy prof long ago. He invited us to think about what society would be like if everyone was entitled to "one free murder". Would you use it in a schoolyard squabble or would you save it for a dustup in the nursing home? Would you use it the first time your mother-in-law bugged you or when some jerk cut you off in traffic? Would you wait, year in and year out in case something really outrageous came along? More importantly, of course, how might you conduct your affairs knowing that anyone you came into contact with might decide to use their freebie on you? Would we have a kinder gentler society? I don't know, but I like to think about that kind of thing.

That's one of the "deep thought things" that simply aren't deep at all.

I really don't like thought experiments like this for one the simple fact:

For them to even be a thought experiment you have to assume that humans are simple brutes that are not capable of organizing them self without an authority that tells them exactly what to do and what not to do, while the society we have is actually proof that this is not true.

So what would really happen if everyone gets a "free murder" or 10 or 100?

Simple: The free marked would take care of this.

Most people don't like to be killed. Therefore they would pool them self in a kind of insurance pool, saying when one of us gets killed by a free murder we kill the guy who did it.

Now to stop a vicious killing circle between pools once started, different pools would agree to only kill (punish) the individual that started it.

People where afraid that they would get revenge killed without being having done anything, so pools would form that cost some money but therefore provide a investigative service in case someone of them is accused of murder and pai tribunals (curts) to decide if their member is gulty or not and have an agreement with other pools to honor this decisions.

tl. dr. we would end up where we are to day, with the difference that people would have the ability to choose to not spend money on such pools and therefore be not protected by the law if they prefer that.

BTC will fix some of society's problems. The law of unintended consequences guarantees that it will introduce some new ones. If we see them coming we will probably fix them as they arise, some through forks. Despite my "no anonymity" thought experiment I'm paradoxically strongly drawn to its zerocoin opposite. Maybe what these two opposites have in common for me is the idea of "no exceptions" - total privacy for all or total anonymity for all, such that no group/entity gets special rules as at present.

I for one think at our current environment the "middle" of BTC fits our needs the best. It provides general pseudonimity by giving it's user the ability to always without a doubt proof that a transaction that he claims took place as took place.

[chanson]

Privacy is a tool to restrict government power but it's important particularly because government power is easily abused by populists. Transparency enables populists. That might be good, but occasionally it is horrific. Big money/power will find a way to stay in the shadows.

With enough tin foil, you could think bitcoin itself was created by the CIA so that they could avoid Congressional oversight.