Bitcoin at the US Senate

[NewLiberty]

Careful or you might confuse folks.  Hashing uses crypto, but the block-chain doesn't hide the result, rather it uses the cryptographic result as an indexable tx reference, so it is incorrect to say "there is no encryption in the Bitcoin protocol".
Encryption in the form of hashes, is frequently used in digital forensics to irrefutably verify a dataset as unchanged.  So the blockchain comes pre-subpoened, and pre-forensically useful.  It doesn't get any better than that for the LEOs.

A hash is not "encrypted" data.  Something that is "encrypted" can be "decrypted" with a key.  When something is hashed it cannot be decrypted and there is no key.

http://www.danielmiessler.com/study/encoding_encryption_hashing/

Thanks for that.  We agree on the definitions, and your point is well made here, and appreciated.  (I am getting frequently interrupted as I am typing and doing so sloppily.)  My intended point was not just that there encryption in Bitcoin, as well as hashing, but that the senator was left with the impression that the general ledger was encrypted (with a trapdoor prime number), and the good bits about it being already what the LEOs want was lost.

[1714932373]

1714932373

[Rassah]

did they mention 2nd life?! lol?! deary me

I thought it was very ironic when Mercedes mentioned SecondLife as example of virtual currency, in the context of more regulation = better, considering SecondLife econoomy was BOOMING for years with no stop in sight, until US told Linden Labs to regulate it, and forced them to ban all interest bearing accounts (banks, stocks, loans, financial services) and ban all games of chance (gambling). The economy absolutely tanked, and never recovered since, with SecoondLife becoming a glorified chat room. Yay regulations!

[solex]

did they mention 2nd life?! lol?! deary me

I thought it was very ironic when Mercedes mentioned Second Life as example of virtual currency, in the contect of more regulation = better, coonsidering SecondLife econoomy was BOOMING for years with no stop in sight, until US told Linden Labs to regulate it, and forced them to ban all interest bearing accounts (banks, stocks, loans, financial services) and ban all games of chance (gambling). The economy absolutely tanked, and never recovered since, with SecoondLife becoming a glorified chat room. Yay regulations!

Wow. I never realized that. I just assumed SL had pretty much died a slow death through apathy, not through what amounts to financial terrorism.
It would be very interesting to see if LL could replace linden$ with Bitcoin.

[dominicwin]

they mentioned a video game? haha!
Pretty sure Bitcoin is being discussed by the senate and how to deal with it because it separates itself and goes far beyond video games and anything known as digital currency up until now.

[DeathAndTaxes]

so it is incorrect to say "there is no encryption in the Bitcoin protocol". Encryption in the form of hashes, is frequently used in digital forensics to irrefutably verify a dataset as unchanged.

Hashing isn't encryption.

Hashing, digital signatures, and encryption are all forms of cryptography.

All hashing involves cryptography.  Not all cryptography involves hashing.
All encryption involves cryptography.  Not all cryptography involves encryption.
All digital signatures involve cryptography.  Not all cryptography involves digital signatures.

Your correction of my correct seems to confusing cryptopgraphy with encryption. 

[DeathAndTaxes]

did they mention 2nd life?! lol?! deary me

I thought it was very ironic when Mercedes mentioned Second Life as example of virtual currency, in the contect of more regulation = better, coonsidering SecondLife econoomy was BOOMING for years with no stop in sight, until US told Linden Labs to regulate it, and forced them to ban all interest bearing accounts (banks, stocks, loans, financial services) and ban all games of chance (gambling). The economy absolutely tanked, and never recovered since, with SecoondLife becoming a glorified chat room. Yay regulations!

Wow. I never realized that. I just assumed SL had pretty much died a slow death through apathy, not through what amounts to financial terrorism.
It would be very interesting to see if LL could replace linden$ with Bitcoin.

They "could" but LL method of profit is through the issuance of currency.  A new L$ cost them nothing yet they can exchange it with real currency.  I do expect virtual worlds to use Bitcoin eventually although I am not sure if LL will have the vision needed to break from their (until recently) highly profitable make money from nothing and profit business plan.

[Rassah]

did they mention 2nd life?! lol?! deary me

I thought it was very ironic when Mercedes mentioned Second Life as example of virtual currency, in the contect of more regulation = better, coonsidering SecondLife econoomy was BOOMING for years with no stop in sight, until US told Linden Labs to regulate it, and forced them to ban all interest bearing accounts (banks, stocks, loans, financial services) and ban all games of chance (gambling). The economy absolutely tanked, and never recovered since, with SecoondLife becoming a glorified chat room. Yay regulations!

Wow. I never realized that. I just assumed SL had pretty much died a slow death through apathy, not through what amounts to financial terrorism.
It would be very interesting to see if LL could replace linden$ with Bitcoin.

Apathy was part of it, but SL's peak was about where Bitcoin was a year ago. They were just starting up with new stock exchanges, investment services, and tons of new businesses in-game that were making real money. The regulation thing make the currency tank in value by something like 75% in a couple of weeks, and all the business types abandoned it. It's why I was so excited to see what will happen after Pirateat40 scheme last year: Every time something like that happened, be in it the real world with Ponzi, or videogames like SecondLife or others, someone would step in, say, "I'm taking control here!" and change things to the boring regulated stuff we're used to. Bitcoin was the first example of what would happen if no regulators stepped in to take charge and control things. Turns out the answer was, people will learn their lesson and avoid high interest yield accounts and ponzi schemes all on their own. Who knew.

[DeathAndTaxes]

Bitcoin was the first example of what would happen if no regulators stepped in to take charge and control things. Turns out the answer was, people will learn their lesson and avoid high interest yield accounts and ponzi schemes all on their own. Who knew.

That is why CC fraud is such a problem for merchants.  They are put in an impossible situation.  There is no consequence for CC users (oh I didn't make that chargeback) and the problem simply can't be solved by merchants.  Merchants can't force users to be more secure with their cards, not fall for phishing sites, and treat a CC number like cash.  At best merchants can hope to reduce the fraud losses below their profit margin and raise prices.  

I am not saying it is a good thing but if there was no fraud liability on CC, users would be a lot more careful.  It is just human nature.


This is one reason why I am long term bullish on the VALUE (not be confused with current price, speculators) of Bitcoin.   CC costs as much as 10% for certain types of businesses.   It isn't just the 3% (or whatever) discount rate, but also the gateway fees, the swipe fee ($0.30 adds up on $5 purchases), the legit CC fraud, the so called friendly fraud (I don't like want to pay for this so let me pretend I didn't purchase it), the chargeback fees from the bank, the capital cost of the reserves they need to maintain (you can't use money being held the CC companies), and the cost of the anti-fraud systems which both have significant cost and sometimes drive away legit business.

If merchants can see that Bitcoin improves their bottom line then they hopefully will offer discounts for Bitcoin.  If they offer discounts for Bitcoin then more users will be attracted to Bitcoin for everyday purchases which means more merchants interested ....

[Mageant]

did they mention 2nd life?! lol?! deary me

I thought it was very ironic when Mercedes mentioned SecondLife as example of virtual currency, in the context of more regulation = better, considering SecondLife econoomy was BOOMING for years with no stop in sight, until US told Linden Labs to regulate it, and forced them to ban all interest bearing accounts (banks, stocks, loans, financial services) and ban all games of chance (gambling). The economy absolutely tanked, and never recovered since, with SecoondLife becoming a glorified chat room. Yay regulations!

Interesting story, that I didn't know. Thank you for sharing.

[NewLiberty]

so it is incorrect to say "there is no encryption in the Bitcoin protocol". Encryption in the form of hashes, is frequently used in digital forensics to irrefutably verify a dataset as unchanged.

Hashing isn't encryption.

Hashing, digital signatures, and encryption are all forms of cryptography.

All hashing involves cryptography.  Not all cryptography involves hashing.
All encryption involves cryptography.  Not all cryptography involves encryption.
All digital signatures involve cryptography.  Not all cryptography involves digital signatures.

Your correction of my correct seems to confusing cryptopgraphy with encryption. 

yes, I wrote it properly in one sentence and improperly in another, and accepted Help's correction of this already as well. 
I think we all understand the issue, and the definitions, and I thank you for your second correction.  I only wish our senate had the benefit of such honest critiques.  I like that no one here lets me get away with any sloppy language also.  It is the kind of protection that I most appreciate, the protection from being inadvertently confusing and being wrong (because together we find what is right).
We all understand that the only encryption in bitcoin is wallet side (and optional) and therefore that many folks are fond of saying that there isn't any encryption at all.

[DeathAndTaxes]

I hadn't see Help's correction, I wouldn't have corrected it except it was a correction of a correction.  Casual use is one thing but definition should be accurate in clarifications.   

I don't consider client side use of encryption in one or more clients to mean Bitcoin (which is a protocol) uses encryption.  The QT client certainly optionally supports encryption but I would be fine with stating on public record that Bitcoin does not use encryption. 

I do agree with you it was a wasted opportunity to correct the senate and get the proper definition on record.  More important than the misuse of word encryption is the longer context.  The senator said "hiding by encryption" which means it was more than just a wrong word.  The blockchain is the exact opposite of hiding.  It is a public record by definition.  It is closed private ledgers (like PayPal for example) that are hidden from public view.   A horrible waste of an opportunity to get a solid good high level view out in the open and on TV as well.

[NewLiberty]

I hadn't see Help's correction, I wouldn't have corrected it except it was a correction of a correction.  Casual use is one thing but definition should be accurate in clarifications.   

I don't consider client side use of encryption in one or more clients to mean Bitcoin (which is a protocol) uses encryption.  The QT client certainly optionally supports encryption but I would be fine with stating on public record that Bitcoin does not use encryption. 

I do agree with you it was a wasted opportunity to correct the senate and get the proper definition on record.  More important than the misuse of word encryption is the longer context.  The senator said "hiding by encryption" which means it was more than just a wrong word.  The blockchain is the exact opposite of hiding.  It is a public record by definition.  It is closed private ledgers (like PayPal for example) that are hidden from public view.   A horrible waste of an opportunity to get a solid good high level view out in the open and on TV as well.

Yes, maybe a blunt and unqualified "there is no encryption in the Bitcoin protocol" possibly may have shocked him into asking the right questions and learning the legally important aspects, which he never received from his panel of experts.

Well the hearing is not "closed" for a couple weeks, so maybe they will read what you wrote up there and get it in the record yet...

[Beans]

That redhead was really annoying. I do think that someone could build a system on top of bitcoin that allowed people to register accounts and link them to there wallets That would open up a lot of possibilities for bitcoin and help with adoption. It needs to be done if we ever want to have a charge back option available for bitcoin transactions. Until it happens I don't see bitcoin gaining much traction with large companies. Paypal would be the perfect entity to do it but I doubt that will happen any time soon.

[NewLiberty]

That redhead was really annoying. I do think that someone could build a system on top of bitcoin that allowed people to register accounts and link them to there wallets That would open up a lot of possibilities for bitcoin and help with adoption. It needs to be done if we ever want to have a charge back option available for bitcoin transactions. Until it happens I don't see bitcoin gaining much traction with large companies. Paypal would be the perfect entity to do it but I doubt that will happen any time soon.

Its being done, multisig allows for all kinds of rules and contracts including chargebacks if required (it does not make chargebacks a requirement, it just makes them an option)

There's also some development on bockchain based passports, voluntary self issued and controlled ID's that can be trusted by 3rd parties requiring identification.

Any links to those projects would be cool for the curious.

[NewLiberty]

Not sure where the documentation is, multisig is already in the client but very few use it and I don't think anythings happened with passports yet, it seems to have come from disagreements over the use of SSL in receipts/invoices development.

Multisig:
https://en.bitcoin.it/wiki/BIP_0010
http://bitcoin.stackexchange.com/questions/13841/how-do-i-use-multisig-transactions-to-handle-escrow-needs
https://bitcointalk.org/index.php?topic=75481.0;all

Passports:
https://bitcointalk.org/index.php?topic=140711.0

Thanks for this, had missed that passport topic, til now.

There are many implications to attaching identity to the block chain.  Wealth based ID, Corporate identities, inheritance, bonded ID, multi-sig ID (partnership IDs / marriage or business), identity repudiation, and many other tangential identity management issues just to name a few.  There are broad ranging implications for this, both for its utility and its social impact.  It is a project that bears some review.

[r3c4ll]

Spanish news articles about this topic in Bitcoin Noticias htttp://bitcoinnoticias.com

[NewLiberty]

Yes, it fairly blew my mind as its the missing link for acceptable online voting privacy too and that allows for systems like liquid democracy even on a global scale.

Uhg, that's all I need.  To be outvoted by even more people.   People tend to vote away their liberty more often then they realize.

[NewLiberty]

Yes, it fairly blew my mind as its the missing link for acceptable online voting privacy too and that allows for systems like liquid democracy even on a global scale.

Uhg, that's all I need.  To be outvoted by even more people.  People tend to vote away their liberty more often then they realize.

Lol, sad but true. Its worth checking up on liquid democracy in Iceland, politicians there seem to be sweating because so far its made the right decisions far more consistently than conventional democratic systems and Iceland's system is a lot better than the thinly veiled masquerades many western governments try and pass off as democracy. Several Icelandic politicians have even stated publicly that the system proves the general public has far more awareness than conventional political systems allow for so it could offer hope even in the most media brainwashed societies.

If only we all lived on small islands where the only people we could plunder by ballot box are the folks we see every day and can stare us in the face.  When you start talking about global decision-making the level of authorities required to enforce democratic decisions seem unconscionable, much less the decisions themselves.
Sometimes it seems we'd be better off if the most powerful political positions were the city mayor and anything decided above that was only advisory and dispute resolution.

[BuTaJIu4eK]

http://www.senate.gov/pagelayout/committees/b_three_sections_with_teasers/committee_hearings.htm

Wednesday, Dec. 11, 2013 2:30 PM
Finance: Subcommittee on International Trade, Customs, and Global Competitiveness
Hearings to examine the digital trade agenda.
                                                                                                                                                SD-215

[BuTaJIu4eK]

http://www.senate.gov/pagelayout/committees/b_three_sections_with_teasers/committee_hearings.htm

Wednesday, Dec. 11, 2013 2:30 PM
Finance: Subcommittee on International Trade, Customs, and Global Competitiveness
Hearings to examine the digital trade agenda.
                                                                                                                                                SD-215

POSTPONED: The Digital Trade Agenda
http://www.finance.senate.gov/hearings/hearing/?id=7da1b80e-5056-a032-526d-4a6cc3ac3a72