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Author Topic: Bitcoin Dark Wallet: The Excuse Regulators Needed  (Read 5483 times)
Redtea (OP)
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April 30, 2014, 05:55:20 PM
 #1

It was interesting to watch the reaction of regulators to the arrival of cryptocurrency. Some of that government reaction was what one might expect, a bit of overreaction based on common misconceptions, followed by a short burst of overreach. China went full crazy, banning Bitcoin outright and telling banks not to touch it. Outside China, the reaction of regulators was surprisingly cautious. In the US, there was a strongly worded letter from the Treasury Department to a handful of businesses — threatening to follow up with even more strong language in the future.  In an unrelated action, the IRS declared Bitcoin to be real property, not currency, and hence taxable. Legislators are split, with some demanding outright bans, while others support a more accommodating approach. Canadians took the radical step of studying the issue before recommending any enforcement action.

The concern of law enforcement was that Bitcoin would be used to fund illegal activities including terrorism, and enable money laundering. Those are not unreasonable concerns — and basically the downsides of any stateless medium of exchange, including cash.

If Visa and MasterCard feel digital currencies are a threat to the stealth tax they levy on nearly every electronic transaction, then Dark Wallet is a tailor-made talking point for lobbyists who want legislators to crush competition.
None of those problems were new, and all regulators and Bitcoin exchanges had to do was work out a set of rules for Bitcoin traders that mitigated those concerns. There was progress in those negotiations; regulators were getting more comfortable with the concept of cryptocurrencies, more businesses accepted Bitcoin, and an influx of venture capital was moving the concept of digital currency slowly but surely toward financial legitimacy.

bitcoin_chartAt MIT, students are set to become part of a giant Bitcoin experiment, as the MIT Bitcoin Club secured $500,000 in funding to give every student at MIT $100 worth of the digital currency and watch what happens. The goal of the project is to gather data about how people actually use digital currency, in hopes that information will lead to improvements in the system implementation.

Now, in the midst of those first tentative steps forward, comes an announcement by a group called unSystem about the release of a new version of the user software Dark Wallet, which beefs up anonymity in Bitcoin transactions.

Dark Wallet encrypts and then blends Bitcoin transactions to make tracking individual transactions all but impossible. If Dark Wallet works as advertised, it will be a clear message to regulators that digital currencies can’t be regulated or trusted, which is not particularly helpful if you’re one of the people hoping to see Bitcoin expand into commercial markets.

Using a process called CoinJoin, Dark Wallet creates a stream of encrypted and anonymous Bitcoin transactions, and only the private keys held by the originator will be able to decrypt and claim the Bitcoins being transferred. Basically the Dark Wallet clients test every transaction to see if it belongs to them; if the decryption works, it’s theirs. The philosophy is simple and effective.

Another wildcard is the news that MasterCard is paying lobbyists to focus on Bitcoin and digital currencies on Capitol Hill. There’s no word as yet on what position MasterCard is taking on cryptocurrency, but the fact they’re sinking a sizable amount of their corporate cash into lobbying efforts related to digital currency should raise a warning flag for cryptocurrency traders. If the companies sitting on the nation’s electronic payment system, Visa and MasterCard, feel digital currencies are a threat to the stealth tax they levy on nearly every electronic transaction made in America — and cryptocurrency most certainly is a threat to that monopoly — then Dark Wallet is a tailor-made PR talking point for corporate lobbyists wanting legislators to crush potential low-cost competitors.

It’s unlikely the push and shove in the quest for anonymity will end with Dark Wallet in any respect. Other Bitcoin developers could find a way to deny Dark Wallet transactions, setting up a developer arm’s race, and fracturing the Bitcoin user base between business interests and the more radical faction demanding absolute privacy. In the end Dark Wallet may be just one more wooden shoe in the machine of those pushing for Bitcoin financial legitimacy; another hurdle to overcome in their quest to see Bitcoin go mainstream.


Sources:
http://redteanews.com/2014/04/30/bitcoin-dark-wallet-the-excuse-regulators-needed/#.U2E4hvldXfI



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April 30, 2014, 06:05:41 PM
 #2

A good read and I thank you for sharing it with us.  I think Darkwallet is a steip in the right direction but willl most likely be used by those who fear crypto currencies.  I've got a feeling things are going to bet interesting over the next few months.
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April 30, 2014, 06:13:29 PM
 #3

The only thing I dislike about DarkWallet is its name.  It is a sensible and important tool to enhance the privacy of bitcoin transactions. 

Imagine that you were a celebrity using bitcoin: every time you buy a coffee, TMZ is going to post the transaction if it gets the scoop!  Your obsessed fans would be trying to track your coins through the blockchain to identify where and when you are likely to eat dinner, shop, vacation, etc.  Coinjoin is a technique that would make it more difficult to be stalked by crazy people.  Privacy is important for our peace-of-mind and for our personal safety.   

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April 30, 2014, 06:20:29 PM
 #4

At some point the hand of the regulators will be forced.  Is it really a smart idea to keep postponing it?  At this point I think the cryptocurrency community has the regulators completely outmatched.  I'm more than happy to hear about DarkWallet launching.
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April 30, 2014, 06:22:36 PM
 #5

The only thing I dislike about DarkWallet is its name.  It is a sensible and important tool to enhance the privacy of bitcoin transactions. 

Imagine that you were a celebrity using bitcoin: every time you buy a coffee, TMZ is going to post the transaction if it gets the scoop!  Your obsessed fans would be trying to track your coins through the blockchain to identify where and when you are likely to eat dinner, shop, vacation, etc.  Coinjoin is a technique that would make it more difficult to be stalked by crazy people.  Privacy is important for our peace-of-mind and for our personal safety.   

I agree...the name itself attracts attention IMO.   They should make it something that attracts less attention.   I definitely think that anonymity with transactions is very important, but it is a slippery slope because it will definitely be a target for gov'ts and an excuse to try and lay down the regulation or ban hammer.
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April 30, 2014, 06:55:23 PM
 #6

The only thing I dislike about DarkWallet is its name.  It is a sensible and important tool to enhance the privacy of bitcoin transactions. 

Imagine that you were a celebrity using bitcoin: every time you buy a coffee, TMZ is going to post the transaction if it gets the scoop!  Your obsessed fans would be trying to track your coins through the blockchain to identify where and when you are likely to eat dinner, shop, vacation, etc.  Coinjoin is a technique that would make it more difficult to be stalked by crazy people.  Privacy is important for our peace-of-mind and for our personal safety.   

I agree...the name itself attracts attention IMO.   They should make it something that attracts less attention....

The name is intentional, DarkWallet is created to be radical.
Something which draws less attention probably would have been wise....too late now.

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April 30, 2014, 07:06:40 PM
 #7

The name is intentional, DarkWallet is created to be radical.
Something which draws less attention probably would have been wise....too late now.
Actually quite the opposite.

Radical is the winning strategy.

Remember that "government" is just a word - there is no monolithic entity with that name. Instead, there are a large number of individuals who all have their own individual goals and motivations. The extent to which they cooperate to enforce certain policies on the rest of the population is a function of how well their individual goals and motivations align with the goals of the organization itself.

Regulators can't stop Bitcoin any more than the RIAA could stop P2P file sharing, so there's no need for Bitcoin users to self-censor out of a misplaced hope that doing so will protect them.

Every time regulators attempt to stifle Bitcoin and are unsuccessful, Bitcoin will gain more credibility and more users - and very importantly many of those users will be "defectors" from the government side. As governments are finding themselves unable to stop Bitcoin, their organizations will slowly start to fill up with Bitcoin users. Identifying the positive feedback loop in this scenario is left as an exercise for the reader.

Provoking conflict with the regulators is, in fact, the best thing that can happen for Bitcoin in the long term.
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April 30, 2014, 11:19:45 PM
 #8

http://www.wired.com/2014/04/dark-wallet/

Quote
they argue that the code is protected by First Amendment safeguards on free speech.
These guys are pretty out of touch if they imagine that is any reason to take comfort.

Quote
Nor does he deny that Dark Wallet might enable heinous crimes like child pornography, murder-for-hire, and terrorism. “Well, yes, bad things are going to happen on these marketplaces,” Wilson says.
I'd like to see someone make a more easily traceable wallet or coin...just as an experiment
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April 30, 2014, 11:26:29 PM
 #9

Provoking conflict with the regulators is, in fact, the best thing that can happen for Bitcoin in the long term.
Yes, but now is not a good time to do it. We should wait until there is more popular support.
 this sort of thing is very likely to turn the masses against Bitcoin
Peter R
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April 30, 2014, 11:28:20 PM
 #10

The name is intentional, DarkWallet is created to be radical.
Something which draws less attention probably would have been wise....too late now.
Actually quite the opposite.

Radical is the winning strategy.

Remember that "government" is just a word - there is no monolithic entity with that name. Instead, there are a large number of individuals who all have their own individual goals and motivations. The extent to which they cooperate to enforce certain policies on the rest of the population is a function of how well their individual goals and motivations align with the goals of the organization itself.

Regulators can't stop Bitcoin any more than the RIAA could stop P2P file sharing, so there's no need for Bitcoin users to self-censor out of a misplaced hope that doing so will protect them.

Every time regulators attempt to stifle Bitcoin and are unsuccessful, Bitcoin will gain more credibility and more users - and very importantly many of those users will be "defectors" from the government side. As governments are finding themselves unable to stop Bitcoin, their organizations will slowly start to fill up with Bitcoin users. Identifying the positive feedback loop in this scenario is left as an exercise for the reader.

Provoking conflict with the regulators is, in fact, the best thing that can happen for Bitcoin in the long term.

Fascinating point of view, justusranvier.  I think I may actually agree now that I see your logic. 

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April 30, 2014, 11:30:26 PM
 #11

i like the incremental privacy bitcoin can provide

right now its psuedoanonymous, if bitcoins get attacked by the government, bitcoiners can update their wallet and get extreme anonymity or change how they move their bitcoins and create new wallets for every transaction. then bitcoins cant be traced.

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April 30, 2014, 11:32:33 PM
 #12

I also feel the name is needed to attract people.  I think it is a double edged sword but if used correctly is could be a deadly "weapon".
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May 01, 2014, 07:02:42 PM
Last edit: May 01, 2014, 07:14:10 PM by Wary
 #13

Canadians took the radical step of studying the issue before recommending any enforcement action.
  Grin

But seriously, rights are never given, they must be taken. Look at it this way: society consists of people, each trying to reach their goals and pushing in their direction. The more you push, the bigger area of freedom you'll get. In the long run only the power matters, the laws would just legalize the existing balance of power. That's why being submissive in the worst strategy ever. Yours is only what you can protect. If you don't push back,  if they feel no resistance, they'll come and take everything. It doesn't matter how hard you'll try not to give them an excuse, they'll find excuses when they want them. If we won't fight for privacy, we will get none.

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May 01, 2014, 07:05:23 PM
 #14

This launched today right?   I believe I read somewhere that 5/1 was the launch date
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May 01, 2014, 07:14:49 PM
 #15

A good read and I thank you for sharing it with us.  I think Darkwallet is a steip in the right direction but willl most likely be used by those who fear crypto currencies.  I've got a feeling things are going to bet interesting over the next few months.

+1

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Lamigo
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May 01, 2014, 07:24:03 PM
 #16

This launched today right?   I believe I read somewhere that 5/1 was the launch date

Yup, and you can find some discussion here. https://bitcointalk.org/index.php?topic=591703.0

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May 01, 2014, 08:13:24 PM
Last edit: May 01, 2014, 09:01:54 PM by BittBurger
 #17

We've all known what Dark Wallet was intended to do.  It's been "Pending" for months.

But i would say its pretty fucking irritating and outright stupid for the two guys who made it to publicly state in articles that they welcome both the good and the bad, "even if that includes murders for hire and 911-esque terror plots".   Then to cap off those statments with a taunt  "Come get us" or "Just try and stop it".  

I mean freedom is one thing.  I get it.  But as an intelligent individual, morality and love for fellow humanity has to be mixed in with your freedom.

Make something free.  Don't be a fucking idiot and say you support terrorist plots or murders for hire.

You support freedom.  Not murder.   I assume.  

I dont know ...

On the plus side, maybe DarkWallet will be such a pussing anathema to the cryptocurrency world that the focus/fears/stigma from Law Enforcement will go there, and be pulled away from Bitcoin.

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May 01, 2014, 08:52:49 PM
 #18

It really is all quite fascinating from my perspective.  I don't see this not becoming more of an issue as time passes.  I do worry about the negative impact but I suspect it will lead to some good discussions and the like.
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May 01, 2014, 08:54:54 PM
 #19

Regulators gonna regulate.

The key is for the technology to always keep one step ahead of the slower process of regulation.

First seastead company actually selling sea homes: Ocean Builders https://ocean.builders  Of course we accept bitcoin.
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May 01, 2014, 09:25:32 PM
 #20

The trailer for the dark wallet makes it seem like it is geared for people in the movies who operate in the underworld...lol
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