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Author Topic: Pros and Cons of Anonymous Digital Cash  (Read 186693 times)
NewLibertyStandard
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February 28, 2010, 06:30:06 AM
 #1

Which of the pros and cons of anonymous digital cash do you think are most important?

For me, the most important argument for anonymous digital cash is that it allows citizens living within a non-representative government to withdraw support for their government by evading taxation.

I think that the most important argument against anonymous digital cash is that it allows powerful criminals to hide their criminal activity.

I'm not sure whether the advantage or the disadvantage is more important.

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Sabunir
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February 28, 2010, 07:18:16 AM
 #2

Advantages:
- Resist/protest unlawful/unfair taxes/government
- Prevent privacy intrusions (financial records) from governments/banks/corporations
- Counter-economic force

Disadvantages:
- Criminal usage (including money laundering)
- No means of refunds or fraud insurance

Which is more important:
The advantages will always be more important as long as there are more regular users than criminal users and there are no better methods for a user to gain the advantages.
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February 28, 2010, 07:27:59 AM
 #3

What we all have to eventually realize is that if Bitcoin spreads to a large enough audience, government is going to catch on and shut it down.

Since the currency exchange involves USD at the moment, I'm fairly certain any such transactions still fall under tax laws. Even if you tried to rectify the transaction of Bitcoins for physical objects as 'gifting', items that are given to you for free are still subject to taxation by law, even though nobody I know includes every gift they were given on their tax forms it's still technically required by law.

This information is based on my experience, so correct me if I'm mistaken.

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NewLibertyStandard
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February 28, 2010, 08:01:34 AM
 #4

I think that fiat currencies also have pros and cons. On the one hand, the few who have disproportionate control over the currencies can manipulate them to encourage economic growth and prevent disaster, but on the other hand, those same people can manipulate the currencies to benefit themselves.

I think it will be good to have both fiat currencies and currencies without a central authority. If people were invested in both types of currencies and if both types of currencies were usable on a daily basis, then if either currency completely failed, people would still have something available to fall back on.

Ensayia, as far as I can tell, there is nothing illegal about Bitcoin itself. There are however, in the United States at least, record keeping regulations when large amounts of money are being transfered. I don't know whether that would apply to unofficial currencies since there's no official value per bitcoin, but if those laws do apply, a person would just be bound by the same requirements to keep records of large transactions. If the government outlawed Bitcoin altogether, people would just make it even more anonymous.

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dwdollar
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February 28, 2010, 06:12:29 PM
 #5

It's the "Non-Criminals" who are the biggest criminals of all.  These kind of people are SO powerful they can write the law and put themselves above it.  A free monetary system would be a massive thorn right in the bottom of their a**.
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March 01, 2010, 05:24:43 AM
 #6

It's the "Non-Criminals" who are the biggest criminals of all.  These kind of people are SO powerful they can write the law and put themselves above it.  A free monetary system would be a massive thorn right in the bottom of their a**.

Provided it turns out to be spendable by not encountering an ever-increasing-price scenario.
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March 01, 2010, 05:59:12 AM
 #7

This thread has moved off-topic. I am interested in reading more responses to NewLibertyStandard's initial questions.
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March 01, 2010, 06:55:01 AM
 #8

Quote
This thread has moved off-topic. I am interested in reading more responses to NewLibertyStandard's initial questions.

Sorry, I can rant at times.  I am mostly a libertarian, so anything I say is going to be biased.  I see free exchange as a fundamental right similar to speech, arms, or privacy.  Any of those can be used for evil too.  Ultimately, it's about freedom of choice.
fergalish
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March 01, 2010, 11:09:55 AM
 #9

I think that what's more important is not the *number* of honest/dishonest users, but their *economic importance*.  That is, 1 million honest users could be easily outgunned by 10 very rich dishonest users.  Look at the US$ - 300 million Americans versus just a few hundred (?) banks - and ask yourself who's winning.

Which is more important:
The advantages will always be more important as long as there are more regular users than criminal users and there are no better methods for a user to gain the advantages.
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March 01, 2010, 05:43:22 PM
 #10

You have a valid point, fergalish. However, I think that more important than the total "economic importance" is the total human rights fulfilled. It is in the spirit of "Better to let 10 criminals go free than to condemn one innocent man".

But I suppose a counter argument is if higher criminal "economic importance" would cause more human rights violations than were prevented. So, indirectly, you may be right.
ihrhase
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March 02, 2010, 02:58:28 PM
 #11

NLS...

Pros...
Free market interaction
Tax shelter

Cons...
It is illegal

If you are planning on using Bitcoin as a business you should realize that there is an inherent illicit nature to the practice of using, trading, and even promoting a currency that is not issued by the state, the state has a monopoly on currency for a reason, anything that threatens it will be playing a game with the coercive resources of the state.

Bitcoin provides supreme opportunities to its users, to see how a free market can work, to see that governments are not exactly good at mitigating the moral hazard of fiat currency, where a private generator may be better and when government is taken out of the equation, prices are drastically different.

This is as illegal as us forming a mint, and pressing silver into coins to spend in a market that operates outside the tax structure, inherently all operations using bitcoin are "Black Market", with this in mind, if illegality is an issue for an individual, cashing out now might be the best option...

Fergalish:
The difference is the banks have the coercive power of the state to protect their actions, with bitcoin, as it is an inherently illegal operation, there is no power to force people to interact with dishonest users, the dishonest types you seem to be pointing out, would shy away from a market that do not have a coercible market advantage...

Suggester:
Market exchanges need to take place for a market equilibrium to be reached, there will be a correction as more exchanges are possible, therefore utility is increased, but these are nominal...

NLS:
A "Fiat" currency is not bad because it is not a commodity currency, it is bad because of a state monopoly, if you have 5 competing fiat currencies there is more of a tendency for honest currency, this is because the dishonest ones will be deselected out of the market.  Similarly if you have a single commodity currency in the hands of the state, and this is a historical fact, the state manipulates composition if the commodity currency...

On criminal activity...
What criminal activity?
What property right violation would use bitcoin to hide itself from the state?  Seems inconvenient to me as a step to avoid detection...
If you are thinking trading state mandated contraband is criminal activity, well, then so is bitcoin, as FRN are the only state mandated currency in the US, all others are contraband...

The Madhatter
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March 02, 2010, 03:43:31 PM
 #12

Haha! That was *exactly* what I was going to post. Tongue You and I are true pals now.

On criminal activity...
What criminal activity?
What property right violation would use bitcoin to hide itself from the state?  Seems inconvenient to me as a step to avoid detection...
If you are thinking trading state mandated contraband is criminal activity, well, then so is bitcoin, as FRN are the only state mandated currency in the US, all others are contraband...
fergalish
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March 02, 2010, 04:08:14 PM
 #13

But I suppose a counter argument is if higher criminal "economic importance" would cause more human rights violations than were prevented. So, indirectly, you may be right.

The difference is the banks have the coercive power of the state to protect their actions, with bitcoin, as it is an inherently illegal operation, there is no power to force people to interact with dishonest users, the dishonest types you seem to be pointing out, would shy away from a market that do not have a coercible market advantage...

So it's necessary to differentiate between dishonest activity at the level of the currency (e.g. inflation, interest), and "normal" dishonest activity which utilizes a currency in an honest manner, but to trade dishonest produce or services - e.g. buying drugs at market value.  Bitcoin will be supposedly immune to the former type, but will greatly liberate the latter from the chains of state control.  We might expect, for example, significant organized crime in a bitcoin world; but we're just coming back to a political argument here - anarchy Vs state, and there are other threads for that.
ihrhase
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March 02, 2010, 09:08:05 PM
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So it's necessary to differentiate between dishonest activity at the level of the currency (e.g. inflation, interest), and "normal" dishonest activity which utilizes a currency in an honest manner, but to trade dishonest produce or services - e.g. buying drugs at market value.  Bitcoin will be supposedly immune to the former type, but will greatly liberate the latter from the chains of state control.  We might expect, for example, significant organized crime in a bitcoin world; but we're just coming back to a political argument here - anarchy Vs state, and there are other threads for that.


Interest is a market phenomenon, it is an application of time in economics, so I will have to disagree with your dishonest connotation to interest...

Basically if it is your opinion that the purchase or sale of drugs is "dishonest" then do not engage in such practices...

Take a less offensive example, tobacco is legal to own and grow privately in the US, but it is illegal to sell, trade or gift home grown tobacco.
If I were to sell tobacco I grew at my home, using bitcoin as a medium of exchange, am I using it dishonestly?

The use of bitcoin as a medium of exchange is illegal in the first place, why are you concerned that individuals will use it in order to trade contraband, when the medium of exchange itself holds the same legal status as a pound of marijuana?

Haha! That was *exactly* what I was going to post. Tongue You and I are true pals now.


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NewLibertyStandard
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March 02, 2010, 09:35:37 PM
 #15

Community currencies are not illegal. Buying, selling or trading legal goods anonymously is not illegal so long as profits are reported accurately. It's the job of the IRS to find those people who are not reporting profits accurately. So long as a person does proper accounting and honestly answers the questions in their tax preparation software, there's not much to worry about. In fact the tax software I use includes an optional tax help insurance in case of an audit. If a person has tax information which he thinks would set off a red flag or if he is unsure whether he filled everything out accurately he can just pay a few extra dollars and be assured that if he is audited, he'll have help straightening it out.

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sirius
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March 02, 2010, 09:51:16 PM
 #16

I don't think using a private currency is illegal anywhere outside some banana republics. Liberty Dollar users haven't been prosecuted. As I've understood, Liberty Dollar was shut down because it could be allegedly mistaken for the US Dollar.

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March 03, 2010, 03:49:59 AM
 #17

What we all have to eventually realize is that if Bitcoin spreads to a large enough audience, government is going to catch on and shut it down.

How?
The Madhatter
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March 03, 2010, 04:32:02 AM
 #18

Haha! Maybe with Internet 2 (or 3?). They would just revoke your internet driver's license if you don't abide by the new rules. Hahahahah

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March 03, 2010, 12:09:38 PM
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Take it from someone who has done things he was not legally prohibited from doing, but someone from the Ivory Tower did not like it....

It is not a good scene...
fergalish
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March 03, 2010, 07:16:05 PM
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Interest is a market phenomenon, it is an application of time in economics, so I will have to disagree with your dishonest connotation to interest...
Excellent, this is an interesting debate that goes back hundreds of years.  Many people would say that inflation is a market phenomenon too.  Do you realise that any economy which permits charging interest on a loan *requires* inflation?  The rich entity charging interest gets *all* their capital back, *plus* the interest.  If no extra money is being injected into the economy (i.e. no inflation), eventually the interest charger collects all the money in circulation and the currency fails.

Basically if it is your opinion that the purchase or sale of drugs is "dishonest" then do not engage in such practices...
"dishonest" was perhaps inappropriate.  Some people *would* consider drug dealing dishonest (exploitation of another's weakness/addiction etc), but nonetheless, it's illegal, and that's what counts in this discussion.  You can argue until you're blue in the face, but the bottom line is, it's illegal, and Big Gov will restrict your liberty if it catches you.

If I were to sell tobacco I grew at my home, using bitcoin as a medium of exchange, am I using it dishonestly?
You're not using bitcoin dishonestly, unless you somehow use your economic power or prowess to distort the market to make an unfair profit.  But, that's aside from the issue of whether tobacco-dealing is illegal or dishonest, or whatever.  See the difference?
Suppose I collected $100 from each of my 9 friends, went out and bought $1000 worth of illegal substance X, then went home, and gave each of them $90 worth, and kept the remaining $190 worth for myself telling them it was more expensive than usual.  Would my friends think I'm being dishonest if they found out (ignore "courier" fees etc)?  Because I bought illegal substance X?  Or because I didn't share it evenly?


What we all have to eventually realize is that if Bitcoin spreads to a large enough audience, government is going to catch on and shut it down.

How?

Umm, let me think, I get your IP address, waterboard your ISP until they give me your physical address, then shoot out your kneecaps.  Of course, I wouldn't say it outright that I'm from the government, but I might build myself let's say a branding iron with the words "bitcoin haters group" and brand your forehead, and then claim I'm from a vigilante/anarchist group patriotically defending my country and its economy - you [not you specifically I-a-n-a, but general bitcoin pro-anarchists] could be happy at least in the illusion of having helped anarchists find a job, right?  So then, would that stop you using bitcoin?  Would you tell your friends what happened?  Do you think they'd stop then aswell?  It's all very well talking about encryption and so on, and I personally wouldn't know how to crack down on bitcoin users, but I think you're being a bit naive if you think Big Government would take it lying down.  Damn, the west went to *WAR* more than once, at untold cost, to defend its economy - hundreds of thousands of dead people, *entire countries* ruined beyond all hope of recovery, tens if not hundreds of millions of displaced people... not to mention the continued suffering by millions of overworked, underpaid, malnourished people, including children, working to construct my next mobile phone.  There you go, maybe I'd just send you to the god-forsaken middle of nowhere where there's a toilet-seat factory, and let you rot away, scratching out a miserable existence together with your former slaves.  Yeah, I'd even let you have your bitcoin then.
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