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Author Topic: separation of powers  (Read 714 times)
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May 12, 2012, 12:36:57 AM

One thing that impresses me about bitcoin is that by now, I see it as a superior model for a modern democracy. Real-world democracies often suffer from a huge (and ever-growing) pile of laws, while still having a hard time to achieve some balance throughout the society (which is what I would regard as the goal of democratic models). Bitcoin, on the other hand, works in an almost anarchical way by having the crowd building a consensus and building interesting innovations upon it. But at the point where it would not serve the majority in some way, it would collapse because those which are discontent with how it works could bring it down using a 51% attack.

Now, I discovered something which pretty much opposes what I find valuable in a democratic society. Modern societies have some means of law enforcement, and they have profit-driven businesses which push forward innovation. But (and unfortunately, because of their disinformation policy towards their customers until now, I'm not sure if it was their business decision from the first place, or if they fell into this because of liquidity problems) the still largest bitcoin exchange has attempted to fill both roles - a profitable police (ultimately leading to this miserable situation: An example for why this must fail is their policy of accepting all deposits which their regard as "illegal" for some reason, even allowing trades using these deposits, and just freezing the accounts on withdrawal. From a business perspective, this is reasonable as it allows them to still make profits from the "illegal" money streams. But as AML regulations are cited as the reason for freezing on withdrawal, this becomes almost amusing. If you ever researched how large crime organizations launder money on commodity markets, it becomes clear: money laundering is still facilitated, and profited from, and the account freezing becomes just a red herring. In the end, no one is served well, neither law enforcement nor the company's customers.

I hope people will learn from this incident, making more from this great democratic basework we have. There is still much room for doing innovative business, and for working with governments in order to have them learn how to cope with this new technology. But trying to fit both needs is only a recipe to get your fingers burnt...

Feel free to PM me for consulting and development services.
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