Sanitized Bitcoin and Digital Nanny State
Everyday bitcoin becomes more mainstream, and in doing so, it instigates scrutiny from Government officials. Bitcoin, like any currency, can be bartered, traded, purchased; and eventually any form of exchange can be used in what the State would consider an “illegal” manner.
Enter a new company called CoinValidation. This company promises to create a list of “good accounts”, as in any account that hasn’t been deemed to be used in “illegal” activity. With the nature of bitcoin, all transactions are stored in the public accounting ledger (the blockchain), and are listed for the world to see. This company intends to track every bitcoin address to see if it has sent/received bitcoins from alleged “illegal” activity.
From a recent article from Forbes about CoinValidation, and their intentions.
It’s a tracking system for Bitcoin ownership that would theoretically weed out ‘bad actors’ – like the Dread Pirate Roberts – from the legitimate Bitcoin business world. Their plan is to compile a database of the known identities associated with Bitcoin addresses in the hope that Coin Validation will become the one-stop-identity shop for law enforcement when trying to find out who’s doing something nefarious with Bitcoin, while providing a red-flag system for businesses who have customers trying to use Bitcoin that’s associated with illicit use. ~Forbes
Too many ambiguous laws already
As bitcoin becomes more widely adopted, and mixed into circulation, there will be very few coins that haven’t been used in what the state would classify as “illegal”. There are supposedly over 200,000 pages of Federal Code, and they have a law on the books that would include every person in the United States. There are some reports where the average person unknowingly commits 3 federal felonies per day. If you added in state & local laws, it’s downright frightening.
Who is the gatekeeper?
If CoinValidation succeeds in their goal, and becomes the gatekeeper for “good and bad” bitcoin transactions, what parameters will be used? Will the black-listed bitcoin address users be tracked down, and prosecuted? Or, will their transactions be rejected by cooperating payment processors? Where does the burden of proof lie? In addition to the technical difficulties, there is a laundry list of questions that will arise with such a company being in bed with Government officials.
My mind is whirling with potential consequences of white/black list of bitcoin addresses. I’ll throw a couple out to get the ball rolling.
- Any company/person/politician accepting bitcoin will be targeted with bitcoins from blacklisted addresses.
- All blacklisted bitcoins will move overseas and be used outside the purview of regulators.
- An entirely different market for blacklisted coins will open up and operate along side.
- A host of new innovation will anonymize blacklisted bitcoin.
- Bitcoin users will transition to a different crypto-currency such as litecoin.
The vast majority of bitcoin users are good people, and invariably they will be caught up in this white/black list nonsense. Once again, the reason why bitcoin was created in the first place, was to counteract central banks/bailouts/endless regulation/errant governments.
Bitcoin is such a revolutionary technology that it allows for true financial freedom at the individual level. After all, the mayhem in the financial market that is created & perpetuated by the Federal Reserve, the banking industry, and endorsed by the Government.
The correct question is: How can the banks & government change their divisive & overpowering ways to allow bitcoin to coexist and compete peacefully in the world. In a sense, people are voting by using bitcoin, they are choosing to use something they trust more than fiat currency.