Monday, January 27, 2014

Now, Bitcoin Foundation General Counsel Throws Arrested Bitcoiner Charlie Shrem Under the Bus

Reuters reports, following the arrest, for money laundering, of the vice-chairman of the Bitcoin Foundation, Charlie Shrem:
Bitcoin insiders said Shrem's arrest showed just how hard it is to get away with illegal activity using Bitcoin, which has an ownership chain built into its software so that each unit can be tied to the users who have acquired or spent it. 
"Using bitcoin for illicit transactions is really, really dumb," said Patrick Murck, the Bitcoin Foundation's general counsel. "Bitcoins are so easy to track."
The Bitcoin Foundation as an organization, also piled on:
 “We are surprised and shocked by the news today. As a foundation, we take these allegations seriously and do not condone illegal activity,” said a spokesperson for the Bitcoin Foundation in an email.
The Winklevoss twins threw Shrem under the bus earlier today.

Okay Bitcoiners, so we know that the government is going to control bitcoins at the point of exchange, which means that bitcoiners are going to have to play by the government's rules and the general counsel of the Bitcoin Foundation  has now stated that "Bitcoins are so easy to track," so what exactly is the benefit of Bitcoin?

12 comments:

  1. Don't you understand "lawyer-speak"? Yes, bitcoins are easy to track. It is the identities behind the bitcoins that are difficult to track. Bitcoin has "user-defined" anonymity. Those who wish to have privacy, will. They certainly will not be dealing with regulated exchanges.

    As far as benefits? You stated a few of them yourself in one of your previous posts. Hint: smart contracts. That is only one of many. Next question?

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    1. You are total delusional if you think smart contracts for trusts etc are going to be based on a fluctuating e-currency like Bitcoin.

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    2. @ Robert Wenzel January 27, 2014 at 10:27 PM

      The fluctuating price of bitcoin is not a necessary component of the blockchain's use for smart contracts. A micro-payment is all that is needed to record a title transfer or execute a smart contract - the value of that transaction is irrelevant. Next question?

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    3. Do you even understand what the smart contract people are doing? They are building their own platform using Bitcoin technology, but not Bitcoin.

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    4. @ Honey Badger.
      From http://finance.yahoo.com/news/two-bitcoin-exchange-operators-charged-162424192.html:

      "Bitcoin insiders said Shrem's arrest showed just how hard it is to get away with illegal activity using Bitcoin, which has an ownership chain built into its software so that each unit can be tied to the users who have acquired or spent it."

      From bitcoin.org:
      "Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. Always remember that it is your responsibility to adopt good practices in order to protect your privacy."

      In other words, Bitcoins are actually not private at all by default and in order to even have a hope of privacy, one has to change the Bitcoin address every single time. That sounds like quite an obstacle where Bitcoin is to be used for numerous routine daily transactions. One has to always create a new address for each transaction and keep track of all the prior addresses to make sure a previous address is never used again?

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    5. @ Robert Wenzel January 28, 2014 at 12:05 AM

      I assume you are talking about Ethereum which does not intend to use the Bitcoin blockchain and it is only one of many new projects that can enable Smart Contracts. But Ethereum is still only an unproven idea whereas Bitcoin is up an running now (imperfect as it is). Smart Contracts are already possible on the Bitcoin Protocol.

      There are also projects like Open Transactions which are designed to interact with the Bitcoin Blockchain and achieve the same results in quite possibly a more elegant way. Check out this overview of OT with creator Chris Odom:

      http://letstalkbitcoin.com/chris-odom-on-opentransactions/

      Ethereum has potential but there are many obstacles that it must overcome first if it wants to replace Bitcoin. First of all, it is a start-up idea (meaning it doesn't exist yet) and their financial incentives don't appear to be sustainable (perpetual inflation).

      My money is on Bitcoin + Open Transactions but, hey, I don't care which one wins because, either way, the State loses and, if Ethereum becomes "the one", then I will migrate over to it.

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    6. @Alan Andersen January 28, 2014 at 12:44 AM

      Yes, and this will all be automated soon. Bitcoin is programmable money so it is simply a feature that can be added to the particular wallet you are using. Open Transactions already has a fully anonymous and trustless currency that can be backed by bitcoins without any counter-party risk. It is an excellent example of the tools that can be built on to Bitcoin to make it even more valuable. Exciting times are ahead!

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    7. @honeybadger

      "The fluctuating price of bitcoin is not a necessary component of the blockchain's use for smart contracts. A micro-payment is all that is needed to record a title transfer or execute a smart contract - the value of that transaction is irrelevant. Next question?"

      So then why is you state you are constantly purchasing bitcoins? Your argument seems to be morphing from "bitcoin will be the greatest money in the universe" to "the bitcoin technology is what matters, who cares about the currency? ... I assume you might care about the purchasing power of a bitcoin given the amount of dollars you state you've poured into it ...

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    8. @Danger Pioneer January 28, 2014 at 8:28 AM

      I care about both the currency AND the underlying protocol. I think they are both amazing and liberating. So far, they've both performed marvelously and have exceeded my expectations.

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    9. @Honey Badger Can one achieve anonymity in bitcoin? Yes since changing addresses ensures that it is difficult if not impossible to trace to the actual person.

      As for the smart contracts part, Wenzel is being emotional since as to the fluctuations into the value of bitcoin, whereas Wenzel HOPES that it will always be the case and calls it a problems, others LOOK at it as temporary and see opportunity (i.e. ultracoin http://tinyurl.com/q7j6vc7), in other words bitcoin derivatives! Duh!!! Given that Mr. Middleton has been prescient about the housing crisis, the debt crisis globally and in various countries, the fall of Bear Stearns, the debts of Anglo Irish Bank, the fall in value of Apple and rise of Google, etc - there's too many to mention, I know how I would put my money on being correct!

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    10. @JayTe - based on your appeal to authority, you should at least be aware that Wenzel predicted those things as well, if not publicly on EPJ, then in the EPJ Daily Alerts

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  2. and cue all the shitcoin defenders...3...2...1...

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