Wednesday, January 29, 2014

The Bitcoin Contradiction

New York State’s top financial regulator, Benjamin M. Lawsky, is holding a two day conference on Bitcoin, which started yesterday. Judging from the hearing, it appears  Bitcoiners want to hold two contradictory views at the same time.

NYT reports on yesterday's testimony:
 “It’s about freedom, ultimately, and whether you want to live in a society that embraces innovation and free speech and freedom or not,” [Fred Wilson, a leading venture capitalist at Union Square Ventures] said.
A minute later, Tyler Winklevoss echoed that: “Back to what Fred said: Bitcoin is freedom. It’s very American.”
But then we had this(my highlight)
Hanging over the hearing was the criminal complaint unsealed on Monday against a leading Bitcoin entrepreneur, Charles Shrem, and a business partner, who were accused of helping people buy drugs online using virtual currencies.
During the hearing, the Bitcoin Foundation, where Mr. Shrem was vice chairman, put out a statement indicating that Mr. Shrem had resigned on Tuesday.
Mr. Lawsky said the arrests showed the potential that virtual currencies have to smooth the way for illegal activity. But the people testifying said that Mr. Shrem’s arrest showed that current laws are enough to stop wrongdoing in the Bitcoin universe, particularly because all transactions are recorded on a public ledger.

So which is it guys, does Bitcoin promote freedom, or does the public ledger result in easier capture of what the government sees as "wrongdoers"?

And please don't add a stupid comment that Bitcoin transactions can be anonymized. First, I suspect that this can't be known for sure , since you won't know who the anonymizer is. It could be the government. But, more significantly, two of the savviest Bitcoin operators out there, Ross Ulbricht and Charlie Shrem, have been arrested and both are facing serious jail time. If these guys are getting busted, is it reasonable to think that the average Joe is taking the complex precautions necessary with Bitcoin to possibly protect identity?


  1. "two of the savviest Bitcoin operators out there, Ross Ulbricht "

    Bob, you have to be stupid, or act stupidly, to mention Ross Ulbricht. He mentioned his legal name on public forums and posted pictures on himself under Dread Pirate Roberts!

    If you use bitcoin, but reveal who you're openly with pictures and putting your legal name on public forums, that's not bitcoin fault!

    1. My point is and continues to be that Ulbricht and Shrem both understood more than most the limits of Bitcoin and operated in high risk operations, yet neither of them could refrain from activity that aided in their arrest. Do you seriously think that the average Joe is going to be more disciplined? There is a reason that the government calls Bitcoin “Prosecution Futures” (See:

      You are highly irresponsible to give the impression that Bitcoin can be a safe anonymous tool.

    2. With ANY anonymizing tool invented or yet to be invented, if you post your real picture under your internet name, which Ross did, you'll get caught.

      This is not a characteristic of bitcoin, you're attacking ALL anonymizing tools used by people who reveal themselves some other way when you mention Ross.

      Maybe you're correct but need to refine your argument and get informed about all the ways Ross revealed who he was that were not related to bitcoin.

    3. The point Wenzel seems to be making is that you don't know who is behind anonymizing tools. The government can be running some. It has nothing to do with posting your picture. It is worse, giving the track record of your illegal transactions to the government.

    4. Anyone who thinks a coin mixer will be allowed to exist that isn't run by government is fooling themselves.

    5. Bitcoin does not need nor seek government permission to exist. Some users do.

  2. But, more significantly, two of the savviest Dollar operators out there, Al Capone and Free Way Ricky Ross, have been arrested and both are facing serious jail time. If these guys are getting busted, is it reasonable to think that the average Joe is taking the complex precautions necessary with Dollars to possibly protect identity?'ve lost Wenzel. Give up.

    1. I think Wenzel's point is that Bitcoin, unlike the claims of Bicoin fanboys,is not any safer medium to use in illegal activities than dollar use.

      Wenzel has also made the point elsewhere that when you get caught using Bitcoin all the transactions coming out of a given wallet can be tracked---very different and much more dangerous than using cash.

  3. Hey Bitcoin Fanboys,

    Give it up. Wenzel has won this debate. Russia has now declared Bitcoin completely illegal and regulations are coming in the US that will make it impossible for Bitcoin to become anything more than a government tracked sideshow.

  4. What a Pity for the corporations Russia and USA then lol. It will just continue to develop outside these boundaries. Bitcoin will survive!

  5. Two guys get busted yet thousands continue to transact freely - seems like Bitcoin is winning to me. Is it perfect? No. Is it better than anything we currently have? Yes. Will it get better? Yes. Bitcoin is programmable money and the brightest minds are devoting their energies to making it better - not trashing it from the sidelines.

  6. JR Comment As Anonymous: January 29, 2014
    As a veteran of the early Internet-web proliferation era there was great concern about privacy, anonymity. However, as the Net spread to the masses it was clear they either did not care or could be cheaply bought (i.e. revealing info. about themselves). The users in the Bitcoin-Crypto Currency space are the tech savvy early adopters, and while some of them may jump through needed hoops to maintain anonymity, if-when the masses use virtual currencies(or payment systems) they will for the most part not bother. When it comes to Crypto payment systems, I feel like I am watching a repeat movie from the 1990's, or perhaps the term Deja Vu is more appropriate.