x

Crypto-anarchists Versus Government, Who Will Win The War to Regulate Bitcoin?

by

         Crypto-anarchists Versus Government, Who Will Win The War to Regulate Bitcoin?

Earlier this year Benjamin Lawsky, New York’s financial services superintendent, said he intended to initiate the biggest move towards regulating bitcoin.

Lawsky told CNN Money that he planned do this by administering “BitLicenses” to companies dealing with bitcoins, allegedly to protect the public from fraud.

Without explaining how exactly, Lawsky said he’d impose regulation on Bitcoin-related businesses, similar to those that govern banks.

Given the government’s track record on managing finances, including simple tasks like balancing a checkbook, the notion the government is either trustworthy, or competent, to successfully carry out such a task is debatable; some might say laughable.

“We’ve found in other areas of the financial world that strong, clear, concise disclosures are critical to earning the long-term trust and confidence of consumers,” said Lawsky. In other words, Lawsky wants Bitcoin exchanges to disclose the risks associated with virtual transactions.

Requesting exchanges provide potential users with facts regarding risks seems reasonable, but to insinuate government regulation is necessary to gain consumer trust is reaching.

If Lawsky’s statement were true, that would mean corporate banks have been nothing but honest to their customers, therefore gaining trust.

I bet many would beg to differ.

The initial idea behind the development of bitcoin was to escape government regulated currency, and develop one that would provide financial freedom to its users.

Enter Dark Wallet

A group of coders, including Cody Wilson, the mastermind behind printing 3D weapons, and Bitcoin project developer Amir Taaki, may be just one step ahead of the government when it comes to tracking the digital currency.

The coders refer to themselves as the unSystem.

Launched on Indiegogo, unSystem developed software capable of concealing bitcoin footprints, preventing its route from being tracked when transactions are made. Engadget explains how a “one-two punch” of encryption and “CoinJoin” technology makes this possible.

“In brief, the latter code registers multiple transactions as a single movement of funds, masking transfers,” reported Engadget.

Acting out of defiance, the team admitted the main purpose of the software, cleverly named the Dark Wallet, is to carry out “illicit transactions” similar to those that previously took place on the Silk Road website. The name itself is a play on the fear law enforcement officials once expressed that hackers and criminals would use technology to “go dark” and avoid government surveillance.

Silk Road was an underground website that supported a black market, including the sale of illegal drugs. It has since been shut down and the alleged site runner, Ross Ulbricht, is in jail awaiting his trial. Ulbricht is being federally charged with drug trafficking and money laundering.

The Dark Wallet is reportedly “…designed to protect its users’ identities far more strongly than the partial privacy protections bitcoin offers in its current form,” reported Wired.

“If the program works as promised, it could neuter impending bitcoin regulations that seek to tie individuals’ identities to bitcoin ownership.”

Law enforcement is watching

The New York Department of Financial Services, in which Lawsky is superintendent, failed to respond to requests for comment.

The Financial Crimes Enforcement Network, however, did respond to Wired Magazine stating they are, “well aware of the many emerging technological efforts designed to subvert financial transparency. It’s certainly our business to be interested and vigilant with respect to any activities that may assist money laundering and other financial crim

Recommended

Bitcoin Price Analysis: Could Three Times Be the Charm for This Resistance Level?

Bitcoin remains in its tightly coiled range as the market continues its sideways trend for the third week in a row.

Bitcoin Schmitcoin

Op Ed: Defining Decentralization: How Ambiguity Continues to Divide Crypto

In the pursuit of mass adoption, decentralization shouldn’t be our goal, but instead a means to achieve the many different, and equally important, goals that exist for cryptocurrency users.

Paul Puey

Op Ed: Why It’s Unsafe to Store Private Crypto Keys in the Cloud

Unless cybersecurity becomes part of the fabric of blockchain and crypto with stakeholders taking it more seriously, it will take much longer for this amazing technology and currency to get the mass adoption that it deserves.

Paul Walsh

Op Ed: How Bitcoin’s Protocol of Peace Can End the Nuclear Age

Bitcoin offers an alternative to a universal security system backed by men with guns. It creates a new model of security based on cryptographic proof that can resist unlimited applications of violence, making a bulletproof network.

Nozomi Hayase