On Monday 28 Feb 2011 14:06:06 teppy wrote: > Long (long!) time lurker on this list, and Bitcoin early adopter here. > I'll try to give a quick summary for Freenet folk: > > Assuming no cryptographic flaw is found, I believe (FWIW) that Bitcoin > will soon be safe, because all functions are decentralized, including > transfer and generation. With some simple steps such as running over > Tor, Bitcoin can also be anonymous for spending, receiving, and generating.
Not true. Bitcoin will not be anonymous until it has mixing services. However
implementing such, and ensuring they play by the rules, would be fairly easy.
The big vulnerability is the exchangers. Unless your BTC economy is *really
huge*, you will need to transfer the money into a bank at some point. Which
means in theory:
- They can shut down the exchangers.
- They can freeze the accounts of people receiving money from them, or sending
money to them, on the grounds that they must be involved in money laundering.
Note that "they" could include non-government actors such as banks, Paypal etc,
if money that has been through BTC goes through them.
A light touch, but technically expensive, option would be to force exchangers
to only deal with currency that they are able to trace. The ultimate heavy
handed sanction would be freezing all accounts which ever received or sent a
BTC transaction. Obviously that would hit us hard. Whether it would be legal
without further legislation I have no idea; I believe powers related to money
laundering tend to be fairly broad, and banks (and especially paypal) can often
do bad things with very little reason...
>
> The one known attack against Bitcoin, and this is an intentional part of
> the design, is to have more computing power than the rest of the network
> combined: When a double-spend occurs, the network as a whole decides
> which spend occurred first; raw computation power decides this. Some
> back-of-the-envelope calculations suggest that the network right now is
> the equivalent of about 2000 ATI 5970 graphics cards, so that might be
> $3M or so in hardware costs, which of course is trivial for the government.
>
> But if Bitcoin grows 1000x bigger, or more specifically, the amount of
> computing power on the P2P network grows 1000-fold, I think it would be
> safe from government attacks. Here's a graph of computing power
> ("difficulty") vs time:
>
> http://bitcoin.sipa.be/
The problem with that is if bitcoin is 1000x larger then it will need much
fatter network connections. At what point does it become impossible to run it
peer to peer on currently plausible systems?
So far, we have received $270 in bitcoin. The first $100 was exchanged via
#bitcoin-otc for Paypal, and the other $170 via Mtgox; we plan to use Mtgox in
future. The former is relatively low risk if you check the reputations, but is
quite a bit of hassle and has at least the theoretical possibility of
laundering stolen credit cards; the latter is somewhat more respectable and
therefore susceptible to government interference...
>
> Teppy
> >
> > What is the danger that BitCoin will have the same fate as the
> > "Liberty Dollar"?
> >
> > https://secure.wikimedia.org/wikipedia/en/wiki/Liberty_Dollar#FBI_.2F_Secret_Service_raid
> >
> > Does this create any risk for Freenet if we are using it?
> >
> > Ian.
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