I think the observation about Target vs Bitcoin exchanges is a sharp one,
but I'm not sure how your proposal helps. You say it's an optional
identity
layer, but obviously any thief is going to opt out of being identified.
Let me translate it to this year's vocabulary. Think of BCIs as a
sidechain: let the legacy financial system migrate, to the extent desired,
to a more heavily regulated pegged sidechain with a stronger identity
layer. Let protocol-level rules regulate this nexus between the custodial
(sidechain) and non-custodial address spaces (blockchain). This isn't
entirely unlike the rules currently governing coin issuance i.e. coinbase
transactions. Let the market forces play it out. Iterate as needed. I
suspect that in retrospect it'll seem obvious. Many moons from now the
balance might shift between the two, but it won't matter much. The system
will have means to recover from catastrophic failure modes.
To help internalize such an evolution, please consider the layers the
Bitcoin protocol builds on top of: segment 52:32 (The Internet is being
upgraded) of the BBC documentary Inside The Dark Web (
https://www.youtube.com/watch?v=qXajND7BQzk#t=3152). Kaspersky's comments a
few minutes earlier (50:06) aren't entirely out of context here either.
Clearly, the need is acute for Bitcoin to become institutional i.e. for
billions of dollars of human value to flow through it, as one Money 20/20
participant put it.
On Fri, Jan 9, 2015 at 2:00 PM, Mike Hearn m...@plan99.net wrote:
This needn't be so, once an optional identity layer, modeled after the
Internet itself, is provided, as proposed in late August of last year on
this mailing list
I think the observation about Target vs Bitcoin exchanges is a sharp one,
but I'm not sure how your proposal helps. You say it's an optional identity
layer, but obviously any thief is going to opt out of being identified.
For things like the Bitstamp hack, it's not clear how identity can help,
because they were already doing KYC for all their customers. To take that
further at the protocol level would require* all* transactions to have
attached identity info, and that isn't going to happen - it wouldn't be
Bitcoin, at that point.
I think that long term, it's probably possible to defend private keys
adequately, even for large sums of money (maybe not bitstamp-large but
we'll see). You can have very minimalist secure hardware that would have
some additional policies on top, like refusing to sign transactions without
an identity proof of who controls the target address. Very tight hot
wallets that risk analyse the instructions they're receiving have been
proposed years ago.
No such hardware presently exists, but that's mostly because
implementations always lag behind a long way behind ideas rather than any
fundamental technical bottleneck. Perhaps the Bitstamp event will finally
spur development of such things forward.
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