A broad-based prohibition on encryption of peer-to-peer financial transactions is an incredibly authoritarian measure for a liberal democracy to propose.
You cannot hope to stop money laundering through tracking of all monetary flows, without putting the entire world under mandatory surveillance.
The only viable solution, that respects liberal democratic norms, is to limit the underlying crimes that provide the criminals with their illicit revenue: so prevent and prosecute hacks, drug trafficking, theft, extortion, etc.
And do so using means that respect the general population's rights: searches and covert targeted surveillance with warrants, informants, interviews of witnesses, examination of public data, etc.
The so-called AML movement justifies broad violations of the rights of the general population.
When that crime is terrorism, it's too late by the time it's happened, and a lot of money laundering is used for this purpose. It's also impossible to prosecute crimes originating in countries outside of your jurisdiction, but funded within your jurisdiction.
Cryptocurrency is more of a blight than it is useful. It's the only reason that cyber ransom is possible.
The cost of reducing funding for terrorism cannot be imposing authoritarian controls on the general population. That's a wildly disproportionate and counterproductive response.
If the right to use cryptocurrency were legally enshrined, instead always on the verge of being criminalized by new legislation or rules, it would find an enormous number of legitimate use-cases, instead of being fully embraced only by criminals. It's the legal uncertainty, that keeps legitimate actors out, that causes the criminal element to be disproportionately high amongst cryptocurrency users.
Cryptocurrency stands to provide the West with a major geopolitical advantage. If you look at the distribution of Ethereum consensus clients, you see they are concentrated in the West:
Of the current 14,000+ nodes, the US hosts 5,349 of them, and Germany 2,170. No non-Western jurisdiction comes close.
This is an industry that cannot thrive in more authoritarian jurisdictions, and will thrive in the West to the extent that authoritarian controls are limited.
> The cost of reducing funding for terrorism cannot be imposing authoritarian controls on the general population.
The inability to hide the source of your funds isn't authoritarian.
> It's the legal uncertainty, that keeps legitimate actors out, that causes the criminal element to be disproportionately high amongst cryptocurrency users.
It's been 15 years since cryptocurrency has existed and for the vast majority of those it's had zero regulation, and has been fully legal. It's not used for legitimate purposes because it's not useful for them.
Crypto is used for speculation, not as a currency. It's used as a currency for criminals because it's easy to use cross-border, including countries who expressly allow cross-border crime (like Russia and cyber ransom, assuming the ransom doesn't target Russians). It's also heavily used as a mechanism to scam people, through pump & dumps, rug pulls, and the like.
We're better off without cryptocurrency, as a whole.
Ethereum only launched in 2015, which is 8 years ago, and introduced a paradigm shift in business processes. The most recent comparably paradigm shifting technology was the internet, which first launched in the 1960s, and took 40 years to achieve widespread adoption.
The last eight years has seen significant development to build the building blocks for a usable distributed ledger:
>The inability to hide the source of your funds isn't authoritarian.
Of course it is. It's your own money, and some other party is forcing you to provide information about it under pain of imprisonment.
In the digital age, this now means making it illegal for supposedly free peoples to call cryptographic logic to encrypt their peer-to-peer transaction. That's hundreds of millions of people being forbidden from using software that enhances their privacy.
It's police state authoritarianism in the vein of what the Chinese Communist Party would endorse.
>It's been 15 years since cryptocurrency has existed and for the vast majority of those it's had zero regulation, and has been fully legal. It's not used for legitimate purposes because it's not useful for them.
World renowned venture capitalists with a long record identifying potential efficiency gains wouldn't pour billions into crypto of it didn't have potential use-cases beyond mere speculation.
Legal threats and uncertainty, emanating from many high-profile regulators and legislators calling for greater restrictions and punitive measures against parties who use cryptocurrency creates a significant chilling effect that discourages major parties from utilizing it. You must know this.
And economic actors have good reason to fear that the threats will be carried out. The recent measures by the US Treasury that effectively make privacy on the blockchain illegal are an example of such a threat being carried out, and prevent a feature that businesses need cryptocurrency to have in order for them to use it on a large scale from being added.
>It's used as a currency for criminals because it's easy to use cross-border
It would be used by wide swathes of society if the legal uncertainty around it were lifted.
As it is, even with all of the restrictions imposed by advocates of a locked down financial system, it is lifting people out of poverty, whether through giving them access to stablecoins [1] in countries with unstable currencies, or giving them a new source of income [2].
The so-called AML system causes untold numbers of deaths [3] and should be totally replaced by a due-process-respecting law enforcement strategy.
>We're better off without cryptocurrency, as a whole.
The world at large is absolutely not better off with centralized control over money, for the same reason it's not better off with centralized control over the economy at large.
In the advanced economies, people deserve better than a financial system entirely dependent on centralized intermediaries and their regulators, as all of the horror stories of Venmo and PayPal freezing customer accounts attest to.
People deserve better than being told that they cannot engage in private transactions with others without reporting the transaction to their government overseer. This idea is completely anathema to a free society.
> World renowned venture capitalists with a long record identifying potential efficiency gains wouldn't pour billions into crypto of it didn't have potential use-cases beyond mere speculation.
Except that the vast majority of that money was invested for pump & dump ICOs. They were able to make back their investments in record time by stealing from fools.
> It would be used by wide swathes of society if the legal uncertainty around it were lifted.
There isn't any real legal uncertainty, except for not being able to use money laundering tumblers, though. Nothing indicates that anyone is interested in using cryptocurrency for anything other than speculation at any larger scale than it's being used currently. Wishes aren't reality.
> People deserve better than being told that they cannot engage in private transactions with others without reporting the transaction to their government overseer. This idea is completely anathema to a free society.
This already exists with banks and credit cards. They're required to do some amount of reporting (but not transaction-level) and are required to comply with sanctions and AML/KYC, but those are all good things in general for society while still allowing these private organizations to provide you privacy. There's even privacy laws written to ensure these companies provide some form of privacy.
It's honestly humorous to be discussing privacy as cryptocurrency is the least private form of currency. Even using tumblers, if you were to use a wallet for legitimate transactions, it wouldn't take much effort to unmask you.
>Except that the vast majority of that money was invested for pump & dump ICOs. They were able to make back their investments in record time by stealing from fools.
Many VCs have had significant token holdings for years, so they are invested long term.
>There isn't any real legal uncertainty, except for not being able to use money laundering tumblers, though.
There is substantial legal uncertainty, with everything ranging from US senators publishing open letters calling for banks to be investigated for crypto associations [1], to major social media companies canceling very large token projects [2], with one of the two main concerns raised being an "evolving regulatory environment" (which in all likelihood is a reference to the recent very hostile regulatory approach the SEC has taken toward all crypto tokens) [3], to privacy technology being sanctioned.
>This already exists with banks and credit cards.
That is already completely wrong, but at least there is a pretense of respecting privacy rights, as the mandates are imposed only on trusted third party intermediaries, and not participants in peer-to-peer transactions.
>but those are all good things in general for society while still allowing these private organizations to provide you privacy.
That takes privacy away from people, so it is not a good thing.
>Even using tumblers, if you were to use a wallet for legitimate transactions, it wouldn't take much effort to unmask you.
Transaction encryption would make cryptocurrency private enough mass-consumer use. It would also preclude dragnet surveillance, as significant analysis is required to unmask a target who is using it.
Obnjectively, the liberal democracy will cease to exist given a relative absence of revenue collection.
Noted as someone who does not believe that the nation's revenue ills stem from a failure of collection today. Simply, I'm noting their logic.
Unfortunately, stable States aren't idealistic as a matter of physics. Electorates are sometimes scandalized when confronted by that reality.
Long term, you might get effective encryption. You'll just have to be okay with the tradeoff on the other end. Accepting for a moment that we've had a liberal democracy.
I agree. I think it’s actually far more legislatively contained and reasonable to just ban currency-based applications of blockchain than such a prohibition.
The people making and passing these laws are 70-100 years old and not only have no idea what encryption or p2p is - they start deleting their gmail emails in their browser when their laptop pops up an out of space message.
My favorite goto in these discussions - the Australian PM saying that the laws of Australia override the laws of mathematics, when talking about encryption. You heard that right an old bald guy who doesn't know how to use the second mouse button because mice don't have buttons - they have ears and a tail - is legislating to break AES256. You just have to pass a law to break it you see, and then the math law will have to obey the overriding Australian law.
Here's the thing though - that's not what this is all about, and these old hags have a very well-versed body of people behind them pushing the agenda. The reason the old hags sound like clowns, is because they are puppets with clown makeup. The goal here, is exactly what you said. Prohibition of encryption, because the people in power want more till they're kings, and they want to see everything you do so they can stay kings. In reality, none of this is meant to be enforced. It is however meant to pile up bogus charges and remove you from the public eye where you can make noise against them, once they decide to remove you for any other reason they want.
Ironically, it's a delusion of youth to assume that the older ruling class is logically or morally wrong due to age. State level management agendas are generations in their planning and execution.
See the fact that a stodgy old aristocrat wrote the defining book on this matter over a decade before the redditor class had their first epiphany on crypto.
The political class has unlimited funds for any youthful advisement needed for necessary corrections, assuming for a second that youth brings actual advantage. They have unlimited access to the smartest people, all who know what encryption and p2p is.
It couldn't matter less what mistakes they make when speaking publicly. They could communicate solely through pre-recordings of their farts and still have their way. For better or worse. The only actual arena in which the future will be decided, when and where it is actually contested at all, is that of bleeding-edge technical dominance.
I'd offer that they are less idealistic than are crypto-warriors, and therefore the bulk of the latter may not be well enough calculated in what they are wishing for. Yet, like I said, it seems that the argument ultimately will be settled in tech.
