Bitcoins/Litecoins/Virtual Currencies

Rangoth said:

i have a genuine question about this piece And I’m not trying to start a BTC purist war. But on the uncensorable/anonymous thing.….i know there is no way to prevent wallet A from interacting on the chain but wouldn’t it actually HURT people over cash because the way governments would do it is by saying “anyone accepting an incoming transaction from wallet A faces x/y/z charges and fines”?

unlike cash which is a fungible asset, even if they don’t know who owns wallet A, all they need to do is flag it as a ”non allowed transaction wallet” and any legit business that doesn’t want to get in trouble would stop accepting funds from there? And it’s not like the owner of wallet A can just move their bitcoin to wallet B because now that wallet gets flagged.

the only cash equivalent I can think of is flagging certain serial numbers, but the average store doesn’t check that so only banks would and they would have to pass a law stating all stores must now check serial numbers?

Click to expand...

Is the concern basically that bitcoin will be made illegal for businesses to accept? If so, does anyone have any thoughts on that?

tugofpeace said:

Is the concern basically that bitcoin will be made illegal for businesses to accept? If so, does anyone have any thoughts on that?

Click to expand...

The main way this manifests would be a separation of "Clean" utxo's from "Dirty" utxo's from a compliance standpoint. Maybe party A holds their coins on an approved exchange and is fully KYC'd etc and party B bought theirs non KYC, ran it through a mixer, etc. The idea here is that because Bitcoin is a publicly viewable ledger a government or whatever censoring entity could allow party A to transact with "clean" bitcoin and deny party B from transacting. This obviously only applies to transactions that would occur within the regulatory moat. The core of Bitcoin is that no one, no matter how powerful, can stop two entities from trading in Bitcoin because it is not censor-able on the base layer.

The game theory of Bitcoin attack surface is quite in depth and this particular attack vector is not seeming very likely at this time. See below, legalization of small payments via BTC suggests to me we're moving in the other direction for the time being.



As of right now, I would be more concerned about an overarching attempt to lure self-custody Bitcoin into various capital instruments, lending, like kind ETFs, etc with the goal for forced liquidations or other means of capture. I don't think this is an immediate danger, but if the general Bitcoin thesis is correct EVERYONE will want your Bitcoin especially governments. Not your keys not your cheese