Think about it this way: would you argue that it is justified to require all Internet communication to be personalized and enforcing crime blacklists at the TCP level?
This already happens. What do you think SpamHaus is? That's right - a community run IP blacklist.
Spam RBLs are a good example of what I'm talking about. They were created because in most parts of the world spamming is either not a crime, or not an enforced one, but the internet community needed to beat spammers or have email become completely worthless. So you started getting private blacklist operators and email servers check some subset of these blacklists.
Did some of the fears expressed on this thread become true? A little bit. Yes, spam RBLs reduced the "fungibility" of IP space because you might request some IPs and then discover they were already abused by their previous owners, so now not all IPs are created equal. SpamHaus and friends do sometimes blacklist people who are "innocent" or at least walking the line.
But at the same time, a lot of the more paranoid concerns never came true. Blacklists that were too aggressive and included too many innocent parties DID end up getting a poor reputation and being abandoned (I've seen this happen). Governments never seized control of the RBLs to censor email, even though they could have. Getting IP addresses didn't turn into a nightmare of endless blacklist checking. People did not abandon email en masse and it did not become a centralized system.
More importantly, because the internet community came up with its own solutions for fighting spam there wasn't much justification for governments stepping in and coming up with their own ideas, which would have been a disaster. If that'd happened you could pretty much expect an AML type solution for online communication, in which running an email server required licensing, ID verification of users, etc. Urgh.
This will lead to everyone applying the most restrictive blacklists with the fastest and least false negative prone approval process possible before accepting any payment.
They're incentivised in other direction by actually receiving money, right?
I think a lot of people have missed that one of the available actions is just to report a flagged transaction but carry on with it anyway. That way you get the money, the other guy gets to spend it, but there's some paper trail should somebody want to follow up. This is how AML actually works today anyway, banks don't have to reject suspicious transactions, they just report them.
Just have a look at how much debate there is over the scammer label in this forum and how time consuming these debates are. Do you really think each and every merchant will take the time to listen to your life story before accepting your payment? Who is going to pay for that time and effort? Also this merchant will have to convince their supplier as well to take the money, etc.
That's not how it works. Let's say this forum operates a scammer blacklist and you and your money end up in it. OK, now when you try and spend that money, the other guy sees a message saying the money came from a scam. Firstly, that's probably a good thing - they're now informed whereas previously they weren't. Maybe they know your story and don't think the tag was deserved so they just go ahead and accept the transaction. Maybe they don't and decide they don't want to deal with scammer, OK, that's what the blacklist is for.
If they re-spend the money, it'll get reflagged again to the next guy. Maybe he doesn't know the underlying story and doesn't care, he just doesn't want any hassle so he refuses the payment.
You aren't hosed. You can "clean" those coins via a nexus. In other words, you take your probable-proceeds-of-scamming money and send it to a nexus who then goes ahead and takes some reasonable action, like recording who you are so if an investigation takes place in future there's some kind of trail to follow. Then they mark those outputs as clean in their whitelist and send them back to you. Now you can spend them without problem because the next guys wallet walks backwards, sees that the coins passed through a nexus and thus that it's all sorted.
There is some hidden agenda, isn't it?
Forum posts hardly count as a hidden agenda
By the way, for those frothing at the mouth about "censorship", that's something which is done by the state. Private individuals cannot censor each other. They can only decide whether to trade or not to trade.
I'm curious about how people here would react if it became clear that a government ban on Bitcoin was being considered for the reasons Mike mentioned, and your political action wasn't likely to change this outcome. Would you be willing to compromise and participate in such a self-policing proposal? Would you thumb your nose at the authorities, and let them ban it? Or would you perhaps go along with this for Bitcoin, but while participating in an underground fork (which avoids the chaos of transactions being valid on both chains somehow) whose focus was on extreme technical countermeasures to censorship and surveillance? Or some other option?
As usual d'aniel nails it.
Way too many posters here seem to have a naive belief that Bitcoin is indestructable. Governments cannot do anything against it because ...... peer to peer!!!1!
But that isn't true. It is completely trivial for a government to squash Bitcoin out of existence with the stroke of a pen. All they have to do is say, of course you can accept and use coins! We just need you to take a few small measures to help us fight the terrorists. You can start by filling out this 100 page form, and registering with your local regulator. By the way, they will charge a fee of several thousand dollars to consider your application. After a few months they will evaluate your risk to the system and decide on the level of surety bond required, normally half a million dollars will do. Don't forget to do this in every state where you might have a counterparty!
An outlaw currency is not even useful to outlaws. So that would be the end of Bitcoin.
The absolute best way to bring this scenario about is to engage in a dick-waving contest with the police. How many politicians got elected by promising to be soft on crime? Zero. It never happens. So if the police go to your local representatives and say, "it feels like half of our investigations come to a dead end because the scammers are using Bitcoin" suddenly the idea of just regulating it out of existence will seem like an awfully good one to the decision makers, especially if 90% of the electorate just hasn't heard about Bitcoin or doesn't care yet.
That's why it's important for Bitcoin users to recognise that one day we might be asked, "what's your solution?" and an answer of "we don't have one" will result in regulation. And no amount of bitching or posting cute quotes from historical figures will change it.
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WUT? This is a