A civil war is emerging between Bitcoin's earliest and most libertarian adopters, and a more commercial wing seeking to embrace regulation as a means of legitimizing Bitcoin businesses.
From: http://www.businessinsider.com/bitcoins-new-civil-war-2014-1
The divide came into focus this week with two key events events. One was a hearing on Bitcoin regulation by the New York Department Of Financial Services. The other was the arrest of BitInstant CEO Charlie Shrem on money laundering charges.
Until the moment of his arrest, Shrem, 24 had been something of a darling in the Bitcoin venture capital community — the Winklevoss brothers were one of BitInstant's earliest investors, and Shrem was scheduled to co-headline a Bitcoin conference in Miami this past weekend.
But on the first day of hearings about the future of Bitcoin regulation convened this week by the New York Department of Financial Services, a panel of VCs were quick to disavow Shrem as an example of a more immature wing of Bitcoin. The Winklevoss twins said they were gratified the Department was discussing ways to help legitimize Bitcoin commerce. Their Bitcoin ETF is awaiting regulatory approval from the SEC.
The division is not just about sheer dollar size. Appearing at the Tuesday hearing, Fred Wilson — whose Union Square Ventures spearheaded a $5 million investment round in Bitcoin wallet firm Coinbase warned against anything but the lightest-touch regulations. He compared the dangers Bitcoin startups would face to what happened to early-stage music streaming platforms, which were inundated with lawsuits from record labels. Should Bitcoin startups be subject to similar legal scrutiny from financial regulators, he said, they would be snuffed out before they even had a chance to bloom.
Wilson's views were countered by no other than Fred Ehrsam, Coinbase's co-founder. He told DFS regulators Wednesday, "Although I love Fred Wilson, there's probably some minimal requirements and procedures that should be put in place if you're facilitating that kind of exchange."
Perhaps it is not surprising that this ultra-libertarian faction was not represented at this week's hearings.
But it could be seen at the NYC Bitcoin Center on Broad Street in Manhattan — where a follow-up cocktail party was held Tuesday to discuss "fallout" from the first day's hearing — and online, where this faction railed from afar against regulators.
These individuals may seem extreme, but, until recently, they represented the core of Bitcoin evangelism.
But their influence seems to be fading. Barry Silbert's Bitcoin Investment Trust is now worth 10s of millions of dollars. In an email Wednesday, he said he agreed the crypto-anarchists who dominated the digital currencies earliest incarnations were getting left behind.
"There are certainly a handful of folks that are hardcore libertarians (some anarchists) that believe that bitcoin should be completely unregulated, but I believe they are in the minority and, as a percentage of bitcoin believers, is shrinking very quickly. I respect their viewpoint, but unfortunately, don’t see how there vision is viable in today’s society."
On Wednesday, New York District Attorney Cyrus Vance Jr. said the greatest concern about digital currencies among law enforcement was anonymity. In a Bitcoin transaction, all transactions are essentially conducted between e-addresses that lack any kind of user identification.
"The difficulty, when criminal activity is involved, is for investigators to identity how the money is moved where and for what purpose.," he said.
But Jeremy Allaire, founder and CEO of Circle, a company that develops digital currency products, showed little concern that regulators could start scraping away at Bitcoin's anonymity element. Asked Tuesday on the panel whether new regulations affecting Bitcoin's anonymity would undermine the popularity of the currency, Allaire replied, "That depends on your definition of the essence of Bitcoin."
As Bitcoin continues to emerge, this fight over Bitcoin's essence, and how much of a role government should play, will only get more intense.
From: http://www.businessinsider.com/bitcoins-new-civil-war-2014-1
The divide came into focus this week with two key events events. One was a hearing on Bitcoin regulation by the New York Department Of Financial Services. The other was the arrest of BitInstant CEO Charlie Shrem on money laundering charges.
Until the moment of his arrest, Shrem, 24 had been something of a darling in the Bitcoin venture capital community — the Winklevoss brothers were one of BitInstant's earliest investors, and Shrem was scheduled to co-headline a Bitcoin conference in Miami this past weekend.
But on the first day of hearings about the future of Bitcoin regulation convened this week by the New York Department of Financial Services, a panel of VCs were quick to disavow Shrem as an example of a more immature wing of Bitcoin. The Winklevoss twins said they were gratified the Department was discussing ways to help legitimize Bitcoin commerce. Their Bitcoin ETF is awaiting regulatory approval from the SEC.
The division is not just about sheer dollar size. Appearing at the Tuesday hearing, Fred Wilson — whose Union Square Ventures spearheaded a $5 million investment round in Bitcoin wallet firm Coinbase warned against anything but the lightest-touch regulations. He compared the dangers Bitcoin startups would face to what happened to early-stage music streaming platforms, which were inundated with lawsuits from record labels. Should Bitcoin startups be subject to similar legal scrutiny from financial regulators, he said, they would be snuffed out before they even had a chance to bloom.
Wilson's views were countered by no other than Fred Ehrsam, Coinbase's co-founder. He told DFS regulators Wednesday, "Although I love Fred Wilson, there's probably some minimal requirements and procedures that should be put in place if you're facilitating that kind of exchange."
Perhaps it is not surprising that this ultra-libertarian faction was not represented at this week's hearings.
But it could be seen at the NYC Bitcoin Center on Broad Street in Manhattan — where a follow-up cocktail party was held Tuesday to discuss "fallout" from the first day's hearing — and online, where this faction railed from afar against regulators.
These individuals may seem extreme, but, until recently, they represented the core of Bitcoin evangelism.
But their influence seems to be fading. Barry Silbert's Bitcoin Investment Trust is now worth 10s of millions of dollars. In an email Wednesday, he said he agreed the crypto-anarchists who dominated the digital currencies earliest incarnations were getting left behind.
"There are certainly a handful of folks that are hardcore libertarians (some anarchists) that believe that bitcoin should be completely unregulated, but I believe they are in the minority and, as a percentage of bitcoin believers, is shrinking very quickly. I respect their viewpoint, but unfortunately, don’t see how there vision is viable in today’s society."
On Wednesday, New York District Attorney Cyrus Vance Jr. said the greatest concern about digital currencies among law enforcement was anonymity. In a Bitcoin transaction, all transactions are essentially conducted between e-addresses that lack any kind of user identification.
"The difficulty, when criminal activity is involved, is for investigators to identity how the money is moved where and for what purpose.," he said.
But Jeremy Allaire, founder and CEO of Circle, a company that develops digital currency products, showed little concern that regulators could start scraping away at Bitcoin's anonymity element. Asked Tuesday on the panel whether new regulations affecting Bitcoin's anonymity would undermine the popularity of the currency, Allaire replied, "That depends on your definition of the essence of Bitcoin."
As Bitcoin continues to emerge, this fight over Bitcoin's essence, and how much of a role government should play, will only get more intense.
This, of course, has been fully described on Trilema, two years ago.
Quote
Things are finally getting interesting.
There’s two parties to Bitcoin as it stands right now. Well, two that I see at any rate, maybe a lot more I don’t see. Let’s delve a little into their history.
Bitcoin, in and of itself, is in no need of any particular government or any government at all. It doesn’t need the Internet, as proven by the existence of brain wallets, and it doesn’t need computers : you could do the whole blockchain thing pen-on-paper if you had the inclination. It doesn’t even need people : it’s perfectly possible for gas molecules somewhere to play out keypair generation, hashing, blockchain creation and all that.
This means that people, computers, the Internet, and ultimately any particular government and government in general is irrelevant to Bitcoin. This is after all how it should be, as the most recent embodiement of an Essence it couldn’t work any other way.
States, in and of themselves, always regard their sovereignity as “over everything”. Indeed, you’d be hard pressed to find a Parliament which earnestly believes that there’s any limit to what it may, in principle, consider. Sure, some places have Constitutions, but as shown by the political crisis in Romania this summer, even the Parliament of an EU member state has serious difficulty coming to terms with any limitation of its rule. Governments are even worse, as perfectly illustrated by the decades-long Constitutional crisis in the US : the Presidential administration there feels perfectly entitled to outright ignore Congress on most matters by now. “For the children”, or “because of the terrorists” or something like that. Excuses there shall forever be.
These two realities then will have to come in conflict, and they have come in conflict at the point of contact : there where bitcoins are exchanged for fiat and fiat is exchanged for bitcoin. States see any such exchange as something certainly within their empire (as this involves their currency). Bitcoin sees this as just another transaction, perfectly identical to any other transaction. Dollars are worthless in Bitcoin just as states are irrelevant in Bitcoin. The argument is usually brought in reverse (”Bitcoins are worthless in Dollars”), and that is obviously true, for instance for someone who has no access to Bitcoin. However, in any conflict between two systems it is witout fail the more encompassing one that comes out a victor (much like in the battle between two snakes : that snake wins which can fit the other within his gullet.)
Out of the fear of very much imaginary terrorists and very much risible “threaths to the safety of children” coupled with the very desperate need to limit people’s access, control and free disposition of wealth (which in turn arises from the desperation of the bankrupt welfare system coming to terms with the exact causes of the collapse of the Soviet Union) states have currently introduced a complex program of mostly illegitimate dickery known as “Anti-Money Laundering”. It is this instrument, created to prop the collapsing giant with clay feet, that comes into conflict with the adamantine rock of Bitcoin.
From this contact then sprout two parties : the Obsequious, mostly the opperators of the largest exchanges, who have for instance proceeded to introduce some shoddy and possibly illegal “KYC” procedures in their business, demanding various things from their prospective customers (in many cases after the relationship was already established) on the grounds that FinCEN (the enforcing arm of the US Dept of Plenty) stated orally and unbindingly that Bitcoin may be included in their most recent power grab ; and the… well… I’m part of it so I will leave the naming to the opposition. Seems only fair. Perhaps the Irresponsibles.
Whatever it may be called, this latter party cares not one whit for the difficulties of the exchanges, nor does it care that their hopes of creating fiat-businesses out of exploiting Bitcoins are pretty much quashed by even a cursory examination of some aspects of the legality of the matter. Sure, they had hoped to one day be listed on NYSE on the strength of their marginal position in this virtual but probably last currency, and make the bright original investors a pot of… well, not gold, anything but gold, some government scrip (which you may not spend and soon enough may not hold, either). Bully for them, but that’s a way of being part of the problem, not part of the solution.
All that aside, the other party sees little of any import coming from their quarter : some minor benefit, possibly some minor hindrance. Overall, their relevancy is a temporary and self-limiting accident in the evolution of this thing.
Or at least that’s how I feel about it.
PS :
There’s two parties to Bitcoin as it stands right now. Well, two that I see at any rate, maybe a lot more I don’t see. Let’s delve a little into their history.
Bitcoin, in and of itself, is in no need of any particular government or any government at all. It doesn’t need the Internet, as proven by the existence of brain wallets, and it doesn’t need computers : you could do the whole blockchain thing pen-on-paper if you had the inclination. It doesn’t even need people : it’s perfectly possible for gas molecules somewhere to play out keypair generation, hashing, blockchain creation and all that.
This means that people, computers, the Internet, and ultimately any particular government and government in general is irrelevant to Bitcoin. This is after all how it should be, as the most recent embodiement of an Essence it couldn’t work any other way.
States, in and of themselves, always regard their sovereignity as “over everything”. Indeed, you’d be hard pressed to find a Parliament which earnestly believes that there’s any limit to what it may, in principle, consider. Sure, some places have Constitutions, but as shown by the political crisis in Romania this summer, even the Parliament of an EU member state has serious difficulty coming to terms with any limitation of its rule. Governments are even worse, as perfectly illustrated by the decades-long Constitutional crisis in the US : the Presidential administration there feels perfectly entitled to outright ignore Congress on most matters by now. “For the children”, or “because of the terrorists” or something like that. Excuses there shall forever be.
These two realities then will have to come in conflict, and they have come in conflict at the point of contact : there where bitcoins are exchanged for fiat and fiat is exchanged for bitcoin. States see any such exchange as something certainly within their empire (as this involves their currency). Bitcoin sees this as just another transaction, perfectly identical to any other transaction. Dollars are worthless in Bitcoin just as states are irrelevant in Bitcoin. The argument is usually brought in reverse (”Bitcoins are worthless in Dollars”), and that is obviously true, for instance for someone who has no access to Bitcoin. However, in any conflict between two systems it is witout fail the more encompassing one that comes out a victor (much like in the battle between two snakes : that snake wins which can fit the other within his gullet.)
Out of the fear of very much imaginary terrorists and very much risible “threaths to the safety of children” coupled with the very desperate need to limit people’s access, control and free disposition of wealth (which in turn arises from the desperation of the bankrupt welfare system coming to terms with the exact causes of the collapse of the Soviet Union) states have currently introduced a complex program of mostly illegitimate dickery known as “Anti-Money Laundering”. It is this instrument, created to prop the collapsing giant with clay feet, that comes into conflict with the adamantine rock of Bitcoin.
From this contact then sprout two parties : the Obsequious, mostly the opperators of the largest exchanges, who have for instance proceeded to introduce some shoddy and possibly illegal “KYC” procedures in their business, demanding various things from their prospective customers (in many cases after the relationship was already established) on the grounds that FinCEN (the enforcing arm of the US Dept of Plenty) stated orally and unbindingly that Bitcoin may be included in their most recent power grab ; and the… well… I’m part of it so I will leave the naming to the opposition. Seems only fair. Perhaps the Irresponsibles.
Whatever it may be called, this latter party cares not one whit for the difficulties of the exchanges, nor does it care that their hopes of creating fiat-businesses out of exploiting Bitcoins are pretty much quashed by even a cursory examination of some aspects of the legality of the matter. Sure, they had hoped to one day be listed on NYSE on the strength of their marginal position in this virtual but probably last currency, and make the bright original investors a pot of… well, not gold, anything but gold, some government scrip (which you may not spend and soon enough may not hold, either). Bully for them, but that’s a way of being part of the problem, not part of the solution.
All that aside, the other party sees little of any import coming from their quarter : some minor benefit, possibly some minor hindrance. Overall, their relevancy is a temporary and self-limiting accident in the evolution of this thing.
Or at least that’s how I feel about it.
PS :
Quote
pigeons you live in a place where fighting back worked. the rest of us live in the rest of the world where we got crushed.
pigeons so we use a different stategy than head-on
mircea_popescu that is a good point, yes.
mircea_popescu but i intend to hold up that legacy.
pigeons i respect that
mircea_popescu after all, the main advantage of btc is exactly that we may cooperare.
mircea_popescu cooperate*
pigeons aye
mircea_popescu understand, i have no problem whatever with a myriad strategies being employed.
mircea_popescu quite the contrary.
pigeons so we use a different stategy than head-on
mircea_popescu that is a good point, yes.
mircea_popescu but i intend to hold up that legacy.
pigeons i respect that
mircea_popescu after all, the main advantage of btc is exactly that we may cooperare.
mircea_popescu cooperate*
pigeons aye
mircea_popescu understand, i have no problem whatever with a myriad strategies being employed.
mircea_popescu quite the contrary.
October 2012.
