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Wendy McElroy: The Satoshi Approach to Privacy

March 24, 2018 |

The Satoshi Approach to Privacy

The Satoshi Revolution: A Revolution of Rising Expectations
Section 2: The Moral Imperative of Privacy
Chapter 6: Privacy is a Prerequisite for Human Rights

The Satoshi Approach to Privacy. (Chapter 6, Segment 5)

The traditional banking model achieves a level of privacy by limiting access to information to the parties involved and the trusted third party. The necessity to announce all transactions publicly [the blockchain] precludes this method, but privacy can still be maintained by breaking the flow of information in another place: by keeping public keys anonymous. The public can see that someone is sending an amount to someone else, but without information linking the transaction to anyone. This is similar to the level of information released by stock exchanges, where the time and size of individual trades, the “tape”, is made public, but without telling who the parties were.

Satoshi Nakamoto

The Case For Privacy” is an excellent essay by the Austrian economist and legal scholar David D. Friedman. It opens: “An old science fiction novel features a device that surrounds its bearer with an impenetrable bubble of force.” The novel is Shield (1963) by Poul Anderson. It presents a dystopian world in which a neoconservative, militaristic, and repressive United States dominates the globe, with the exception of China.

Then a game changer occurs. An idealistic astronaut, Peter Koskinen, returns from Mars, with a new technology that has been developed in tandem with indigenous Martians. A portable force field protects the wearer from almost every attack, but it allows light to penetrate freely. It is the ultimate defensive device for individuals. Koskinen wrestles with himself about which political faction to gift with the force field. After a murder attempt, he realizes that no one should have a monopoly on the technology. Friedman sketched Koskinen’s solution. “He writes out an explanation of how the shield works and spends two days distributing the information to people all over the world. By the time Military Security-the most formidable of his pursuers-catches up with him, it is too late. The cat is out of the bag.”

Friedman’s brilliance is to draw an immediate parallel between the force field and privacy. Anderson’s brilliance was to foreshadow Satoshi’s strategy regarding release of the blockchain.

Satoshi’s Solution to the Privacy Problem

The transparency of online communication, according to some, is the death knell of privacy because unwanted others can easily eavesdrop. The government is the biggest snoop of all, of course, especially when it comes to the most demonized personal information of all–financial data.

With apologies to Mark Twain, reports of privacy’s death have been greatly exaggerated. With the possible exception of science designed for global warfare, technology always benefits individuals as much as or more than it benefits government. Digital technology has enhanced the individual’s ability to control his own life, including the flow of information and how to protect sensitive data that could be used against him.

Privacy is stepping into new territory. This is predictable. The concept of privacy exists only because of social relationships, only because people connect with others. Dangers are hidden among the vast advantages of participating in society. One of the dangers is that government or other criminals will use information to harm the person or property of participants. Social interaction has shifted dramatically due to online communication, and it would be amazing if privacy had not done the same.

There is no one path to privacy. The strategies employed depend on variables such as an individual’s personality and the circumstances. But the Satoshi approach should be considered seriously, if not preferred. For Satoshi, the transparency of the blockchain was not only salutary but it also allowed for genuine privacy—a privacy that rested on keeping the public key anonymous and never linking it to a true identity. In other words, protecting a True Name was the privacy. And the first line of protection for a True Name was the use of anonymity, pseudonymity, or polynymity (multiple personas). Past that point, there were and are constantly evolving tools to separate an identity from a transaction, without compromising the transparency of the latter.

Why is transparency salutary? A visible timeline and a public ledger promotes confidence in the honesty of transactions; it provides an immutable reference to arbitrate disputes. But the main reason to value transparency is also the reason it was built into the blockchain to begin with. An open ledger solves the problem of double spending and fraud. Double spending refers to paying for more than one transaction with the same coin, often by using the same coin in rapid succession for different transactions. “Bitcoin Whitepaper: A Beginner’s Guide” observed,

A timeline and public history of all transactions prevents double-spending because later transactions would be considered an invalid, or perhaps fraudulent, payment from the same coin. Each coin has a unique timestamp and the earlier transaction would be accepted as the legitimate payment. One coin, one payment…Here we see the emerging structure of the blockchain. The timestamps are key to preventing double-spending and fraud. It’d be virtually impossible to send duplicate coins because each coin contains different, chronologically-ordered timestamps.

That’s the main advantage of transparency, just as the main advantage of the properly-administered public key is privacy, especially in the face of government. Friedman commented:

Privacy includes the ability to keep things secret from the government….I might be keeping secret my weakness for alcohol, or heroin, or gambling or pornography and so preventing the government from stepping in to protect me from myself….If you view government as a benevolent super being watching over you-a wise and kindly uncle with a long white beard-you will and should reject much of what I am saying. But government is not Uncle Sam or a philosopher king. Government is a set of institutions through which human beings act for human purposes. Its special feature-what differentiates political action from the other ways in which we try to get what we want-is that government is permitted to use force to make people do things.

The human purposes served through government institutions include power-seeking, greed, status, and the imposition of moralistic rules. Crypto users have reason to be particularly private. A recent news story declared, “NSA Has Been Tracking Bitcoin Users Since 2013, New Snowden Documents Reveal.”

An abundance of caution is not paranoia. It is never paranoia when they actually are out to get you.

Data Evolves as a Weapon of Oppression

Governments are developing new ways of using databases to repress average people. A headline in Reuters (March 16, 2018) read, “China to bar people with bad ‘social credit’ from planes, trains.”

Social credit (xinyong) is a long-standing moral concept within the Chinese tradition, which indicates the level of a person’s honesty and trustworthiness. The Chinese government now extends the moral concept to include loyalty to the state and social honesty; it proceeds to assign an official rank to each person. Then, social control is imposed on those with low scores by denying them privileges, such as traveling by plane or train. Other social-credit offenses include using expired tickets to board a train or smoking while on it, buying “too much” alcohol, watching porn, returning a rented bike in a tardy manner, “not showing up to a restaurant without having cancelled the reservation, cheating in online games, leaving false product reviews, and jaywalking.”

The trivial offenses may seem puzzling or even funny. But they serve an important and frightening purpose. The Chinese government is able to isolate anyone it wishes by barring them from travel. The trivial offenses hand the government a blank check.

Social credit is not a uniquely Chinese phenomenon. Governments around the world impose their own forms of it on citizens and foreigners alike. In the U.S., passports are denied to those who are sufficiently behind in child support or tax payments; former felons find it difficult to travel abroad. Foreigners who tell a U.S. border guard that they have smoked marijuana, whether the occasion was legal or not, will be refused entry. Global News, a Canadian outlet, explained, “they’re…told to go back to Canada, and told they are inadmissible for life. This is a lifetime ban.”

In the UK, three activists were recently denied entry, allegedly due to their anti-Islamic views.

Increasingly, social credit is used to deny basic rights to “low scorers,” with the ability to travel being only one example. Government’s voracious appetite for data is growing. For example, the 2,232-page ‘‘Consolidated Appropriations Act, 2018,’’ which is now before the US Congress, contains many “poisoned riders.” On page 2201, there is the Cloud Act, which allows police access to online data without a warrant. Such access happens now in a covert manner, but the bill allows visible and aggressive intrusions as standard and sanctioned procedure. It means the data would be admissible in court.

Many of the reasons used to deny basic rights are financial, such as back taxes, back child support, expired train tickets, unpaid debts, or such “incorrect” purchases as porn and alcohol. No wonder people want to cloak their online financial transactions. Shielding the transactions themselves can be difficult or impossible, however. Once information is released to the wind of the Internet, it becomes vulnerable. Even encrypted data can be broken open, and encryption  draws the suspicion of law enforcement whenever it is used. Various projects are in progress to cloak transactions in an effective manner. They should be applauded as another privacy option, but it is far from clear that they will succeed.

It is far more practical to cloak privacy at the source of the transactions, to break the connection between a True Name and an exchange, however transparent the latter may be. The participant has much more control over his public key than he has over transmitted financial data.

Conclusion: Choose Your Privacy Strategies Wisely

People should choose the approach to privacy with which they are comfortable, and their approach will hinge on circumstances.

A key circumstance: all information is not equal; some information is more equal than others. Everyone has at least three kinds of personal data, each of which demands different treatment. First, there are facts that people want to broadcast widely, such as a new novel or an employment resume. This data requires the opposite of privacy: marketing. Second, there are facts that are harmless to disclose, such as a favorite color or a preference in potato chips. The disclosure may draw unwanted solicitations, but these are minor annoyances that do not jeopardize rights. Third, there are facts that can be vectors of oppression, such as financial data. They can be used to harm people’s rights, wealth, and well-being.

Each type of information may require a different privacy strategy, including the strategy of doing nothing at all. Whenever privacy needs to be shielded, however, the Satoshi solution should be seriously considered.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: The Satoshi Approach to Privacy appeared first on Bitcoin News.

Bitcoin News

Craig “Satoshi” Wright Sued for Billions

February 28, 2018 |

Craig “Satoshi” Wright Sued for Billions

Forget the debate about whether bitcoin is a store of value or a currency. What everyone can agree upon is that it is a store of drama. And where there is drama in bitcoin over the last couple of years, Australian computer guru Craig Wright is often in the thick of it. Filed on Valentine’s Day and released yesterday, Mr. Wright is being sued for upwards of 5 billion dollars by the estate of his former business partner, now deceased David Kleiman. At issue are hundreds of thousands of bitcoin, business relationships, integrity, and the still-going suspicion Mr. Wright might be Satoshi Nakamoto.

Also read: How To Regain Control From Nanny Zuck

Craig Wright Is Sued for Billions

$ 5,118,266,427.50 USD is a big number, and it’s the amount plaintiff Ira Kleiman claims is owed the estate of David Kleiman, his brother, by notorious cryptocurrency enthusiast Craig Wright. According to certain statements Mr. Kleiman, the deceased, partnered with Mr. Wright in various forms, and the two were apparently around at the inception of bitcoin and the chance to get in on the cheap to the tune of roughly one million tokens. Craig “Satoshi” Wright Sued for Billions

That sum would be divided, the plaintiff asserts, with Mr. Kleiman receiving about 300,000 bitcoin.

At some time after the agreement, as Ira Kleiman alleges in his 38 page lawsuit against Mr. Wright, and Mr. Kleiman’s death in 2013, attempts to fudge the deceased man’s portion in Mr. Wright’s favor occured. Mr. Wright, as of this writing, has not responded officially.

The filing is riddled with juicy morsels such as “It is unclear whether Craig, Dave, and/or both created Bitcoin. For reasons not yet completely clear, they chose to keep their involvement in Bitcoin hidden from most of their family and friends. It is undeniable, however, that Craig and Dave were involved in Bitcoin from its inception and that they both accumulated a vast wealth of bitcoins from 2009 through 2013,” a point of contention for the last few years at least.

Craig “Satoshi” Wright Sued for Billions

Is He or Isn’t He

Craig Wright, of course, is perhaps best known for either claiming to be Bitcoin’s creator, Satoshi Nakamoto, as way to hedge against press accounts; for claiming the title as an elaborate hoax; claiming to be Satoshi as a way to shield others; a tortured genius who became exasperated with skeptics, or an insufferable publicity hound and scam artist. Readers pick.

What is clear are the odd lengths to which Mr. Wright went about his claim/hoax/whatever, going so far as to fly no less a personage than bitcoin luminary Gavin Andresen to London in order to make the case, or non-case. Mr. Andresen, for his part, left convinced Mr. Wright was Satoshi, though he kept an eye toward skepticism. It was all very confusing. Those efforts, however, might now contribute to the charges against Mr. Wright.

It’s also par for the course in civil lawsuits of this sort to engorge one’s opponent as a maniacal super villain, capable of the worst trickery. Again, at this point, we haven’t Mr. Wright’s side of things.

Nevertheless, it is put forward that Mr. Wright conspired against the ignorance of Mr. Kleiman’s family after his death in 2013. Because Mr. Kleiman’s heirs were unaware of their family member’s bitcoin efforts and potential bounty, “Craig perpetrated a scheme against Dave’s estate to seize Dave’s bitcoins and his rights to certain intellectual property associated with the Bitcoin technology. As part of this plan, Craig forged a series of contracts that purported to transfer Dave’s assets to Craig and/or companies controlled by him. Craig backdated these contracts and forged Dave’s signature on them,” the filing states.

Craig “Satoshi” Wright Sued for Billions
“In reality, this signature appears to be a near identical copy of a computer-generated font called Otto, available here: https://www.wfonts.com/font/otto. “

Law Firm Is No Joke

Mr. Kleiman reportedly signed away his bitcoin, Mr. Wright is said to have explained, due to another lucrative business offer in Australia. That venture went belly up, with Mr. Wright accused of tax avoidance, and the lawsuit demands this is why Mr. Wright’s home was subsequently raided with Mr. Wright escaping to London.

From there, it appears Mr. Wright attempted contact with the deceased man’s family, making sure his computer equipment was not comprised. The lawsuit details emails of the sorted mess, and attempts to forward the narrative Mr. Wright did everything in his power to exclude the family from a bounty they’re sure he still has tucked away. Elaborate forgeries are examined, along with prospects of wallets containing as much as 650k in bitcoin.

Craig “Satoshi” Wright Sued for Billions
Boies, Schiller & Flexner

Still, passages such as “In March 2008, just a few months before Satoshi’s paper on the Bitcoin protocol was published, Craig wrote Dave an email stating: ‘I need your help editing a paper I am going to release later this year. I have been working on a new form of electronic money. Bit cash, Bitcoin . . . [y]ou are always there for me Dave. I want you to be part of it all,’” jump out at readers. But, again it is important to emphasize, such types of evidence can be manufactured or just simply coincidental rather than implying what readers’ wish.

Popular media accounts in Gizmodo and Wired, investigating Mr. Wright’s correspondence, along with interviews he’s done, are cited as evidence to both his character and claims of bitcoin wealth – none of which bodes well for Mr. Wright in this instance. There even appears to be correspondence with the deceased man’s brother, confirming an arrangement to split bitcoin in the hundreds of thousands. 

Mr. Kleiman’s estate and its claims might be laughed off as frivolous or reaching, but they’ve hired Boies, Schiller & Flexner, a mostly New York-based law firm. Boies is noteworthy for representing Vice President Al Gore in the Supreme Court Bush v. Gore case which decided a presidency, along with representing the government in its antitrust case against Microsoft. Boies routinely ranks as a top law firm in class actions, antitrust, appeals, product liability, white collar, securities litigation, and in profits per partner and per lawyer.

Readers especially interested in where the Satoshi aspect of all this leads are encouraged to deep dive Kim Nilsson’s Wizsec blog, Kleiman v Craig Wright: The bitcoins that never were. Whether readers are more or less convinced about Mr Wright’s claims or non-claims, one constant remains: bitcoin’s store of drama will continue on for some time.

What do you make of the lawsuit? Let us know in the comments section below.


Images courtesy of Pixabay. Kai Sedgwick contributed sourcing.


Not up to date on the news? Listen to This Week in Bitcoina podcast updated each Friday.

The post Craig “Satoshi” Wright Sued for Billions appeared first on Bitcoin News.

Bitcoin News

The Satoshi Revolution – Chapter 5: ICOs – Peril or Menace or Expression of Satoshi Spirit? (Part 2)

February 10, 2018 |

ICOs - Peril or Menace or Expression of Satoshi Spirit?

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 5: Implementing Crypto Privacy
by Wendy McElroy

ICOs: Peril or Menace or Expression of Satoshi Spirit? (Chapter 5, Part 2)

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…

– Charles Dickens, A Tale of Two Cities

Crypto advocates differ dramatically on the impact of Initial Coin Offerings (ICOs). They are a valuable dynamic that financed Ethereum’s smart contract; they are a blank cheque for scammers; they give government a wedge with which to separate cryptocurrency from freedom. The damnable thing is that all the assessments may be correct.

What does this have to do with privacy? In my opinion, current ICOs are regulation bait. The bad behavior of some ICOs and the recent hacks of others provide the perfect justification for governments to clamp down, not only on ICOs but, perhaps, on all cryptocurrency. Just as centralized exchanges are becoming quasi-banks, which are the “trusted third parties” Satoshi reviled the most, ICOs could come to resemble securities or private equities. In some places, that process is underway. The regulation gives government access to additional funds, of course, but it also provides detailed information on every investor. It nationalizes another bastion of free-market finance.


What is an ICO?

An ICO is a type of crowdfunding or crowdsale for startups, which allows them to generate capital while bypassing the restrictive requirements and costs of regulatory compliance and of dealing with intermediary financial organizations. A startup allocates a specified number of “tokens” to early investors in exchange for an established “money,” often bitcoin. The token is a pre-mined cryptocurrency that is issued by the startup. If the crowdfunder’s financial goal is not met, then the money is supposed to be returned to investors.

Some startups add incentives, which vary: dividends on future products, or services, for example. But the main incentive: if the financial goal of the crowdfunding is met, and when the ICO goes public, the token holders may see their investment soar in value. The tokens become a functioning currency, with a value linked to that of the startup. In 2014, for example, Ethereum’s ICO raised $ 18 million, which made each Ether coin worth approximately $ 0.40 US. Today (January 26, 2017), the price hovers around $ 1050.


The Disagreement

Some crypto advocates believe ICOs embody the original spirit of Bitcoin. Marcel Chuo of bitcoin.com wrote, “ICOs allow any investors around the world to have complete freedom to choose how to invest their money. By contrast, private equity is restricted to ‘accredited investors’ which is the result of a bunch of rich people pressuring the government to set up barriers to the common folk making money…” It is a fair and accurate point.

An accredited investor is a person who is rich enough to qualify for a government-granted privilege; he is allowed to invest in so-called high risk ventures, like startups, while the average person is prohibited. It is a financial privilege accorded to the upper echelon of wealth. Regulations vary from country to country, but the American ones are typical. The Securities and Exchange Commission (SEC) offers one of three ways to qualify. The individual (or entity) must have an annual income of $ 200,000 or a joint one of $ 300,000; he must have a net worth of over $ 1 million; or, he must be a general partner, executive officer, or somehow in business with whomever is issuing the security. Common people are deemed to be too stupid or unsophisticated to take such financial risks. They are generally restricted to investing in mutual funds and other low-risk, low-return vehicles.

Importantly, accredited investors must file a regulatory disclosure form with the SEC, which lays open their finances to government.

Cryptocurrencies and non-regulated ICOs blow past the legal privileges of the rich. They open a wide window for the average person to invest by the same rules as the rich, while skirting reporting requirements. Cryptocurrencies and non-regulated ICOs give average people the chance to profit hugely by taking a risk.

Of course, it is also possible to lose hugely. Under the best of circumstances, startups are high risk. The best of circumstances include – and, perhaps, rest upon – the honesty of those conducting the ICO. But even legitimate startups can go bankrupt, be hacked, be shut down by government, or collapse for another reason. Without honesty, however, the ICO is a scam.

ICO scams seem to have increased in recent years. Several factors are at work.

A feeding frenzy for crypto has descended on investors, and many of them do not act wisely because they fear missing the next, best thing. ICOs have also become a fad, akin to the dot.com fad in the late 1990s; the dot.com bubble collapsed circa 2001. Like many of their ill-fated predecessors, some ICO offerings now seem to rest on nothing but talk. Yet, they draw investors. An article in Quartz (July 07, 2017) reported, “A cryptotoken called ‘Useless Ethereum Token’ has raised over $ 40,000 in just under three days. Here’s its pitch: ‘UET is a standard ERC20 token, so you can hold it and transfer it. Other than that… nothing. Absolutely nothing’.” The useless, gag crypto reportedly raised 310.445 in Ether, $ 324,120 in US currency, and it issued 3,965,716.097 tokens. The investments occurred despite a header on the main website, which declared, “You’re going to give some random person on the internet money, and they’re going to take it and go buy stuff with it. Probably electronics, to be honest. Maybe even a big-screen television. Seriously, don’t buy these tokens.”

Useless Ethereum called itself, “The world’s first 100% honest Ethereum ICO.”

But there are blatantly dishonest ICOs. Crypto-veteran Kai Sedgwick recently wrote, “Benebit, one of this year’s most hyped ICOs, has pulled an exit scam, making off with a reported $ 2.7 million of investor funds. Other estimates put the figure as high as $ 4 million. The fraud only came to light after someone noticed that the team photos had been stolen from a school website. Once this happened, the Benebit team scampered…” Benebit had been endorsed by many respected ICO forums and sites, such as the clearinghouse ICO Syndicate. In short, due diligence would not have saved investors from losing their life savings.

And, then, there are the honest ICOs and exchanges that are simply incompetent. On January 26, 2018, a team from the Japanese Coincheck exchange held a press conference to discuss the theft of between $ 400 and $ 534 million; the vagueness comes from whether the stolen funds are assessed at the time of investment or their current value. A hacker cleaned out the exchange’s crypto in a single transaction because it seems to have been held in one hot wallet, which had no multi-sig. In short, the security resembled swiss cheese. Coincheck was one of the respected exchanges; ICOs are far more notorious for bugs and vulnerabilities.

Phoney or incompetent ICOs may seem humorous to non-investors, but there is sobering aspect that could easily affect them. Bad ICOs draw government regulation. In fairness, both ICO successes and scams are regulation bait.

An instance of attacking their success: In early September, 2017, China banned ICOs as being disruptive to financial stability. Translation: crypto and free-market ICOs were so popular that government could not control them. The ban appears to have been a means to clear the financial decks in order to allow only ICOs that function under government control to return. A headline (January 26, 2018) in The Bitcoinist stated, “Chinese Official: New Regulations for 2018 May End ICO Ban.”

If so, only “official” ICOs will be permitted, including ones conducted by government agencies.

Meanwhile, the SEC takes a different tack, which is no less damaging to financial freedom. It has started to classify some tokens as securities and to prosecute startups that issue them for violating federal security regulations. An article in CNBC (January 25, 2018), entitled “SEC devoting ‘significant’ portion of resources for catching cryptocurrency scams,” warned that the SEC “isn’t making much distinction between security and utility tokens, and that securities law applies to at least some cryptocurrencies.” Soon, SEC regulation may apply to all ICOs. Even if it does not, who would issue tokens with the risk of SEC persecution hanging over the process?

Complying with securities regulations is an onerous process. Of course, there are exceptions to when an investment is labelled a “security.” One is if only accredited investors are accepted. This returns the rich to a position of financial privilege, which may be part of the SEC’s goal.

Conclusion
ICOs started as innovative vehicles that allowed average people to invest in startups, and allowed startups to bootstrap themselves without government obstruction. There was always room for scamming, however. Many ICOs now defraud innocent people and give government a perfect excuse for regulation.

Government will only accept crypto and its related manifestations, such as ICOs, if it can be in control of them. Grabbing the wealth is certainly one goal but social control is another. The key to both is information. The looting of data is about to accelerate. Precaution should as well.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 5: ICOs – Peril or Menace or Expression of Satoshi Spirit? (Part 2) appeared first on Bitcoin News.

Bitcoin News

The Satoshi Revolution – Chapter 5: Privacy, Anonymity, and Pseudonymity (Part 1)

February 3, 2018 |

Privacy, Anonymity, and Pseudonymity

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 5: Implementing Crypto Privacy
by Wendy McElroy

Privacy, Anonymity, and Pseudonymity (Chapter 5, Part 1)

It is often said that there is a tradeoff between privacy and security…. Security is defined as the state of being free from danger or threat. One threat is assault. How is one made free from assault by being assaulted at an airport?…. How is one made free from the threat of being harassed or charged with a crime by the State by the State’s knowing every move you make, every statement you make, and every financial transaction you make? I say that your security is going DOWN, not up. The State can fend off terrorists by the ordinary methods of policing if it had a mind to. It doesn’t. It prefers to expand into a totalitarian monster.
Mike Rozeff

Privacy will determine the future of cryptocurrencies. Will they continue to enhance individual freedom, or will they become a government tool of social control?

Privacy is a human need, which is why the battle over its control is so intense. Constant surveillance makes it difficult or impossible for individuals to forge intimate family and romantic bonds, to create, to vote their conscience, to sexually explore, to discover who they are politically and religiously, to experiment with drugs, or to dissent without danger. Personal privacy is also the greatest barrier to government power, which rests on government knowledge.

“Only criminals need to fear government surveillance” is a common response to the defense of privacy. But every peaceful person is a criminal with something to hide. Why? They have exceeded the speed limit, taken an illegal drug, smuggled cheap booze or cigarettes across a border, made “unauthorized” additions to a house, fibbed to a customs official, understated their income on a tax form, or violated one of the tens of thousands of other laws that criminalize harmless behavior. Government makes criminals of us all. As Ayn Rand explained, “The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.” Thus, all individuals are under control.

The assault on privacy also harms society as a whole. Consider freedom of speech. I remember being in a restaurant when a relative went on a post-9/11 rant about how the U.S. was beginning to feel like Cuba, from which he escaped. His wife tried to silence him, declaring in an adamant whisper, “You can’t say those things in public.” She was nervous as she glanced around to see who could have heard. Surveillance and informants make people reluctant to express opinions that could be used against them in a legal or political manner. Property can be seized, families destroyed, and prison ensue. Why would anyone speak out if his children could lose a parent as a result?

The killing of free speech is one of many political repercussions of destroying privacy. Privacy is a key characteristic that distinguishes a totalitarian, Kafka-esque society from a free one. Can you shut your front door and be safe from invasion? Everyone agrees that criminals should not break through your locks and treat your body and possessions as their own. Why are government agents entitled to do the same thing? They are nothing more than the for-hire workers of an employer whose authority comes because enough people give the employer a thumbs up to invade and steal. They are criminals sanctioned by consensus.

Until recently, many incursions on privacy have been prevented for no other reason than they were difficult to enforce. And, then, technology arrived. Even with its notorious incompetence, government is now able to surveil as never before, and many people have grown afraid or complacent, as the mass frisking at airports proves.

The government assault on privacy benefits from a Big Lie: namely, privacy is now impossible because government surveillance is omnipotent, omniscient. Resistance is futile. Privacy is so last century. Balderdash. First of all, technology has always empowered the individual more than it has the government. Second, there is a world of difference between “difficult” and “impossible.” Privacy is  certainly more difficult in the 21st century, which only means it takes work. Individuals need to assert actively what they once could take for granted in order to end the ongoing rape of their data.


What Should You Do?

No one answer exists. How to handle personal information is up to the lifestyle and goals of each individual.

Before answering, however, some distinctions are useful: privacy versus anonymity, for example. Privacy is the ability to keep personal data or activities to yourself; you close the door while using the washroom, for example; the activity is not shameful but neither is it for the world to see. Anonymity is when your activities are transparent to the world but the fact that you are the one acting is not. Rick Falkvinge, founder of the first Pirate Party, elaborated, “The typical example would be if you want to blow the whistle on abuse of power or other forms of crime in your organization without risking career and social standing in that group, which is why we typically have strong laws that protect sources of the free press. You could also post such data anonymously online through a VPN, the TOR anonymizing network, or both. This is the analog equivalent of the anonymous tip-off letter, which has been seen as a staple diet in our checks and balances.”

Another distinction: there are two types of data — private and public. If data is private – for example, if it is kept behind closed doors or within a limited circle of personal transmissions–then it can remain private. If data is publicly displayed, however, the practical ability to control it is lost. If I discuss my sex life on a public bus, for example, I have no business denouncing a blabby eavesdropper who passes on my experiences. Unfortunately, a great deal of personal data becomes public through no fault of the person it describes. Government vigorously mines information on everyone from birth, and well-meaning parents register children for everything from medical care to government entitlements.

Happily, cryptocurrency transfers are the data under discussion; they combine the best aspects of private and public data. They are protected by encryption and anonymity or pseudonymity, while remaining transparent. This is a new expression of data that needs to be protected in new ways, both from government and from malicious hackers.

The most effective tactics may well be technological, but this article does not address them. The tactics change constantly and quickly in response to government or hacking threats. And, frankly, although some tactics are simple, like spreading assets over a number of wallets, understanding other tactics requires a technological sophistication that I do not possess.

Instead, the article points to variations on privacy strategies that have been used for decades, if not for centuries. Pick and choose, but it may be best to use them all because the regulatory wolves are circling. Here is a sampling:

Obfuscate or “hide in plain sight.” One way for a person to preserve privacy is to be so inconspicuous or subtle that he is almost unnoticeable. Blend in, or become invisible. Sometimes obfuscation involves participating in so much noise that an eavesdropper cannot distinguish your signal from any other. An example might be sending only modest payments across the blockchain so the transactions join with hundreds of thousands of similar others, all of which are of scant interest because of the small amounts. Other times, obfuscation means masking activity through mixers or tumblers that further anonymize transactions. The anonymization carries a risk, however. It can constitute a red flag to eavesdroppers.

Avoid Centralized Exchanges and Other Data Sharing Centers. If a person wants government to have his financial data, then he should just mail it in an envelope to the government. Of course, signing up with an exchange, like Coinbase, saves a stamp. Centralized exchanges are now an arm of the government. Moreover, they carry their own risks, including bankruptcy or other reasons for withholding funds. Nevertheless, there are good reasons for using exchanges; they permit futures trading and other Wall Street niceties, for example. But decentralized exchanges are preferable; exchanges outside the U.S. or other crypto-hostile nations are preferable, as are ones that do claim jurisdiction over private keys. Even then, wealth should be moved in and out as quickly as possible, without allowing the third party to control it for longer than necessary.

Find Discreet Ways to Cash Out. The crypto veteran Kai Sedgwick wrote,

“Bitcoin transactions are semi-anonymous: every transaction on the blockchain is broadcast publicly and visible for all eternity, but the owner of each wallet is unknown. Tying addresses to real-world identities is now relatively easy for the powers-that-be, because everyone has to cash out somewhere, and that usually involves linking bitcoin addresses to bank accounts.” Don’t. As much as possible, deal with people one-on-one. Seek venues that exchange crypto for gift cards to stores you regularly use, such as grocery stores. Be inventive in avoiding the banks and centralized exchanges; they are the “trusted third parties” that Bitcoin was designed to obsolete.

Use a Privacy Currency. Dozens and dozens of private currencies exist, with several being solid. Although most of them use different techniques to preserve privacy, anonymity is a theme. The founder of Zcash explained the philosophy behind that particular privacy currency. “We believe that privacy strengthens social ties and social institutions, protects societies against their enemies, and helps societies to be more peaceful and more prosperous…. A robust tradition of privacy is a common feature in rich and peaceful societies, and a lack of privacy is often found in struggling and failing societies.”

Zip It on Public Forums. Public forums, like Facebook or Twitter, are monitored and mined by government and corporations. They are collection points for data, even if a person tries to post anonymously. If social media is necessary for professional reasons, then use it to the bare minimum. Never post anything on social media that you wouldn’t put on the front page of the New York Times, and that includes crypto forums.

Be Careful in Writing Down Information. Do not write down your private keys, for example, without having a secure, undisclosed place to store them.

Conclusion

The government is coming for crypto, which means it is coming for users. Its front line attack will be an attempt to eliminate privacy; it realizes privacy is the backbone of cryptocurrency as a freedom tool, even when users do not. Now it the time for heightened vigilance. To paraphrase the comedienne Lily Tomlin, “No matter how paranoid I get, it is never enough to keep up.”

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 5: Privacy, Anonymity, and Pseudonymity (Part 1) appeared first on Bitcoin News.

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Missed the Altcoin Craze? Don’t Worry, the Satoshi Is Still Very Cheap

February 2, 2018 |

Missed the Altcoin Craze? Don’t Worry, the Satoshi Is Still Very Cheap

When Satoshi Nakamoto designed bitcoin, his smartest trick wasn’t to cap the total supply at 21 million coins – it was to make each coin divisible to eight decimal places. At the time, as now, the smallest unit of bitcoin was worth so little as to be inexpressible in fiat terms. But bitcoin’s creator had the foresight to recognize that if his fledgling cryptocurrency succeeded, there was a good chance that 1 BTC would eventually be worth quite a lot. And when that happened, one satoshi (a moniker which the smallest unit of bitcoin had yet to acquire) would also be worth something.

Also read: Shapeshift Throws Its Support Behind the Bits Standard for Measuring Bitcoin

Bitcoin is Big But Small, Scarce Yet Plentiful

The beauty of bitcoin is that it can be simultaneously big yet small. You can buy a car for 2 BTC or an altcoin for 60 sats (satoshis). With the change left over from the former, you could load up on a bunch of the latter. Bitcoin’s divisibility, coupled with its ability to be expressed as both something expensive and something cheap, makes it the world’s most versatile cryptocurrency.

Today you can purchase 100 sats for a cent. If 1 BTC were ever to reach $ 1 million, a satoshi would achieve parity with a U.S. cent. But that doesn’t need to happen for satoshis to attain utility. They already have a number of uses, even if altcoin traders are one of the few groups who currently refer to things as being priced in sats. Once Lightning Network gets up and running – or as bitcoin cash adoption continues to grow – there’s no reason why sats can’t become the de facto unit for referencing small purchases. If bitcoin maximalists have their way, one day there will be no U.S. dollar and everything will be denominated in BTC or satoshis.

In the Future One Satoshi Will Be Worth More Than One Ripple

Should the global monetary system ever collapse and hyperbitcoinization occur at scale, there will be more than enough bitcoins to go around. Not whole ones, admittedly, but enough satoshis for everyone to transact. To put this into perspective, the global GDP stands at $ 78 trillion while the total supply of satoshis stands at 2,100 trillion. A future in which everyone is transacting in sats may be improbable, but it is not infeasible.

A Drop of Ripple or a Sat of Bitcoin?

In the Future One Satoshi Will Be Worth More Than One RippleBitcoin isn’t the only cryptocurrency that’s divisible into thousands or millions of decimal places. Iota and Neo aside, most altcoins do the same. Ripple, for example, goes to six decimal places, with the smallest unit known as a drop. It’s a cool name, even if the world is unlikely to require XRP by the millionth any time soon given that you can purchase a whole one for just over a dollar.

Should ripple ever “do a bitcoin” and become hugely valuable, there will be 1e+17, or 100,000,000,000,000,000.00 drops to go round, which is almost as many drops as there are in the world’s oceans. (Let’s overlook the fact that Ripple Labs is sitting on 55,000,000,000,000,000.00 of those drops.) The idea of $ 1 million bitcoin seems fanciful right now, though not as fanciful as the notion of $ 100 ripple.

Satoshis: The Best Cryptocurrency You’re Not Using

There’s nothing wrong with buying a cryptocurrency like ripple or iota because you like the name, or the pretty logo, or have a soft spot for its CEO. Be it for emotional, ideological, or profitable reasons, by all means load up on XRP, DOGE, and XVG. But don’t mistake the dollar price attached to these coins for a fair valuation of their worth. Anything you can buy with a ripple you can buy with 10,000 sats and anything you can buy with a dogecoin can be bought for 60 sats. Big and small, Bitcoin’s base units do it all.

Do you think satoshis will eventually be widely used for pricing small purchases? Let us know in the comments section below.


Images courtesy of Shutterstock, and Fox Broadscasting.


This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

The post Missed the Altcoin Craze? Don’t Worry, the Satoshi Is Still Very Cheap appeared first on Bitcoin News.

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The Satoshi Revolution – Chapter 4: Is Privacy Possible in the Digital Era? (Part 3)

January 20, 2018 |

Is Privacy Possible in the Digital Era?

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 4: When Privacy is Criminalized, Only Criminals will be Private
by Wendy McElroy

Is Privacy Possible in the Digital Era? (Chapter 4, Part 3)

Recent inventions and business methods call attention to the next step which must be taken for the protection of the person, and for securing to the individual … the right “to be let alone” … Numerous mechanical devices threaten to make good the prediction that “what is whispered in the closet shall be proclaimed from the house-tops.”

— Louis Brandeis

What is privacy? Simple images come to mind, like slamming a door in the face of a census taker, but the question unlocks a complex issue.

Perhaps the most famous answer comes from an article by the American attorneys Samuel Warren and Louis Brandeis, which appeared in a 1890 issue of the Harvard Law Review. It was one of the most influential articles in the history of legal theory. “The Right to Privacy” is considered to be the first prominent call for privacy as a concept to be cemented into law. It opened: “THAT the individual shall have full protection in person and in property is a principle as old as the common law; but it has been found necessary from time to time to define anew the exact nature and extent of such protection.” Elsewhere, privacy is defined as the right to be left alone.

The article argued for privacy as a “foundational” or basic human right, upon which all other rights depended. “The right of property in its widest sense… including all rights and privileges, and hence embracing the right to an inviolate personality, affords alone that broad basis upon which the protection which the individual demands can be rested.” No right is more basic than privacy; freedom of speech, sexuality, freedom of conscience, and financial security depend upon it because none could exist in the presence of storm troopers smashing through your bedroom door. The right to close your door is paramount.

Interestingly, the Brandeis-Warren article was in response to technological developments that were seen to threaten personal privacy, much as the internet and blockchain are seen to threaten it today. One of those developments was the portable camera with which journalists photographed prominent people in venues that were formerly private, such as restaurants, weddings, and funerals. Today, the focus of privacy rights has shifted from rude journalists to the rude government for which “privacy” is a synonym for “secrecy.” The government regards privacy as a smoke-screen for criminal acts, especially tax evasion. The shift is probably a function of how powerful and massive government has become, compared to the 1890s.

Although privacy rights have been a theme in common law and, so, a strong theme within Anglo-American societies, their legal status has been vague. Indeed, before “The Right to Privacy,” the legal expression of the right was splintered. There were laws against trespassing, for example, but being safe from the invasion of property and home is only one aspect of privacy. The codifying of the broad concept of privacy is more difficult.

After all, what does the “right to be left alone” mean? Everyone knows a woman’s purse should not be snatched or a house broken into. But these are easy cases, and not the ones cryptocurrency users will confront; they must deal with their personal information being mined, and then being used against them.

The blockchain’s ledger of transfers allows uninvited parties to eavesdrop on financial and other information that has been voluntarily made public — at least, to some degree. What should the legal status of eavesdropping be? If someone overhears a personal conversation in a public place and he repeats the content, does the act infringe anyone’s right to “be left alone?” What if the eavesdropper uses the information to advantage, for example, by acting on a stock tip? What if he uses the data to blackmail? Is there a right to legally restrain the eavesdropper?


The Bottom Line of Privacy

The iconic libertarian Murray Rothbard argued that all human rights devolve to property rights; that is, they come down to the question of who properly controls the use of something, anything: a widget, an idea, information, your body. It is always possible to use force and usurp control, of course, but who is the proper owner in a peaceful society? It is the individual who acquires valid title through production, trade, or other peaceful means. There is no more clear or valid title than the one individuals have to the use and protection of their own bodies, which includes their personal information.

This right is under concerted attack by the biggest eavesdropper in human history–and one that intends to use the data against you with extreme prejudice. Government wants to access and control personal information in order to own the power of its content–that is, to use the power of your identity against you. It registers babies at birth; it pathologically chronicles everyone’s financial, medical, and educational status; it requires official paperwork at all junctures of life, including death. It does not matter if the person has done no harm and he is accused of no crime. The government’s purpose is control. Individuals who do not meekly acquiesce to being controlled are criminals.

One reason government succeeds at stealing information is that privacy is an ill-defined concept that people do not understand; if they did, they might value it more. Privacy hinges on two questions. As a place to start asking them, consider the right to control of your own thoughts and their expression. (Privacy consists of more than this ability, of course, but it is a springboard point.)

Question #1: Who owns what is in your mind? Most people would loudly declare “no one owns what’s in my mind!” Your thoughts are yours for the same reason that you own your fingers and eyes; they are part of your body; they are an integral part of who you are. But what if the thought in your mind is a chemical formula that you accidentally glimpsed? The instant you glimpsed the formula, it began to change by integrating with every other thought you have on chemistry and life. Do you own the altered formula that is now in your mind? If you do, then can you market it over the protest of the chemist who perfected it? If not, why not?

The parallel to financial information: if someone has financial assets, such as a sack of gold, then the information is properly private, but only as long as it is unrevealed. The problem with cryptocurrencies — at least, for this paradigm of privacy — is that all transactions are revealed.

Question #2: Who owns information that is now part of another person’s mind? Who owns information that has been made public? The 19th century libertarian James Walker stated, “My thoughts are my property as the air in my lungs is my property…” But what if you exhale? What if you willingly throw ideas or information into a public realm, like the internet or the blockchain?

If information sharing comes with a nondisclosure contract, then there is no problem; the originator retains rightful possession. But reality isn’t usually like that. Most violations of personal information are involuntary, such as being registered at birth and assigned a government tracking number for life. Some result from a transaction in which a naive person exchanges data with a corporation for a free subscription or the like.

The glut of personal information in the public sphere returns to the title of this article: Is Privacy Possible in the Digital Era? The answer is “yes.”


The Solution

As long as the old paradigm of privacy is used — that is, privacy = concealment — then the transparency of the blockchain is a death knell. But what if privacy now equals transparency, and the focus of protection is not on the transaction but on the identities of actors? This is a new and purer paradigm of privacy. For the sake of honesty and equitable trade, do not hide any transaction. For the sake of privacy, do not require the identities of actors anymore than grocery stores require ID of those who buy milk with cash. Then, let everyone see; let everyone verify. Both honesty and privacy can be preserved. The key is to keep your identity private—own what is in your mind, and in no one else’s—while allowing the information to be public as a proof of honesty.

Of course, there is a catch. How does anyone protect identity while making an open transaction? The solution to privacy is often painted as the problem. “Technology destroys privacy” is a common sentiment. The opposite is true.

Consider a small aspect of how to preserve privacy: encryption. Encryption is the process of coding and decoding information.

The idea and its importance to privacy is not new. It played a key role in the founding of America. Before Confederation, the Founding Fathers attacked the existing post office because the British used it as a censorship machine. After Confederation, some Founders did much the same thing. The Continental Congress wanted to declare some political material “unmailable” because it was deemed to be dangerous. A prime target was anti-Federalist letters and periodicals; the anti-Federalists fought many aspects of the Constitution, and they effectively blocked ratification unless the document included a Bill of Rights. During the intense debates, they simply could not circulate their material through the Federalist-controlled post office. Many of them, including Thomas Jefferson, resorted to corresponding in code.

The American government has always realized the political importance of controlling the flow of information. In the 1770s, communication may have occurred through postal routes maintained by horseback riders, while today, we communicate through packets of data beamed across optical cables. This difference is irrelevant to the principles involved. The key questions are: “Who owns your words and ideas?”; “Who has the right to read them?”; “Who owns your personal information?”


Conclusion

Few rights are as important as financial privacy because wealth is the way people feed themselves. The attacks on privacy are intensifying because government realizes the stakes; after all, your wealth is also the way government feeds itself.

The new paradigm of privacy is transparency without identity. But it works only if people protect their identities at every turn. Never willingly give personal data to government, to exchanges, or to the corporations that are government proxies.

Privacy is a human right, but it is a right you can surrender in the much the same manner as you can surrender your claim to a pile of cash by throwing it into the wind. In a word: don’t.

[To be continued next week.]

Thanks to editor/novelist Peri Dwyer Worrell for proofreading assistance.

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 4: Is Privacy Possible in the Digital Era? (Part 3) appeared first on Bitcoin News.

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The Satoshi Revolution – Chapter 4: Crypto. A New Paradigm of Privacy and ID (Part 2)

January 13, 2018 |

Crypto. A New Paradigm of Privacy and ID

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 4: When Privacy is Criminalized, Only Criminals will be Private
by Wendy McElroy

Crypto. A New Paradigm of Privacy and ID (Chapter 4, Part 2)

[A]ll those who used their knowledge in a bid to enact social change saw cryptography as a tool to enhance individual privacy and to shift power from big, central institutions to the human beings who live in their orbit.

–Paul Vigna, Business Reporter at Wall Street Journal

Cryptocurrencies bypass central banks by privatizing the issuance of money and  its transfer across borders. The globe should erupt in applause at the return of financial control to the individuals who produce wealth. Finally, financial justice.   

But a global party over currency freedom would be inadequate because it would overlook another revolutionary aspect of crypto. Cryptocurrencies and the blockchain are a new paradigm of privacy that will replace the old one as surely as the new currency broke the death grip of central banks. Revolutionary forms of “identity” verification, like blind signatures, have redefined the concept of privacy and returned it to the free market where sharing information advances individuals…but only when and if the individual consents. (See earlier discussion of blind signatures.)  They forge a vision that is uniquely suited to the preservation of freedom in the digital age.

The focus on crypto as a remedy for government surveillance is understandable. Privacy has been nationalized by governments that twist the definition of “identification” to serve their own elitist goals. Government documentation is now the only way most people can prove their identities in order to access the basic necessities of modern life. In most Western nations, undocumented people cannot board a plane or train, or drive a car. They cannot open a bank account, acquire a credit card, access medical care, cash a check, take a regular job, attend school, get married, rent a video (let alone an apartment), or buy a house. They are second-class citizens to whom the government denies the opportunity to advance through labor, education, entrepreneurship, or other merit. Government has made identification into a prerequisite of modern life.

Meanwhile, those who are “identified” become vulnerable. Their bank accounts are frozen, health care denied, credit cards canceled, wages garnished, records subpoenaed, and get arrested. In a fully nationalized ID  and reporting system, the government knows who everyone is, what everyone thinks and possesses, and where to find them. The nationalization of privacy is a lynchpin of totalitarianism. No wonder the government’s appetite is so voracious. No wonder  those who resist the onslaught on privacy are presumed to be criminals on that basis alone. As Phil Zimmermann, the creator of Pretty Good Privacy, stated, “If privacy is outlawed, only outlaws will have privacy.”

Society was not always this way. It does not need to be so in the future. Just as cryptocurrencies allow individuals to bypass central banks, they provide a path to shape entirely non-governmental identification systems.

The need is urgent. It is not merely that nationalized privacy is a powerful tool of government oppression, there is also a crying free-market need for privacy and identification systems.


Free-Market ID

Most people flatly accept the government’s narrow, antiquated and self-serving view of what constitutes privacy; it is the ability to protect of personal data – an ability and “protection” of which the government lays an absolute claim of jurisdiction. Free-market ID is the antithesis of government or social control, as its very definition indicates. It goes far beyond the verification of an individual’s identity or address. Indeed, it may not even include a traditionally-valid name or address.

To appreciate the new paradigm of privacy offered by cryptocurrencies, a tour of the past benefits of free-market ID is valuable.

When commerce was conducted on the barter level, people personally knew or had reliable information about the individuals with whom they directly traded. Then commerce expanded to include complex exchanges with total strangers; direct barter was replaced by indirect exchange, which often required some trust. A bedrock of trust has always been the ability to answer the question, “Who am I dealing with?” Past a primitive organization of society, therefore, there has always been a need for identification.

To appreciate the scope and the advantages free-market ID, consider a widespread method of identification from centuries ago that is making a comeback: letters of introduction and recommendation. The dynamic: Person A carried letters of identification to Person C, to whom he or she is a stranger. The letters had been written by Person B, whom Person C knew and respected. In short, Person B vouched for the identity of the letter bearer.  

This is the first and most basic service rendered by free-market ID: authentication. There are a myriad of reasons that would make people want to verify their identities. They could be picking up packages, confirming a reservation, joining a club, voting, or applying for a job.

The free-market function of authenticating identities can be easily provided by  businesses that run background checks and issue their own ID cards. Market incentives would make those businesses meticulously careful about the accuracy of documents. If nothing else, someone who was defrauded by accepting a fraudulent or careless one could sue. Even if the business prevailed in court, its reputation would be damaged or ruined. And free-market ID companies would live or die on the basis of reputation.

Governments have monopolized the authentication function of ID and distorted it to serve the purposes of authority alone. That is, the people being IDed do not request the “service”; it is required of them and, then, it is used as a weapon against them. Private ID still exists in bastardized form. Employers issue private ID to employees, financial institutions give customers cards that access their accounts. But such privatization is illusory. Before an employer or a financial institution can issue any ID, the “beneficiary” must be screened by government requirements, such as the provision of a tax number. The recipients of “private” ID  are monitored through reporting requirements.

 Second, free-market IDs offered certification. Letters of introduction were often letters of recommendation, as well. They attested to the character, the station, and the specific abilities or talents of the bearer. Other forms of ID performed the same function: university degrees, endorsements from employers, membership in professional organizations, and financial statements from banks. The certifications allowed strangers to assess whether a bearer was qualified to occupy a job or to perform a particular task. Reputation offered a similar ID.

Today, government licensing and regulation have replaced the formerly free-market process of verifying credentials. Everything from neurosurgery to braiding dreadlocks requires a government license that substitutes for reputation and other forms of verifying worth. Those who believe no contradiction exists between government sanction and free-market reputation should consider: however impeccable a caregiver’s reputation may be, he or she cannot practice medicine without government permission. The two are incompatible. Indeed, those with licenses are the most vocal critics of free-market practitioners with whom they would be forced to compete.  

Third, in some cases, free-market IDs authorized specific actions. Letters of recommendation often assigned limited rights to the bearer. For example, an attorney’s firm might assign a limited power to a representative so that he or she could settle a case on the behalf of a client. Today, the tasks that can be authorized on the “free market” are strictly defined by government. The latter controls the process of implementing tasks, and it demands that results be filed with appropriate agencies. Indeed, government controls the most common form of assigning limited rights through ID. Law enforcement acquires the “right” to aggress against peaceful people by virtue of wearing badges.


Objections to Free-Market IDs.

Common objections to the free-market IDs arise. They are antiquated and unsuited to the modern world; they are not anonymous; as a means of  establishing widespread trust or reputation, they can be slow; and, they are not uniform. If examined, however, these objections turn into advantages.

Antiquated. Examples from the 19th and early 20th century may seem antiquated. Or, rather, some do and some do not. Letters of recommendation, in one form of another, have been updated and are still in widespread use; a job application that includes contact information for former employers is an example. The relevant point: the free market responds amazingly well to a surrounding society’s need for identification. It did so centuries ago, for centuries before that, and it will do so today; this is evidenced by blockchains that automatically verify digital transactions by accepting them. Bitcoin exemplifies the free-market’s adaptation on stilts.

No Anonymity. The primary purpose of early IDs was to verify identity, not to render anonymity. The sharing of information occurred at the request of the bearer and, to my knowledge, the data was not disclosed to other parties, such as government agencies. The current drive for anonymity derives from a desire not to share information because it will be disclosed to unwanted others, especially to government.

The defining feature of free-market privacy is the same as that of free-market currency: control is in the hands of the individual. Each person decides their own comfort levels on questions such as “privacy versus convenience.”  Even  decentralized exchanges now offer a sliding scale of choice to users, from open identification to anonymity.  

Slow to Establish Trust or Reputation. This may have been true in the past, when mail and people took weeks or months to travel. Everything moved slowly. But it is now a fast-moving world. Nevertheless, establishing a reputation on the basis of personal dealings and real-world achievements can be more gradual than waving a government piece of paper or badge in the air. Which is more real? Once established, which is the more resilient? The fact that establishing a reputation or a business may take time is hardly a criticism.

No uniformity. Another word for this condition is “diversity,” and it is an extreme advantage of free-market ID. Government ID is homogenized because the goal is to force everyone into the same mold, to enforce conformity to the same laws and reporting requirements. Uniformity furthers the goals of government and social control. When ID furthers the needs of individuals, then the form it takes is dictated by those needs. A driver may require a certification of competence in order to obtain a desired insurance policy. But he or she should not need to provide a tax number. Diversity indicates nothing so much as flexibility in the light of what is appropriate.


Conclusion

Cryptocurrencies offer a revolutionary approach to privacy, which gives control of personal data back to individuals. This aspect of the Satoshi Revolution is often overlooked: a paradigm shift is occurring.

The old paradigm is for authorities to coerce and to centralize vast quantities of data on and, then, to make a great flap over the security of that data. “Privacy” becomes a matter of how diligently the centralized authority guards the information that it warehouses and employs. Privacy is nationalized and becomes a matter of national security.

The new paradigm of privacy: individuals control their own personal data and use it for their own benefit. Consider what happens in the transfer of bitcoin. The participants decide if wish to identify publicly or to remain pseudonymous; they choose to go through an anonymizer, or not, and to use a different address for each transaction, or not. The blockchain doesn’t care. It authenticates the transaction, rather than the individuals, in much the same manner that vendors used to authenticate a gold coin without caring who handed it to them. In short, peer-to-peer crypto verifies transactions, not individuals. It is the privatization of privacy.

Cryptocurrencies are on the cusp of changing the landscape of personal transactions. When smart contracts become common practice, then verification of contracts and the authorization of their terms will be increasingly a matter of algorithms, not of bureaucratic permission. Technology will lead the way to freedom.

 

[To be continued next week.]

Thanks to editor/novelist Peri Dwyer Worrell for proofreading assistance.
Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 4: Crypto. A New Paradigm of Privacy and ID (Part 2) appeared first on Bitcoin News.

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Bitcoin Enthusiast Finds Undiscovered Cave and Names It Satoshi

January 13, 2018 |

Italian Explorer Finds Undiscovered Cave and Names It Satoshi

Few people will ever encounter an undiscovered natural wonder, and then have the pleasure of naming it. That’s what happened to Guido Turricchia and his intrepid band of explorers deep within the Papua New Guinean jungle and deep beneath the earth. The speleologist found a new cave and had the honor of christening it. The epithet the environmental engineer and bitcoin enthusiast chose? Why, Satoshi.

Also read: Chinese Bitcoin Mining Giant Bitmain Establishes Branch in Zug, Switzerland

Blockchain meets Rockchain

For the past month, Guido Turricchia, Andrea Felici, and Maurizio Buttinelli have been AFK and thus divorced from bitcoin price moves and cryptocurrency drama. On December 10, the trio of experienced explorers left Italy to embark on their most ambitious trip yet through the dense rainforest of Papua New Guinea. The southwest Pacific nation, which lies north of Australia and to the east of Indonesia, is famed for its biological diversity.

Italian Explorer Finds Undiscovered Cave and Names It Satoshi

Guido and his group witnessed many enchanting sights as they trekked through the jungle, but they were saving themselves for the beauty that lay within the earth. From Guatemala to Costa Rica, the speleologists have traveled the world, frequenting some of the most remote and exquisite underground caverns, caves, and rock formations these territories have to offer. After journeying for days, the group, led by a local guide, came to a cave formation in the heart of the Papua New Guinea jungle.

Italian Explorer Finds Undiscovered Cave and Names It Satoshi

Guido explained to news.Bitcoin.com how locals used the entrance to hunt flying foxes, but hadn’t forayed any further. The explorers roamed deeper into the caves, descending a total of 2km, before coming to a huge cave system comprising a series of vaults, the greatest of which measured 120 x 80 x 50 metres, with extensive concretions and an underground river flowing through it. Due to the rocky formations, Guido dubbed it Blockchain Valley.

Italian Explorer Finds Undiscovered Cave and Names It Satoshi

Enter the Cave of Satoshi

The trio, who now found themselves in one of the remotest places on earth and confronted by sights that had never been seen with the human eye, went deeper into the earth. After passing through Blockchain Valley, they came to the largest cave of all. “It’s common practice to name new caves after important people,” explained Guido, “but there was nothing for Satoshi”. There was only one name on his lips, and thus the cave of Satoshi was born.

Guido first learned about bitcoin and blockchain in 2013 and, like many people, was instantly hooked. In the years since, he’s balanced an interest in the technology with operating a crowdfunding platform, which provided relief to victims of last year’s Italian earthquake, and exploring with Circolo Speleologico Romano, a caving organization founded in 1904. The Papua New Guinea trip, aided by sponsors such as Powerfilm Solar, was the group’s most ambitious yet.

Italian Explorer Finds Undiscovered Cave and Names It SatoshiAll told, they spent one month in the Folopa territory, hiked for 60km into the rainforest, and explored 4km of caves, discovering 25 new entrances in the process. The blockchain created by Satoshi Nakamoto has now been into space and, thanks to the efforts of an Italian caving group, his name has resonated in the depths of the earth. Satoshi Cave will now live on for millennia.

How do you think Satoshi would feel about having a cave named after them? Let us know in the comments section below.


Images courtesy of Guido Turricchia.


Tired of those other forums on the subject of Bitcoin? Check forum.Bitcoin.com.

The post Bitcoin Enthusiast Finds Undiscovered Cave and Names It Satoshi appeared first on Bitcoin News.

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The Satoshi Revolution – Chapter 4: What Do You Have to Hide? Everything! (Part 1)

January 6, 2018 |

The Satoshi Revolution – Chapter 4: What Do You Have to Hide? Everything! (Part 1)

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2: The Moral Imperative of Privacy
Chapter 4: When Privacy Is Criminalized. Only Criminals Will Be Private
by Wendy McElroy

What Do You Have to Hide? Everything! (Chapter 4, Part 1)

I grew up with the understanding that the world I lived in was one where people enjoyed a sort of freedom to communicate with each other in privacy, without it being monitored, without it being measured or analyzed or sort of judged by these shadowy figures or systems, any time they mention anything that travels across public lines.
– Edward Snowden

I want my tombstone to read: “I lived. I died. Now mind your own damned business.” What do I have to hide? Everything! Which is to say, any information I am required to reveal is data I decline to disclose.

Privacy is the single most effective way to preserve freedom against encroaching government. In his book Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed, the political scientist James C. Scott commented on the role of one form of data inventory played in the rise of the modern state: the census. Scott wrote, “If we imagine a state that has no reliable means of enumerating and locating its population, gauging its wealth, and mapping its land, resources, and settlements, we are imagining a state whose interventions in that society are necessarily crude.” Data is power, both for individuals and for governments.

The privacy of cryptocurrency offers the brightest hope for individuals to preserve their financial autonomy. And the need for privacy has never been more urgent; with the digital age, the collection of data has become a bonanza of which past governments could only dream. But crypto-users who want to control their own wealth confront cultural assumptions that strongly favor government control rather than individual freedom.

Some of the strongest assumptions include:

• The presumption of innocence belongs to government, not to individuals;
• a double standard of morality is applied to government and to individuals;
• the political meaning of “privacy” is inverted by a sleight of hand; and
• Orwellian doublespeak has become normal discourse.

The Presumption of Innocence

The legal term “presumption of innocence” is sometimes expressed by the Latin phrase “ei incumbit probatio qui dicit, non qui negat,” which means the burden of proof is on the accuser and not on the accused. The accused is presumed to be innocent until he or she is proven guilty. The legal doctrine rests on the belief that most people are not criminals and, so, criminality cannot be presumed; it must be demonstrated. The doctrine also acknowledges a fundamental principle of logic: namely, since it is impossible to prove a negative, the burden of proof correctly rests with whomever makes a positive assertion.

The presumption of innocence is a cornerstone of individual rights and a wall against arbitrary prosecution by governments. It is a defining feature of a free society rather than a totalitarian one. The renowned British barrister Sir John Clifford Mortimer-best known as creator of the beloved fictional character, defense barrister Horace Rumpole — was far from alone in viewing the presumption as “the golden thread” that wove justice together.

The golden thread has unraveled.

The government has been handed a “right” to surveil and to demand information from the masses, who no longer have a presumption of innocence even though they are accused of no crime. Border guards fingerprint, physically molest, interrogate, and bark out, “Your papers!” to the passing hordes; those who refuse are viewed as obviously guilty because they must have something to hide. Police officers arrest people for refusing to produce ID, whether that arrest is legal or not. After all, police officers are “the good guys,” which means only “the bad guys” will not comply. The violation of rights is justified or even encouraged by the allegedly noble motives of government agents, who are said to provide security or enforce the peace. The presumption of innocence has been transferred from individuals to government agents.

The underlying assumptions of innocence have also been reversed. Instead of considering most people to be non-criminal, everyone is suspected of being guilty until their innocence is established. How? Government-issued ID and compliance with reporting requirements are the bedrock of evidence demanded. As well, the logical principle of being unable to prove a negative has been reversed; the logical fallacy known as “the argument or appeal from ignorance” has taken its place (Here, “ignorance” refers to a lack of contrary evidence). Stated over-simplistically, one part of the fallacy asserts “that a proposition is true because it has not yet been proven false.” And, so, the possible criminality of an individual is true because it has not yet been disproven.

Again, the presumption of innocence has been transferred to the government and away from the individual. It is difficult to overstate the importance of this. It is not only the death knell of justice, which cannot exist without due process, it is also a direct slide into totalitarianism. That’s the political meaning and consequence of the question “What do you have to hide?” People are no longer innocent and allowed to mind their own business in peace.

Double Standard of Morality

The presumption of innocence of government and its agents is enabled by the fact that a double standard of morality is at work in society—one for individuals, and one for government.

No voice rang out more clearly against a double standard of morality than that of the libertarian-publishing giant, Raymond Cyrus Hoiles, who began creating the media chain known as Freedom Communications in the 1950s. Hoiles believed the double standard was more destructive to society than any other concept, and his attacks upon it were a common theme in his newspapers.

In an editorial entitled “The Most Harmful Error Most Honest People Make” (December 17, 1956), which appeared in his flagship newspaper, the Santa Ana Register, Hoiles explained the error. It “is the belief that a group or a government can do things that would be harmful and wicked if done by an individual and produce results that are not harmful, unjust and wicked. It is the belief that a number of people doing a thing that is wrong for an individual to do, can make it right and just.” Hoiles most often critiqued the error in terms of taxation. If it was wrong for a neighbor to steal your goods, then it was equally wrong for a group of neighbors or their appointed representative (government) to do the same.

The critique of double standards did not start with Hoiles, of course. A 1657 pamphlet (ascribed to the rebel Colonel Titan) argued, “What can be more absurd in nature and contrary to all common sense than to call him Thief and kill him that comes alone… and to call him Lord Protector and obey him that robs me with regiments and troops? as if to rove with two or three ships were to be a pirate, but with fifty an admiral?” And, yet, this absurdity is what the state enforces when it acts in a manner that would not be tolerated from individuals.

What applies to taxation applies no less to the violation of privacy. If it is wrong for a neighbor to pat down your naked body and that of your child, then it is wrong for a government agent to do so. If it is wrong for a neighbor to tap your phone, to record your financial transactions, and to peek through your windows, then it is equally wrong for the government to do so. A group does not relinquish personal responsibility by acting in someone else’s name because actions are always the personal responsibility of the acting party. Gang rape is no less rape even if it serves a cause that a particular society applauds, such as ethnic cleansing.

A key reason government remains an engine of coercion is because so many people buy into a double standard that exempts it from moral responsibility. If government agents, from the president to post-office workers, were bound to the same standards of decency and legal responsibility as other individuals, then the current government would crumble.

A Sleight of Hand on Privacy

“Privacy” has been redefined as “concealment,” which is a sleight of hand. In his excellent essay, “’I’ve Got Nothing to Hide’ and Other Misunderstandings of Privacy,” Professor Daniel J. Solove explained the metamorphosis of privacy into concealment: “The argument that no privacy problem exists if a person has nothing to hide is frequently made… When the government engages in surveillance, many people believe that there is no threat to privacy unless the government uncovers unlawful activity, in which case a person has no legitimate justification to claim that it remain private.” Oddly enough, people who make the “nothing to hide” argument also hang curtains on their windows. They do not give their wallets or purses to strangers to rummage through. They close the door before having sex, and they object to naked photos being posted online. What are they hiding? As Solove commented, privacy is “not about anything to hide, it’s about things not being any one else’s business.”

The “nothing to hide” position trivializes and criminalizes the right to privacy. It also destroys the incredible value true privacy provides to society and to individuals. Consider just one example of each benefit:

The value of privacy to society: When a government monitors general communication, people do not interact freely. This is especially true of dissenters, the aberrant (however innocuously so), writers, whistleblowers, critics of government, skeptics, defense attorneys, artists… The bleak, gray society in the Soviet Union and other communist states provide cautionary tales of how fear and caution crush creativity and discussion.

The value of privacy to individuals: Privacy is part of a healthy, creative and self-reflecting life. Since childhood, for example, I’ve kept a diary into which I pour hopes, confusion, disappointments, and desires. When I read pages from the past, I viscerally feel who I was at ten years old, which makes me understand far better the person I am today. These diaries are private, not because I am ashamed of them, but because they are very personal.

Everyone has areas of privacy to protect. Some wear lockets with photos of dead relatives; others harbor a forbidden love; some lock the door to luxuriate in a hot bubble bath; or, they hide a sexual preference that confuses them. These are lines. No other human being can properly cross them without an invitation. Slam the door in the face of anyone who says differently!

We Are Orwell

In his dystopian novel 1984, George Orwell introduced the concept of doublespeak. This refers to the reconstruction of language in order to deliberately distort or reverse the meaning of words for political gain. For example, “war is peace” justifies the invasion of nations that have initiated no force due to a noble goal–peace. “Liberty is obedience” allows authority to compel the compliance of peaceful people for “their own good” in the name of security. “Questioning is violence” means censorship is justified to preserve social order. Now, “privacy is concealment.”

Cryptocurrencies face a steep cultural climb to take their place as a privacy tool. Fortunately, they already occupy the high ground of freedom.

[To be continued next week.]

Thanks to editor/novelist Peri Dwyer Worrell for proofreading assistance.
Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 4: What Do You Have to Hide? Everything! (Part 1) appeared first on Bitcoin News.

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The Satoshi Revolution – Chapter 3: Exchanges – Exchanging Liberty for Convenience? (Part 6)

December 31, 2017 |

Exchanging Liberty for Convenience?

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 1 : The Trusted Third Party Problem
Chapter 3: Trying to Undo Satoshi
by Wendy McElroy

Exchanges – Exchanging Liberty for Convenience? (Chapter 3, Part 6)

The best “TTP” of all is one that does not exist, but the necessity for which has been eliminated by the protocol design, or which has been automated and distributed amongst the parties to a protocol. The latter strategy has given rise to the most promising areas of security protocol research including digital mixes, multiparty private computations, and Byzantine resiliant [sic] databases. These and similar implementations will be used to radically reduce the cost of current TTPs and to solve the many outstanding problems in privacy, integrity, property rights, and contract enforcement while minimizing the very high costs of creating and operating new TTP institutions.

Nick Szabo

The utter brilliance of Satoshi Nakamoto’s insight into the “trusted third party” problem is not obvious. Nor is its importance to freedom. It is not merely an economic insight or a clever sidestepping of government; it is a key to human progress that is as pivotal as the concept of property rights, freedom of speech, and freedom of religion.

First, it is necessary to seemingly disagree with Satoshi in order to arrive at a point of total agreement.

Trusted third parties (TTPs) are intermediaries between two parties who wish to transact business but require someone to administer the exchange, as in the case of the escrow on a house. TTPs can be an unadulterated good because they are a natural and valuable evolution within a complex human society. As society grows beyond barter, people need representatives whom they can trust on the basis of personal knowledge, reputation, or the vested interest of the TTP. International transfers of money, guarantees on loans, investment in start-ups…these are the stuff that allows businesses to establish and flourish.

There is a personal aspect, as well. A trusted other can act as a guardian for parents who are distant and incapacitated. This is part and parcel of human beings needing each other.

The required third party may be a financial institution, a family member, an attorney, a friend, or a recommended stranger. It is not be too strong a statement to say that a sophisticated economy could not exist without their presence.

But that’s not what Satoshi meant by a TTP. He decried an obscene perversion. TTPs have been usurped by government and converted into a grotesque mirror image of themselves. Instead of being freely chosen by individuals based on their own self interest, they are “choices” mandated by government based on its needs. In other words, TTPs such as central banks serve the government at the expense of people who are allegedly their customers who are reported, investigated, and prosecuted for conducting business with their own money.

Central banks, and other forms of finance, have converted the immense value of TTPs into a form of oppression. Years ago, I spoke to a friend who was visiting from a communist country. He said no one opened a business there because the process could take years and it required volumes of paperwork merely to sell a loaf of bread to someone. Loaves of bread still circulated, of course, because the black market flourished outside of “official” channels; the selling and buying of goods is the basis of life itself. It cannot be extinguished. It can only be criminalized. That’s what government does to wealth and the flow of community when it mandates who or what can be a TTP.

Cryptocurrency has thrown government for a loop. At first, it did not understand crypto and, so, it did not take the phenomenon seriously. Finally, a glimmer of understanding occurred. Not of the technical dynamics, of course, but of the political and social implications. It was and is a threat. Governments no longer controlled the issuance of money, and the mandated TTPs into which it forced people were being obsoleted.

Governments want to regain control. Some ban cryptocurrency; others issue their own statist versions of it; many scramble to come up with a combination of legal solutions. Mostly, politicians are just scrambling. They are trying to wrap their fists around the micromanagement of currency, which is the key to social control.

How? It was inevitable that a new form of free-market money would be used as something more than a form of direct exchange, and it would assume the many other roles money performs, such as speculation and currency exchange. Decentralized exchanges evolved to permit the role of crypto to expand without destroying its initial value of privacy, anonymity and control by the individual. But, unlike the individuals who use them, these exchanges were and are visible. They are vulnerable to attack by authorities.

There are two ways to quash this expression of economic freedom, and both are being used. Decentralized exchanges that operate without the permission of government are prosecuted. Centralized exchanges that are licensed and regulated in much the same manner as banks are encouraged. Eventually, the time will come when all peer-to-peer transactions will be viewed as criminally suspect, whether or not they occur through exchanges.

It is the incredible contribution of Satoshi that he combined the importance of issuing money with the trusted third party “problem”. There has never been a more profound acknowledgement of the TTP problem to personal freedom. It was a missing link that no one else connected.

Current TTPs endanger people’s freedom because they are now an arm of government, which Satoshi’s vision originated to avoid.

The fundamental feature of free-market third parties is that they facilitate the individuals who voluntarily use them and are considered to be customers. They provide a service on the free market. A crude and simplified test of whether a TTP is a service or a threat is to ask a few questions. Does the TTP make an individual’s personal property safer, or does it constitute a risk to it in any manner? Are there a range of free-market options among which to choose or are there monopoly institutions with which people are forced to deal in order to perform necessary financial matters, such an international transfer? Does the TTP serve the needs of individuals or of the government?

Many people have become so used to central banks and other government TTPs that they forget that “services” provided are supposed to be “services,” rather than vehicles of oppression. True services do not confiscate or freeze accounts in the absence of theft or fraud. They do not report transactions to hostile others, such as rapacious governments. They do not demand intrusive information or refuse transfers to unapproved traders.

A valid trusted third party is like a money-changer in the idealized olden days. He counts your currency with honesty; he checks the current conversion rate; he hands you the bills, and you walk away. All parties, who have any business being parties to a transaction, are satisfied. The foregoing example is simplistic, of course. But it captures something.

If government cannot control the issuance of money, it needs to control its circulation. Governments realize they have lost their monopoly over currency. Their best move is to control the circulation of every unit of wealth in society, whether or not it is created by them. And exchanges are the choke point at which they can do so. Unfortunately, most exchanges are more than happy to become ersatz bureaucracies in return for the official privileges they receive.

Prosperity is independence and freedom. I wish wealth, privacy, and protection from authority to everyone in 2018.

[To be continued next week.]

Thanks to editor/novelist Peri Dwyer Worrell for proofreading assistance.

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 3: Exchanges – Exchanging Liberty for Convenience? (Part 6) appeared first on Bitcoin News.

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