Bitcoin As A Government Surveillance And Tracking Tool

Discussion in 'Bitcoin and Cryptocurrency' started by Millard Baker, Oct 9, 2014.

  1. Millard Baker

    Millard Baker Member

    It's been (incorrectly) said that the genius of Bitcoin is that every transaction is completely untraceable. What if the truth is actually the opposite: the genius of Bitcoin is due to the fact that every transaction is entirely traceable in a public ledger?

    Bitcoin may have the potential for anonymity. But it may also have the potential to help government monitor how people spend money.

    There is at least one private company - Coin Validation - that want to make use of the public Bitcoin ledger to create a centralized tracking system linking real identities with associated Bitcoin addresses:

  2. pumpingiron22

    pumpingiron22 Member Supporter

    Very interesting article millard!
    Jdog likes this.
  3. Millard Baker

    Millard Baker Member

    If Coin Validation succeeds, you can expect the names of many drug (AAS) dealing sources to be entered into the database. If there customers didn't take anonymity measures in sending Bitcoin, they could be directly linked to illegal activity especially if their names appear in the database for any reason. Since the bitcoin blockchain is a public ledger, it means that the record is forever. So 10 years from now, long after one may have forgotten about a bitcoin-related steroid purchase, a company like Coin Validation may have made the connection.
    Skull and pumpingiron22 like this.
  4. Masters Power

    Masters Power Member Supporter

    This article is nearly a year old, I wonder in Coin Validation has gained any traction with businesses using Bitcoin.
  5. Millard Baker

    Millard Baker Member

    I don't know. I wonder if there is a list of businesses who have signed up for Coin Validation. It would be convenient for those consumers who are calling for a boycott of such businesses:

    It seems to me that most small businesses would NOT want their finances to be so readily viewable by the general public (and its competitors). I agree with the author of the following article who thinks small business would prefer something like DarkWallet that would allow them to keep their bitcoin addresses private (and therefore their company account balance and transaction history as well):

  6. Millard Baker

    Millard Baker Member


    BIGMESC Member

    I wonder how this would work on offline and mobile wallets that are not connected to real-world ID's

    Darkwallet needs to get out of alpha testing and get to stable software.
  8. flenser

    flenser Member Supporter

    Too bad coinbase doesn't allow us delete transaction histories. I don't think there are any laws requiring them to keep it.
  9. Millard Baker

    Millard Baker Member

    It's not up to Coinbase. It's not up to any government rule or regulation. It's the bitcoin protocol. It's the defining feature of the blockchain - ALL transactions are permanently recorded.
  10. flenser

    flenser Member Supporter

    But coinbase stores specific transactions in a file with my name on it.
  11. Millard Baker

    Millard Baker Member

    Those are regulation imposed by the government. Expect Coinbase to scrutinize and record transactions including recipients just like a traditional "money service business".

    "Coinbase is a regulated Money Service Business under the FinCEN division of the U.S. Treasury Department and as such, we are required to review accounts in order to ensure compliance with regulations and/or our Terms of Use."
  12. flenser

    flenser Member Supporter

    That makes sense. I guess I should have read their faq...
  13. MindlessWork

    MindlessWork Member Supporter

    What about using Bitcoin services offshore? I am sure there are risks in using offshore services as well as hurdles in buying/selling/using bitcoin with such services, especially if you wanted to keep your BTC transactions private and away from US government scrutiny.
  14. Millard Baker

    Millard Baker Member

    Bitcoin is a cop's BEST friend since it is "insanely traceable" due to the permanent public ledger of transactions:

    Source: In the Silk Road trial, Bitcoin is a cop’s best friend
    MindlessWork likes this.
  15. MindlessWork

    MindlessWork Member Supporter

    What about the Bitcoin derivatives that are popping up like Litecoin and Dogecoin? I am sure the security shortcomings of BTC will be resolved in order to make cryptocurrencies as anonymous as possible. The permanence of the BTC transaction trail is what is BTC's major flaw IMO.
  16. MassTurk

    MassTurk Member

    This article makes more sence of the fast drop that happened recently. Everyone who realizes it's not as anonymous as it thought to be, is dropping bit coin maybe it found its bottom and will be profitable as a currency for the people who is capable of investing now. I know Millard said the bottom would be around 150.00$, it got pretty close to that early last week around 176.00.
  17. Millard Baker

    Millard Baker Member

    Darkcoin is a more anonymity-oriented cryptocurrency. It may appeal to a niche market for which anonymity is an absolute requirement.

    Cryptocurrencies like Darkcoin (DRK) may co-exist with Bitcoin. BTC could be main trading currency but users may switch over to DRK when the circumstances dictate. It doesn't seem like DRK is headed for mainstream adoption.

    I don't think the "anonymity" issues had anything to do with the crash in BTC prices. It's not really important to most consumers.

    As long as BTC remains extremely volatile, traders will find it profitable no matter which direction it goes. Given the large VC investment in the BTC ecosystem, I don't think it will go away anytime soon. Still, I don't know that it will find a permanent floor at ~$150/BTC.

    If a better cryptocurrency comes along, BTC may very well end up worthless. That's what speculation is all about :) For most people and investors, I don't think the anonymity features will be the determining factor about a cryptocurrency's superiority.
    MassTurk and MindlessWork like this.
  18. MindlessWork

    MindlessWork Member Supporter

    Thanks for your post Millard, and perhaps DarkCoin could well be in a better position to take off due to the concerns about the security and anonymity of bitcoin as well as being compatible with BTC. I am sure DarkCoin would well be suited as a payment tool for the Silk Road denizens as well as for sources. As cryptocurrency is in a state of flux and constant development, hopefully there will be a solid crypto contender to real world cash!
    Millard Baker likes this.
  19. Millard Baker

    Millard Baker Member

    DRK has been adopted by some 'dark markets'.

    Darkcoin Now Accepted on Minor Dark Net Markets

    Some people thought its unique (anonymity) features gave it more value relative to BTC and its price appreciation wasn't just a speculative bubble. But that doesn't appear to be the case. Its price has crashed too:
    MindlessWork likes this.
  20. MindlessWork

    MindlessWork Member Supporter

    Maybe DRK should float along with BTC as its a compatible derivative? Definitely would make it easier to compute the total cost of a transaction in DRK