They've crossed a threshold. They're now considered terrorists. It's not just law enforcement any more. Law enforcement has limited resources chasing a large number of crooks. Now CIA, NSA, and DoD are looking for them, with far more resources aimed at a few targets.
All it takes is one slip-up. One intercepted phone call. One Bitcoin transaction that can be traced. One boast to a friend. One purchase of an expensive car. One crypto key that wasn't totally random. One hint on social media. It may take a while. But eventually the attackers will make a mistake, if they haven't already.
Back in 2009, Somali pirates attacked the US-flagged Maersk Alabama and kidnapped the captain. They didn't expect the US to send two warships, helicopters, and a SEAL team after them. But that's what happened. Three of the pirates are dead, one is in a US prison.
The US has a long tradition of overreacting to attacks, going back to the Tripoli pirates demanding ransom during the Jefferson administration. (Jefferson sent a fleet and the Marines. The pirates lost.) The Barbary pirates during the Teddy Roosevelt administration (Roosevelt sent battleships. The pirates lost.) The Somali pirates during the Bush administration. (The pirates lost.) Bin Laden during the Obama administration (Bin Laden lost.)
Somewhere, there's a few very scared hackers.
Seems to me in that case, defense is easier than offense. There's now huge financial incentives for extending strict security to more areas than just military/transportation/communication infrastructure systems.
Hackers are subject to economic pressures and cost/benefit/risk analysis just like anyone else. If government puts a heavy thumb on the scale, then maybe you start to think there are easier ways to make a few million bucks that don't run the risk of your ending up dead or in prison for life.
As an example, kidnapping used to be a reasonably common crime in the United States (with a high payoff) but in the wake of the Lindburg Kidnapping, the US made kidnapping a federal crime and a capital offence. Instead of dealing with local cops, kidnappers were now facing a dedicated team of FBI agents with substantial resources and the death penalty when they got caught. Suddenly, it makes a lot less economic sense to be a kidnapper and ransom kidnappings have mostly disappeared in America.
The hackers probably only sold the software, and will be difficult to trace. Also, they have plausible deniability as they can say the software was for research purposes only and never meant to be used, do harm, etc.
- Sébastien Vachon-Desjardins. "Information on a Polish server identified Vachon-Desjardins as one of the most profitable affiliates of the NetWalker organization". "RCMP seized hundreds of thousands of dollars from Vachon-Desjardins's home and safety deposit boxes after his arrest, while also discovering a cryptocurrency wallet with contents valued at about $50 million." 
- Joshua Polloso Epifaniou. 
I think there is a strong argument that even with all the negative externalities listed, the positive are even greater. I mean, what if the world's billionaires are eventually forced to transect on a public blockchain? A lot of shadiness will suddenly become really hard to hide. Net crime may well reduce; we don't know what we don't know in that sphere.
> Funding "rogue states" such as North Korea and Iran."
Now on to the point I disagree with. Find Iran on a map. Look left of it and right. You'll see two countries invaded by the US on the flimsiest of pretexts. The US not being able to use financial means to rub salt in the wounds of people it wants to bully is a win for the world. This is a positive externality.
That’s never going to happen because the technology is not going to get that far. How do you have effective monetary policy with a deflationary currency? Governments and central banks are not going to willingly give up that power, nor should they. Blockchain currencies just do not make sense on the macroeconomic level.
Moreover we already have solutions for investigating financial crime, it would be much easier to improve policy and enforcement there than overhaul our economy for what would be at best an indirect benefit.
I think you have to be completely deluded to believe that.
> I mean, what if the world's billionaires are eventually forced to transect on a public blockchain? A lot of shadiness will suddenly become really hard to hide.
Wasn't one of the big promises of crypto anonymity so that it would be the salvation of the prosecuted? And now it's supposed to completely eliminate anonymity and that is supposed to be a good thing?
>Net crime may well reduce; we don't know what we don't know in that sphere.
We have ample hard evidence that the opposite is the case.
The Bitcoin blockchain is a public, permanent ledger of every transaction ever made. The people claiming it is anonymous were always being optimistic. I think it might be strictly worse than the existing banking system for privacy.
People trying to use Bitcoin for anonymous crime are in for a very nasty shock at some point. It is a better idea to go old school and bank with HSBC.
I see nothing there indicating a quantitative increase in crime victims or number of crimes being committed due to cryptocurrency.
Most notably, ransomware is doing 20 billion dollars worth of damage annually (increasing quickly), and depends pretty much 100% on cryptocurrency for payment: https://cybersecurityventures.com/global-ransomware-damage-c...
Most Proof of Stake supporters see this as a good thing because it means there's no electricity waste and higher degree of "censorship resistance".
However what will actually happen is this "censorship resistance" is what will make the PoS blockchain as a whole get "censored", ironically.
Proof of Work blockchains, while wasting a lot of energy, can be regulated easily because the government can simply regulate the large miners in their countries. However Proof of Stake, because it can't be traced easily, the regulators will have to try to stop the entire blockchain as a whole.
Of course, it's impossible to completely stop it, but the governments can do a lot of things in their "anti-decentralized tech playbook" to make sure the adoption never goes mainstream. (See Tor, BitTorrent, etc.)
This isn’t inherent to PoW consensus. In 2010, Bitcoin was CPU mineable on any ordinary Windows PC. It wasn’t until Bitcoin commanded a significant market value — which wasn’t guaranteed in the slightest — that industrial scale mining operations came into the foray.
> Most Proof of Stake supporters see this as a good thing because it means there's no electricity waste and higher degree of "censorship resistance".
Your understanding of censorship resistance is gravely mistaken :
Overcoming censorship is not possible in a PoS system, as the censor
has acquired majority stake and cannot be unseated. As such PoS
systems are not censorship-resistant and the theory is therefore
In addition to being vulnerable to total censorship, Proof of Stake consensus suffers from the misfeature of not even having a quantitative fork ranking protocol — i.e. it lacks a way to objectively compare the truthfulness of divergent blockchains. Under adversarial conditions, the PoS chains pos1, pos2, and pos3 cannot be quantitatively ranked by hashing power the way the PoW chains pow1, pow2 and po3 could be, as there is no hashing power in PoS. Instead, there is only “phone-a-friend” consensus, which Vitalik Buterin has euphemistically referred to as “weak subjectivity”.
Jude C. Nelson, who has a PhD in distributed systems from Princeston, critiques PoS better than anyone :
PoW requires less proactive trust and coordination between
community members than PoS -- and thus is better able to recover
from both liveness and safety failures -- precisely because
it both (1) provides a computational method for ranking fork
quality, and (2) allows anyone to participate in producing
a fork at any time. If the canonical chain is 51%-attacked,
and the attack eventually subsides, then the canonical chain
can eventually be re-established in-band by honest miners
simply continuing to work on the non-attacker chain. In PoS,
block-producers have no such protocol -- such a protocol
cannot exist because to the rest of the network, it looks like
the honest nodes have been slashed for being dishonest. Any
recovery procedure necessarily includes block-producers having
to go around and convince people out-of-band that they were
totally not dishonest, and were slashed due to a "hack" (and,
since there's lots of money on the line, who knows if they're
being honest about this?).
Because Proof of Stake blockchains can’t even come to consensus under adversarial conditions without human intervention (per JCN), these “blockchains” can actually be understood as distributed append-only ledgers managed by trusted central organizations the membership to which is gated by wealth. It’s highly misleading — even outright deceptive — to promote such systems as being more permissionless than PoW-powered systems like Bitcoin.
“Green-friendliness” was never a design goal of cryptocurrency: creating a lasting store of value sans institutions, exchangeable pseudonymously over the internet, was.
This is inherent to the PoW consensus. Satoshi Nakamoto himself even said Bitcoin would end up in data centers because of this property. It's not that hard to understand why this would be the case. PoW is powered by competition, and competition begets scale, just like any other industry.
> Your understanding of censorship resistance is gravely mistaken :
Before making this kind of condescending comments, maybe make sure that you are not the one who's misunderstanding what I am saying? I was talking about what many PoS supporters think, not what I thought. Go ahead and re-read what I said.
Their (The PoS supporters) idea is that "because it's much more difficult to find PoS validators than PoW miners because PoW miners need to maintain a factory whereas PoS validators can just hide in their mom's basement and make money, it's more difficult for the governments to regulate PoS than PoW". And my point was that that was an incorrect belief.
My entire post was talking about this false sense of "censorship resistance", basically Pro-PoW and anti-PoS, and you didn't need to lecture me on your superior understanding of PoW. I understand everything you said, but you completely misunderstood my point. If you didn't get that by reading, maybe it's your reading comprehension problem.
As someone who has long been all too familiar with the various sophistry tactics commonly employed by Bitcoin’s competition, frankly that was my impression of your post. I apologize if I misread your intent.
> This is inherent to the PoW consensus. Satoshi Nakamoto himself even said Bitcoin would end up in data centers because of this property
Bitcoin wouldn’t have ever warranted industrial scale mining operations if not for BTC’s significant price appreciation. But PoW systems were never guaranteed to be commercially successful. It’s perfectly possible for Bitcoin to once again become CPU mineable on ordinary Windows PCs — assuming its market price collapses.
I regularily receive a silly critic, which I always take the time to debunk, and then often get told "it was joke.. come on".
We live interesting times.
Edit: Not questioning the honesty of the author, the clarification is legit.
Maybe all that's needed is a few tweaks to the legislation and some political will.
Maths are funny like that.
Looking the other way in this context can be as simple as "enforce address/wallet embargos with a delay of ten minutes": That's enough to swap all dirty and trackable tokens for clean anonymous/anonymizable tokens.
We're starting to see realization of that potential in the emergence of a mechanism to directly monetize the production of culture, via NFTs, as this 2021 details:
An illuminating 2013 article by the same author:
The calls to ban cryptocurrency now remind me of the efforts to stop the public from having access to strong cryptography in the 1990s. Without the success of the cypherpunk movement, in which a critical mass of tech activists, private sector interests, and forward thinking government officials all supporting democratization of access to the technology, led to export controls on the strong cryptography being lifted, the multi-trillion dollar e-commerce market as we know it today would never have emerged.
Transitively, this statement applies to a set of crypto currencies too. I, hence, think it'd be unproductive for anyone to deny this property by e.g. trying to outlaw certain applications of cryptography.
While I wasn't alive during that time, I believe that for ideas of similar weight that require immense ethical decision making strength (e.g. anything related to splitting atoms) political and game theoretical advances had to be made before humanity was ready to "live peacefully with that knowledge."
It's not by accident that cryptography was once deemed a weapon by certain states.
Now it's time that states don't turn their eyes away and merely say "careful, you may loose all your money." That's irresponsie. Rather they must collaborate to
ensure that crypto has a useful, peaceful and non-destructive future.
Friedman and Holz are being simplistic.
Coins cannot be taken away. Infrastructure can go darker to evade state-level control. Shadow economies are feasible. Hence, IMO states should create a friendly environment for the best possible outcome of their citizens. It's epistemic authority that the state needs to apply now ("You shall pay taxes because is a hard requirement for xyz to work").
This argument keeps being made but it's BS. There are plenty of PoS tokens which use very little electricity.
Also, crypto discourages consumption by discouraging spending through social HODLING behaviour. HODLING a token collectively to make the price go up means that community members have less fiat available to spend on consumables which reduces their collective consumption and reduces carbon emissions.
In a crypto ecosystem, all the different tokens are competing for which community can HODL the hardest. The communities who produce the most value and spend the least are going to end up the richest (highest market cap) with the loudest economic voice. This is a lot better than the fiat monetary system where spending is not a factor because everyone is forced to support (and absorb the stresses caused by) the spending of billionaires within that system. When a billionaire spends hundreds of millions of dollars to buy a super-yacht or private jet, it doesn't crash their currency... Maybe it should!
Imagine what good that would do to the environment if everyone was competing to consume less!
There is also an argument that Bitcoin mostly uses cheap, surplus electricity because that's the only kind that's cheap enough to make mining profitable.
This doesn't make sense. Holding an asset so that it appreciates in value causes it to, well, appreciate in value. There are plenty of ways to exercise that value without actually exchanging it: it can be used to issue loans or secure other financial instruments. The blockchain space seems to be rife with these sorts of schemes.
But also, to the larger point: you're not reducing consumption if your goal is to inflate the value of an asset until you're stinking rich. You're deferring consumption until you have the resources commensurate to your desired level of consumption. That's what everybody does, to be clear: it's only blockchain people who seem to have trouble looking it in the eye.
But the point is that everyone is deferring consumption until some time in the future but that perfect time when you can cash out all at once never actually happens (note that a blockchain is public so it's not possible to quietly sell your assets without drawing attention and crashing prices; especially for people who own a lot of the asset). Traders can easily front-run you if you attempt any large sale.
On the other hand, fiat provides many opportunities for billionaires to cash out and pass the costs onto regular tax payers. The pandemic was a perfect example of that; the reserve banks printed a ton of cash which propped up the markets and allowed billionaires to cash out huge sums without causing any crash.
Also, there will always be a new up-and-coming tightly-HODLED coin by a younger generation to compete with yours.
I don't understand what this is supposed to be in contrast to. This is precisely how the normal market works: the vast majority of Jeff Bezos's actual wealth is illiquid and impossible to cash out at once, because doing so would be an extremely strong signal to the market that he no longer trusts his investments.
This is also fundamentally how retirement (normally) works: Joe Schmo doesn't liquidate all of his retirement accounts the day he turns 65; he draws on them (and potentially incurs taxation) as necessary. Tens of millions of people in the developed world retire every year; the market doesn't crash when they do.
To whit: there's nothing new about any of this. If cryptocurrency is an investment and you hold it like any other, then it behaves like any other. The only material differences appears to be the preponderance of scams and unsustainable behavior (cf. permagrowth around the next great coin).
Not 100% effective - it hasn't destroyed Cuba - but would cut off the supply of money, advertising, and the ability of people to pay ransoms in it.
- Section 6, Bitcoin Whitepaper
A nation state wanting to destabilize or destroy trust in a given cryptocurrency might not fit that definition.
I don't think that's a likely outcome, though – governments have much more economical tools at their disposal achieving the same outcome.