Bitcoins. Are they a net negative to human society?

Great Debates
162

Exactly. Quite frankly by making these ridiculously bad arguments and indeed being a major player in why the scenario went off the rails makes him come across as the sort of person who thinks he’s smarter than everyone else who got caught because he knows not to write “For Illegal Crimes Heh Heh Heh” on the check memo line.

Now I’m assuming that’s not in fact the case and he does have a more compelling argument but this sort of approach really does cast a lot of doubt on that. Claiming that “good faith” isn’t reciprocated merely because it’s objected to in a completely reasonable rebuttal is highly obnoxious too.

What’s your point exactly? Alright, I’ll hand it to you. Let’s take two abstract entities, with no human foibles or personalities or motivations or real life practicalities that are vulnerable to centuries of amassed investigating and prosecuting experience. Abstract invisible points in space. Actually, nix the points in space, I’d hate for there to be any implied connection to the physical world that you’d accuse me of relying upon outside of the bitcoin technology itself. Two abstract concepts who can fund initial bitcoin wallets in a completely magical untraceable way, but rely on the blockchain to route a transaction between them. Ya got us. The abstract concepts are safe, no jail will hold them because no investigation will be able to link a transaction path to them that goes through the bitcoin blockchain. It’s just too anonymous! Are you happy now? Does this win satisfy you?

I don’t think anyone here is claiming that blockchain insecurity is the reason why this is infallible in the real life. Of course they’re talking about human failure scenarios. That’s how things fail no matter what underlying transaction technology you’re using. You’ve got to get the amount into and out of the system at the endpoints for it to be useful. You’ve got to want something to happen outside of the blockchain to make it worthwhile. And that’s where it falls back to “yes, but I’m smarter than all the other guys that got caught”. And you’ll have to forgive us if we’re skeptical of that after after some implausibly bad arguments that apparently we’re not allowed to object to.

163

The pro-Bitcoin arguments here remind me of “video game logic”, like how if you put a bucket over a shopkeeper’s head, he won’t notice you stealing from him; or if you hide in a cardboard box the guards won’t notice anything suspicious.

It’s absurd to think that a transient wallet will slow down the police by more than an infinitesimal amount, or that it will somehow give you plausible deniability. No one’s going to be fooled by that.

The other thing this reminds me of is the one-time pad (OTP). An OTP is a mathematically perfect form of encryption–really, truly perfect, unlike most crypto schemes (including Bitcoin) which are just probabilistic in nature. But essentially nobody uses OTPs, because in actual practice they’re junk. It’s hard to distribute the keys, and if you make the tiniest slipup like reusing a key then you’ve allowed the adversary to decrypt your stuff trivially.

Is it OTP’s “fault” when it gets broken? On one hand, no; it’s mathematically perfect. And yet as a practical encryption scheme it’s virtually worthless. The features which make it “perfect” are those that make it so very fragile. The same seems to be true of Bitcoin.

164

How easy it is to find out who is behind a wallet will depend a lot on what info the authorities already have about the wallets in question. The blockchain doesn’t store the IP address or anything about who initiated the transaction, so even knowing where to start looking in the first place will be difficult. If someone uses their wallet to buy a Tesla, it will be very easy to find out who that was. Tesla’s wallet ID is public and they are a US company. The authorities could get a warrant and get Tesla to say who took delivery of the car. But if the payment was done through murky exchanges who don’t keep logs and are in countries which don’t cooperate with the US government, it will be very difficult to find out any info about the wallets.

This difficulty means that Bitcoin is probably the best way by far to do anonymous transactions for the average person. Teams of investigators will try to link a drug kingpin to a wallet and find all the people behind the linked wallets, but if you’re just a regular person they won’t make the effort. This now means that anyone can pay for illegal services and products with a high degree of convenience and anonymity. If someone wants to download the latest Marvel movie before it’s in theaters, they now have a way to pay a Ukranian hacker who will offer the download key for a certain price. Without Bitcoin, that kind of transaction would not really be possible. And even if the Ukranian hacker is busted, there’s no guarantee that the authorities will be able to discover his wallet ID or who paid into that wallet. It may not be 100% guaranteed anonymity, but it’s pretty close as long as someone is reasonably careful.

165

I assure that several people started this thread asserting just that, and you seem to have entered the thread at the point where we shook out those misconceptions (maybe). My struggle in this thread is I’m trying to hit multiple goalposts that are on wheels. We started out this thread with people believing bitcoin was insecure because of blatantly wrong misconceptions, like “every bitcoin leaves a trail!” No, wrong, there’s actually no such thing as a bitcoin, and there’s no identifiable entity changing hands (like a dollar bill or a diamond with a serial number on it). I’m still not sure everyone gets this, to be honest.

As we corrected these misconceptions one by one, the initial thesis never changed a single iota: bitcoin can’t be anonymous, if not for the reasons I first guessed, then there’s got to be some other reason! So the goalposts moved, and people started crafting increasingly stupid scenarios, like someone mingling legit funds with tainted funds in the same wallet, because nobody wanted to admit they embarked on this thread with strong opinions based on a knee-slappingly bad misunderstanding of the technology.

So, sure, let’s retreat to the most weakly stated (and therefore most defensible) assertion that can still stand. Humans are stupid, they make mistakes. Okay, you got me! Happy now? But what does this observation even prove? Whether it’s dollars or gold or diamonds or whatever, all of these methods must expose themselves to the real-world taint of human stupidity. Nobody ever argued that Bitcoin is special! I argue only that, of those value-exchange technologies, Bitcoin is the one that can best be hardened.*.

(* deliberately not mentioning more-hardened cryptocoins like Monero here because I don’t want to add confusion).

And the anti-Bitcoin arguments remind me of my neighbor who, aggrieved about dog mess on his lawn, once went to the police with a bag of dog waste. “There’s a physical trail! I have a bag of DNA evidence right here!” And because technically, theoretically, he’s correct in a sense, it’s nigh impossible to persuade him that it doesn’t matter because nobody’s got time for that shit. Specifically it’s a huge and possibly insurmountable real-world time investment to identify every single law-abiding dog owner in the world, whose dogs may or may not even be registered, and ask them nicely to give a sample for comparison (and why cooperate? what would even be the basis for that warrant?)

It’s super easy to look at a disassembled haystack of 3 straws plus a rather large needle and say “look how easily needles are found in haystacks!” It’s a different scenario when someone who knows what they’re doing doesn’t want you to find it.

And let’s run with this analogy. OTP isn’t ideal for the exact reason you mentioned, because it’s less practical. But guess what, the entire modern finance system runs on cryptography that’s less secure than OTP. If you want to compare bitcoin to a crypto algorithm, compare it to a workhorse like RSA. It’s fully exposed to side-chain attacks when keys are exhange, but military and governments use it because good enough is good enough. That’s the analogy you should keep in mind.

166

There at least seems to be a consensus on both sides here bitcoin is mostly useful for crime, the only question is about how easy it is for authorities to track it. On that basis alone I think we can answer the original question as “Yes, they are a net negative to human society.”