[ExI] Bitcoin

[Anders Sandberg]

On 04/04/2013 00:34, Mirco Romanato wrote:
>>  From a theoretical perspective I feel torn. Bitcoin is a
>> crypto-libertarian dream, a currency free from government control where
>> you can invent new financial instruments with an afternoon of
>> web-programming. This is what we were talking about back in the 90s!
>> Yay! At last! But... while I think SilkRoad is very neat and that people
>> should be allowed to buy drugs, it shows that bitcoin might make it *too
>> easy* to run black market activity. It seems perfect for hiring people
>> to rough others up, or even assassination markets - and it might allow
>> buyers to avoid the currently tricky step of contacting unsavory
>> characters. From our experience with viruses and exploits, the scary
>> explosion happens when an economic driver appears and starts to feed a
>> bad business.
> This is a free market in private law enforcement, I would say.
>

There is an  asymmetry between the criminal market and the law 
enforcement market. Somebody can set up a roughing-up service, and it 
would connect people who wants to rough up other people with nasty 
characters willing to do it. These nasty characters already exist and 
perform some violence, but now they can be untraceably hired and 
directed against targets. If I want to set up a bitcoin-enabled law 
enforcement organisation it needs to patrol around whoever or whatever 
they are paid to protect, or provide plausible levels of deterrence by 
coming after attackers. Note that this doesn't benefit from the 
anonymity like the criminals: being paid untraceably by an unknown party 
doesn't help the law enforcement do its job better. Since it is a group 
effort members need to coordinate and trust each other, and to be 
effective they need a certain organisation size. The only thing it helps 
is to reduce the risk to the hirer of being prosecuted as part of 
"conspiracy to vigiliantism" or whatever if the law enforcement is not 
officially recognized (and if it is a vanilla security firm, then there 
are likely other ways of paying anonymously).

It is the same thing with kidnapping: currently the main problem is 
getting paid untraceably. Better untraceable payment methods, likely 
more kidnappings. I also suspect one reason the various frauds and 
thefts of bitcoins have been successful (besides clients being unused to 
how to secure them) is that the fencing is trivial. All crimes and 
activities like corruption where "follow the money" is a good heuristic 
to catch people benefit from bitcoin.

These downsides are by no means an argument that bitcoin will be an 
overall bad. But it is a disruptive technology we do not fully see the 
implications of. The obvious sides - anonymity, weakening state power, 
algorithmic money supply - are just the first order sides. There are 
deeper implications we will discover only as they emerge - the 
sending-is-free property of email as it was designed way back does 
contain spam as an implication.

-- 
Anders Sandberg,
Future of Humanity Institute
Oxford Martin School
Faculty of Philosophy
Oxford University