Bitcoin Traceability

Yves Smith aka Susan Weber aggregates the best stuff she finds on the Web, adds some comment to it and gives it to me in my morning briefing site: Naked Capitalism.  My goto site for the best stuff.

Concerning Bitcoin she prefaced with the following comment a link cross post entitled: Governments Will Struggle to Control Bitcoin

Yves here. I was extremely puzzled to see various US regulators make cautiously positive remarks about Bitcoin in Congressional hearings. One would expect them to be opposed.

If Yves is puzzled then so am I.  There must be some fire behind the smoke.

I recall the joy of finally cutting the land line telephone cord.  Free at last.  I just naturally hated the arrogance and domination of the telephone company.  Same feeling when I cut cable tv.  However, I am still tied to the internet service the same cable company provides and pay 10 bucks extra for it because I do not also have their cable tv service.

There was also an icing on the cake of cutting land line service.  My telephone number was portable.  It was my number to take with me.  I got out of the land line game and took my ball with me as well.  Joy!

In hindsight, number portability was not only a joy to me but a joy to any entity that wanted another persistent ID number that would follow me everywhere.  Now connected to my cell phone.  Whoever that entity was saw the future where this persistent ID would be valuable to them for some reason.

Entities have always sought to uniquely identify individuals for some reason.  That is why parents give children names.  Even if it is only number one (n number) son/daughter.  An identity that can be associated with attributes unique to that identity that serve to further express the uniqueness of that identity lest there be any confusion or ambiguity.

Christmas is coming.  The holy family was on the move because of a decree to register in the city of their origin, maybe for tax collection purposes?  State control of personal identification.  Social security numbers serve that modern purpose.  I had a service number in the navy.  Originally a 6 digit number then the military changed to using the SSN as the military service number.  I wore it on a metal tag that would be wedged in my mouth if to identify me if I were killed in action.  I knew what that notch in the tag was for.  It was all planned out in advance by someone to be sure that I would be identified with little doubt when the time came.

Money transactions pervade everything we do.  Transactions with digital money connect us to the things that either add or subtract to financial accounts that hold our money.  The only other source of transactions providing as much information are our internet communications.  Information we originate by typing something into a keyboard related to whatever that entry connects us to, perhaps with a payload in the connection like the payload of email content.  Simply going to a website is payload information.

Increasingly we do not even have to overtly enter our identification into the internet.  It is entered for us by virtue of the continuously broadcast wifi MAC address of our computer devices and the extent to which that device is carried with us at all times like a dog tag around the neck.

The cross post link that discusses the government struggle to control Bitcoin is probably not so much control of bitcoin but aimed at control of entities that use the Bitcoin system.  Potentially everyone.  Universal not if but when Bitcoin becomes the universal money of exchange.  Someone is looking forward to that time and it will happen.  Very soon, I think.  Sooner than expected.  Things happen quickly in a crises.

My proposed monetary system is a totally traceable system.  Money stays in a single record independent of account but must be related to an absolutely identified account owner.  Ownership of the single unit dollar changes with every transaction.  The unit dollar does not move from account to account.  The unit dollar is a fixed record.  The owning account to which it is associated is the only thing that changes.  Current owner of the dollar moves to new owner of each dollar with a transaction of n dollars.  Date, time, location, and perhaps even the nature of the transaction and the exact item involved.  Associated transaction information mandatory by design or default and maybe optional at the discretion of the owner/receiver of the unit digitized dollar.  The wet dream of the NSA.  Total traceability and the hook on which to hang any and all associated information.

Someone is looking ahead to a near future where information control structures implemented today will pave the way to facilitate information control using intelligence gathering applications that are not possible today but are so obvious they are written on the wall.  Bitcoin is absolutely traceable.  More traceable in the future when forced by the government to adopt tracing mechanisms that will not be voluntary but coerced because by governmental power to control.

This is big news today:  Cayman Islands and Costa Rica agree to share bank account details with US.  The alleged tax havens have signed agreements with the United States to tell the IRS about funds held offshore by Americans.  It is only the beginning of government control of monetary information.  I am rather amazed that it is happening.  The sanctity of confidential information identifying the accounts of the rich is being breached.  I have read and believe that the biggest money laundering entity in the world is the United States.  Perhaps the Caymans is where the dumb money goes.  Money that Wall Street wants to repatriate for control even more than the government to identify it for revenue.

There are government entities beyond the IRS that want this information and it has nothing to do with revenue. Somewhere there is a quid pro quo in this deal.  What could it be?  I suspect that the NSA has discovered so much criminal activity information in its secret intelligence gathering of Cayman Island bank transactions that the government must take action.  However, it cannot take action based on attribution to NSA spying, something that is a very sensitive issue now.  When the account information the NSA already knows is revealed by the banks then the government can take action.  How is that for a theory.  The government strong arms the Cayman Islands into divulging the information the government already knows so the government can act on it.  Wouldn't it be ironic if the government was strong armed into taking this course of action by some entity that has the asymmetrical information advantage over the government and threatened the government with release of that information.  A case of the government being blackmailed into doing the right thing but only to protect factual revelation of government doing the wrong thing.

This is big news.  It came out on Friday, 29 November 2013.  The day after Thanksgiving.  Is that the slowest day of the year for news that must be released but news that not to be noticed by the public?  Might this news be directly related to a new spike in Bitcoin value over the weekend?  Watch the stock market blue chips on Monday? 

Facts are traceable.

Yves here. I was extremely puzzled to see various US regulators make cautiously positive remarks about Bitcoin in Congressional hearings. One would expect them to be opposed.
Read more at http://www.nakedcapitalism.com/2013/11/governments-will-struggle-to-control-bitcoin.html#3yKMIVQIAA6VR7yA.99

Yves here. I was extremely puzzled to see various US regulators make cautiously positive remarks about Bitcoin in Congressional hearings. One would expect them to be opposed.
Read more at http://www.nakedcapitalism.com/2013/11/governments-will-struggle-to-control-bitcoin.html#3yKMIVQIAA6VR7yA.99