14 votes

Why Bitcoin CANNOT be Controlled by Government:

Here on the Daily Paul, I've read a lot of comments from Bitcoin skeptics who are (rightfully) curious how we Bitcoiners know government will not "step in and take control of Bitcoin." Stated very simply, they can't.

This statement, too, is met with skepticism since common knowledge tells us that EVERY technology can be hacked and commandeered. The nuance with Bitcoin is that it is both a currency technology AND a protocol.

A protocol in the technology world is like a language. It has a dictionary, grammar, and rules. If someone were to "take over" the English language and change a bunch of the words and rules, it ceases to be English. The same is true of Bitcoin.

Suppose someone didn't like one of Bitcoins rules, for example, the hard limit of 21M BTC. He could set out to re-write the Bitcoin protocol and begin generating coins. However, the coins created by this new protocol could not be spent on the Bitcoin network. To return to the language analogy, it would be like speaking Klingon to someone who's never even heard of Star Trek. They are simply incompatible.

So that's how Bitcoin as a Protocol protects it from being changed. But even if one agrees to all the rules, can it still be affected, seized, and controlled by government or a nefarious entity?

It's a bold claim to state that a technology is un-hackable, but by any reasonable measure, Bitcoin is exactly that. To understand how this is possible, you must also have an understanding of cryptography and mathematics.

When a user sends bitcoins to another user, he broadcasts it to every single user on the network. It's almost like a Tweet in that respect. (Don't worry, the users on each end of the transaction are only identified by their Bitcoin address - so long as the users haven't publicly disclosed their Bitcoin address, they may remain unidentifiable.)

With all the transactions going on, the Bitcoin network is very noisy. But there are users who are gathering all the transactions that are floating around into blocks. In order to validate that block of transactions, one has to audit that the users sending the Bitcoins actually have the coins to spend. This is where the Cryptography comes in.

The transactions are locked with a key that can ONLY be unlocked using guess-and-check. They CANNOT be revese engineered. (To understand how this is possible, see this video for a quick Cryptography 101: https://www.youtube.com/watch?v=3QnD2c4Xovk). So while the government may be "snooping" on your transactions, so is everybody else... and this is encouraged! (Remember, you are anonymous until you publicly disclose your Bitcoin address!)

The users who are working to create these blocks are ACTIVELY trying to guess-and-check these transaction blocks to ensure that they are valid transactions. In fact, they are in a race to do so! The user that is the quickest to find the solution to these blocks of transactions and publishes the result to the "Block Chain" receives a reward.

Now because the users are in a competition to audit the Block Chain, it becomes extraordinarily difficult to "control" Bitcoin transactions in any way. One must possess over half the power of the entire Bitcoin network! At present, this network already has over 10 times the hashing (decrypting) power of the world's most powerful super-computer, and it's increasing by the day. Building a government hack machine is already cost-prohibitive by any reasonable standards.

That doesn't mean that such a move isn't a concern to Bitcoin users. (It is.) The implications of such an attack have been calculated, and though an attacker couldn't replace any preceding transactions (steal your Bitcoins) one *could* falsify future transactions. Such an attack, however, would be very difficult and very costly to maintain. (As soon as the attack ended, the Bitcoin network would revert to its previous state. The attack would literally need to be carried out until the end of time.)

Most likely, users would see the attack coming and even those who are not active miners (like myself) would add their hashing power to the network to protect Bitcoin, or as a worst-cast scenario, switch to an alternate cyrptocurrency like Litecoin, which has many of the same properties as Bitcoin, but uses a different cryptographic algorithm (thus, requiring a new Hack Machine).

It is generally believed that these disaster scenarios have an *incredibly* small likelihood of occurring, much less being successful.

It is important that people new to Bitcoin know the risks before adopting, which why I included information about the ("51% attack"). I know full well that some of the skeptics will jump on and blindly state, "See? Bitcoin is hackable. DOA." I ask that these people pause before posting and consider their words with care. Bitcoin as it stands today is more secure than any bank, and it cannot be seized or intercepted by government. It is true ownership of one's purchasing power, and a viable alternative to FRNs.

PMs are still an important hedge, but unlike PMs, Bitcoin is being used and accepted as payment today! More and more websites and physical establishments are accepting Bitcoin every day. They are people who are sick of being told what they can and cannot buy/sell. They are people who are sick of having their money confiscated annually to fund other people's wars. They are people who want to OWN their purchasing power, and have taken that desire into their own hands.

Bitcoin is an extremely powerful technology. It circumvents the banks & government authority... and unlike PMs, it can be perfectly hidden, and is resistant to force.

I firmly believe that Bitcoin is how we can peacefully End the Fed.



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Garan's picture

Excellent Article. Best intro to BitCoin I have seen.

No kidding.

I have a technical background, yet can't digest poorly explained articles (which can be like poison to the mind).
Yours is the best intro I have seen both highly technical and not.

The only area that seems like too much of a explanatory-jump is when you move from the Bitcoin rules and the incompatibility of non-protocol coins, to the conclusive summary statement.

I think something needs to be said to help the reader somewhat understand how a protocol can be inseparable from the coin.

That's the only part that skipped a beat for me.

Overall. Excellent job.

Thanks!

Thanks for the feedback. I've tried to clarify that part of the article.

If feds control the internet,

If feds control the internet, then they also control access to bitcoins.

If you don't think they control the internet, start reading around.

BitCoin CIA Connection

Have you seen this ?

http://www.youtube.com/watch?v=K5VC58gjnjY

____

"Take hold of the future or the future will take hold of you." -- Patrick Dixon

IDK

TruthNeverTold is totally off his rocker when he talks about Bit Coin, and I'm not a Bit Coin enthusiast.

The CIA... on American soil... what?

Support the Daily Paul by using this link when you visit Amazon.com... http://www.amazon.com/?_encoding=UTF8&tag=bullnotbull-20&lin...

Daily Paul will earn a commission on all of your purchases.

Yes, I've seen it.

Chris Duane ("truth never told") is a known anti-Bitcoin propagandist and this is just another one of his FUD videos.

I hope you don't believe everything you hear.

C'mon, people

The Julian Assange character would never lie to you. Right, Mr. Sands?

Ha.

The feds can't control, but can significantly disrupt it

First, the feds will go after the exchanges. I predict that companies like MtGox and Bitinstant will be harassed and targeted until they shut down. That will make it very difficult for anyone to exchange any other form of currency for bitcoins. You can still find an individual to trade currency for bitcoins, but that is much harder and slower than large exchange. It also increases the likelihood of fraud.

Next, the government will try to regulate the forms of payment companies can accept. I predict that you will hear a mudslinging campaign from the media and government linking bitcoins with anything nefarious that they can; money laundering, organized crime, drug dealing, and, of course, terrorism. After that, there will be a push for laws to make it illegal for a company to accept bitcoins as payment.

With the above two items in place, the only way to use bitcoins will be locally in barter directly with someone else, or on the black market. The blockchain and bitcoin protocol may be strong, but there are ways to disrupt it. I bet my bottom dollar on it. The feds will stamp out any viable currency that they don't control.

We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.

-C. S. Lewis

You've got a great point, but...

I think you make a great point here. These things WILL happen. I don't think it's a matter of if but when.

The thing is, libertarians have often asked others "Where is your line in the sand?" What is the action taken by government that, if enacted, will push you to the point of no return in terms of how you choose to deal with said government?

Now, I don't always like this question being posed because it usually leads to some pointless (and counter-productive) debate about killing cops or military personnel or government officials, but I think it's a very poignant question in the context of Bitcoin.

If the government (pick yours, I live in Canada but I'm sure that won't stop the Nazi Amerikan establishment from going after me as well) cracks down on Bitcoin to the point of making it akin to terrorism to be dealing in Bitcoin, well, guess what? There's my "line in the sand". That's a point where I won't passively allow myself to be pushed any further into the cage. I am doing it regardless of consequence. I own myself. I'm a sovereign, free, conscious being and can therefore trade with whoever I want for any reason I want using any medium of exchange that I want.

They will have to imprison me to make me stop. If they crack down on my right to trade with my fellow man, that's the last straw. That's the point where I conclude that backing down for purposes of self-preservation will no longer suffice. I will be their "terrorist" (albeit a happy, pro-human non-violent one)... and I don't think I'm alone in this. This would be the final "government has pushed too far" event for many people I think.

I don't care what they try to do with Bitcoin. On this issue, I will no longer play their game and will not back down from threats and intimidation. If they push too far, it is over for the control paradigm in terms of intimidating people into conforming to a system predicated on hatred of human sovereignty and decentralized relationships.

what's sad is, some people

what's sad is, some people probably had the same sentiment when the govt confiscated people's gold in the 30s, yet, here we are.

I do believe you are correct

The Feds will try the mudslinging that you describe.

Yet at the same time, they will continue their other anti-choice campaigns. The "Black Market" won't just exist for hard drugs and assault weapons, but over-taxed cigarettes, over-regulated hand-guns, hell, even soft drinks. The rate at which they are pushing people away from their monopoly on spending, I wouldn't be surprised if Bitcoin is a household name by 2020. How else will you buy a Big Gulp?

Just keep in mind BitTorrent, the technology that allows pirates to connect directly with their peers to download copyrighted materials. Governments and the Copyright Monopolies have put so much work into stopping it and nothing has worked.

The same technology that makes BitTorrent impervious is what makes Bitcoin impervious.

Everything...

You just said is very likely and expected. Remember my friend never understate the power of the free market; bit coin USERS will be disrupted and this will only increase its reliability and confidence for disruption would be proof of bitcoins effectivity. Bit coin was made with all of these challenges in mind and all of these challenges already have been solved ahead of time. Yes they can disrupt the users of ANY currency. (Like we already experience with gold silver and even fiat).

Take down all of the exchange companies and new ones will flourish around the globe!!!!!

"We’ve moved beyond the Mises textbook. We’re running in the open market." - Erik Voorhees

meekandmild's picture

Is there a list of businesses who accept Bitcoin?

.

Is the DailyPaul a "business" ?

I think it is, and a GREAT ONE AT THAT! :)

http://www.dailypaul.com/270932/dp-fundraiser-final-push

Here is the list of all the bitcoins Michael publicly accepted during this donation drive:

http://blockchain.info/address/16oZXSGAcDrSbZeBnSu84w5UWwbLt...

52.96 BTC

WINNING!

Just plain 'Happy'about the direction the world is taking! Especially if we live to reach LEV [Longevity Escape Velocity]

oops, double-post

.

Example of a GREAT WEBSITE accepting bitcoin!!!

Right here! The Daily Paul accepts it too, though Michael still needs to add his address to his "donations" page.

His last drive earned him 52.97 BTC from 55 individual donations. The last one was on March 1st for 1 BTC. At today's exchange rate of $73 it is worth about $3866!

How do I know all this?

Well, Bitcoin is beautifully TRANSPARENT:

http://blockchain.info/address/16oZXSGAcDrSbZeBnSu84w5UWwbLt...

BUT,

at the same time, there is no way of knowing who the donors were. Thus Michael chose to protect the identity of his Bitcoin donors.

Thank you Michael! :)

Just plain 'Happy'about the direction the world is taking! Especially if we live to reach LEV [Longevity Escape Velocity]