Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
Unfortunately, transaction records like financial records are currently afforded a very low level of legal protection in the U.S., so the "warrant" and "probable cause" parts don't describe current practice. (That would be the case for a telephone wiretap, or a search of your home, but not for access to your financial records.)
https://en.wikipedia.org/wiki/Third-party_doctrine
One thing that I don't think the press ever managed to chase down -- following the Snowden revelations -- is the rumor that there was also a "bulk financial records program" which would have involved intelligence agencies and/or law enforcement getting access to search all bank transactions, without any individualized suspicion. (Recall that one thing Snowden revealed is that there was a bulk telephone records program, in which telephone metadata was turned over to the government in bulk, without individualized suspicion, which the government justified in part due to the third-party doctrine.)
In the government's view, the third-party doctrine means that it's never a fourth amendment violation if the government compels access to most kinds of transaction data in the possession of some kind of service provider or intermediary. (Some of those kinds of data may have higher levels of statutory protection but the government's position, as I understand it, has been that it's not an infringement of your fourth amendment rights even if those protections are circumvented or ignored.)
(Technically the third party doctrine would still apply in any case, because this would be a statutory protection rather than a constitutional protection.)
EG, technically cops don't need a warrant or subpoena to ask Google where you were on a particular day. Though, in practice, they often still get one because they know that it's kinda unfair and judicial or statutory protections are probably coming soon and they don't want to jeopardize the prosecution should the law change during the investigation.
For example, the January 6 insurrectionists are largely being caught through location data obtained under warrant from Google. Do they technically need the warrant? No. And if they were investigating, like, shoplifters, they probably wouldn't have bothered to get one. But they don't want to let thousands of insurrectionists off the hook in case this is the case where the courts decide to flip.
A cross-country wire payment visits multiple jurisdictions already with the US getting first dibs via SWIFT.
My local IRS can also read them.
So they are effectively public for all major actors.
> Using bitcoin to avoid government surveillance is like saving your passport on a billboard to avoid hackers.
And I'm saying its main purpose is not to avoid surveillance but at as an inflation hedge.
The fact that the governments also see in real time should count as a vote of no confidence.
>>> The government needs a warrant after convincing a judge
Granted, it's not for your local drug dealer but for higher level surveillance.
not everywhere. In some places in Europe (e.g. Germany) the IRS is able to pull up your banking history without the bank having to notify you, and they can query a subset of the info (time of account opening, current deposit, personal info) without even notifying the bank.
Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
The bank will not be informed of the invasion of privacy (the excuse is so that banking customers don't have any negative impact when they realize customers get probed - it's probably more to avoid spooking the public about the frequency of how often this happens).
> Also the request must be authorized by the state tax office, it's not like every government employee can request and obtain the list of all of your transactions.
you're mistaken. These are the organs which have automated access (in addition to the IRS):
- social services
- job center
- bailiff
- state attorney
- customs authorities
[1] in German (just run through any translate service): https://www.vlh.de/wissen-service/steuer-nachrichten/kontena...
[2] https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
The usual way bitcoin payments are traceable are due to crypto-fiat exchanges requiring that information (AML & KYC regulations).
Wouldn't that make it effectively equivalent?
Do you know what else is a great inflation hedge? An index of stocks. Unlike BTC, the stocks also pay dividends, are backed by real economic activity, enjoy massively lower volatility, don't suffer from large fees, are never going to be banned, aren't tainted by endemic fraud and scam, and even produce a tiny bit of societal good. Stocks are objectively a better inflation hedge than BTC in just about every aspect, apart from not being a novel tech bro toy.
With bank ledgers, the computation energy is a minimized side effect that does not even show up as a rounding error in the financial reports of companies, and they do tens of thousands of transactions per second.
For cryptocurrencies, burning the energy is a key feature - 100% correlated to the proof of work and increasing by design. This achieves handfuls of transactions per second with energy burn exceeding that of nations.
Children's cartoons make better representations of the real world than that post.
I can issue fiat money myself. Here: "I owe you 5 CKD." What is the value of that? Zero. You don't know me, you have no reason to trust me, you cannot take my IOU to court and force my property to be seized. Your 5 CKD is worthless, in contrast to 5 USD.
Not at all. You can't take your dollars to the issuer (the Federal Reserve) and have them redeemed for goods and services. They are not redeemable, hence not "backed". Fiat simply means not backed.
> Why else do non-US residents value the USD?
Do you mean why they demand USD? For different reasons. One reason is to pay for goods and services imported from the US. Another reason is to use it as reserve currency.
> And why does EURUSD vary with relative economic output of the two countries?
It doesn't.
So it's alright because western countries aren't suffering any side effects?
> Hyperinflation is a made-up problem.
My country suffered hyperinflation multiple times. It was so bad we had to create new currencies with every iteration. I think the most recent episode happened in the 90s or so.
For most people in the United States, some inflation would be objectively positive.
[0]: https://www.bankrate.com/personal-finance/debt/average-ameri...
[0]: https://www.businessinsider.com/bottom-half-of-americans-neg...
In objective reality, setting aside philosophical objections to usury, since inflation devalues debt as well as savings it is a net benefit to the above mentioned Americans.
Given each bitcoin breaks down into 100 million sathosis you can always buy/sell parts of a bitcoin. Doing the same with other assets classes is harder or not even possible.
Dollars used to be backed by gold and it was still fiat money.
Bitcoin is backed by its own scarcity.
Fiat is typically contrasted with commodity or representational currencies. The key element is that fiat has no intrinsic value. It's usually issued by a government, but need not be. The value comes from faith.
Bitcoin meets all the qualifications save government issuance. The bits themselves have no value. The currency's value is based on faith in both the underlying computations and in the existence of a market for trading bitcoin.
Wikipedia gives the definition "often by government regulation" (implying not necessarily) citing Goldberg, Dror (2005). "Famous Myths of "Fiat Money"". Journal of Money, Credit and Banking. 37 (5): 957–967. doi:10.1353/mcb.2005.0052. JSTOR 3839155. S2CID 54713138.
Just because something takes a while to produce does not give something value otherwise I’d be making a killing on my Etsy store
Also that fixed schedule will end soon.
Doesn't mean that other things couldn't cause it to be devalued.
(and, of course, if the network consensus shifts in a way that changes the issuance rate... though perhaps it wouldn't really "be bitcoin" if that happened.)
What exactly does btc solve or bring to the table? People buy it “cause it goes up”. That won’t end well.
Feels like a bunch of people buying digits rocks.
All I'm doing, is explaining as best I can, why someone might see it as a "hedge" against large amounts of money printing.
If it is valued by people at some time (it has a price that people are buying and selling it at, whether in exchange for some currency like USD or for pizzas), and the value for the USD (in the sense of "how many pizzas / market-basket-of-goods does it buy?") is going down as a result of the quantity of money being printed-and-introduced-into-the-economy being unexpectedly very large, if that sort of event isn't positively correlated (as in, in the probabilities that people assign to future outcomes) with the value (in the same sense of number of pizzas) of btc going down, that could be something people see as merit-worthy in it.
People conceivably could want to hold something which is both easily exchangable, and highly subdivisible, and which has such a property, .... provided that they didn't expect the number of pizzas it buys to rapidly decrease.
I do wonder though, why there isn't simply a common financial instrument which pays out with the price of some market basket of goods at a designated time? It seems like such an instrument would serve much the same appeal.
Perhaps the issue is that, in order for people to be willing to issue such an asset, one would have to pay them a large amount to account for the risk that they are taking on?
There's also the issue that one would presumably have to keep actively buying more of such an instrument if one wanted to hold large portions of it over time.
I think it's more like digital beanie babies but to each their own :)
In the year 2140. And the end strengthens the point you're disputing.
From a mathematical crypto standpoint it's sorta good, but again what value has been created? It's not like the blockchain is now saving us time and effort in factorization that can be applied to real world problems that would otherwise need to be recalculated regularly, which is a pity.
Of course you can truthfully say fiat currencies are totally notional, but as a practical matter the value of a fiat currency reposes economic stability and security offered by whatever government issues it (which may or may not be valued by other people).
A backed currency means another entity is willing to guarantee they will trade the currency for something else. In the example of the gold standard, this means the government would exchange dollars for a certain fixed amount of gold. This meant that dollars could be worth more than gold, but theoretically wouldn’t fall below their fixed value in gold, because at that point people would trade them in for the gold.
You can’t just redefine backed to mean something that is expensive to produce. If something is expensive to produce it also doesn’t mean it has any intrinsic value.
(I’m also not arguing that modern fiat currencies are backed - in fact they are not backed by definition! I just get frustrated by all the fake economic mumbo-jumbo about Bitcoin).
I used to be able to trade dollars for gold and vice versa, at a fixed price, guaranteed.
I can't trade bitcoin for 'math'. No-one is storing energy reserves in case there's a run on people converting bitcoin to energy. Bitcoin is not backed by anything.
And if you want to be that picky, Bitcoin is backed by math and energy (or at least heat). You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
Can you show me where I'm swapping? I don't think I am. It's not semantics anyway, its a fundamental definition of what a backed currency means! The value of my car isn't backed by all the petrol I have used in it, nor is bitcoin backed by the electricity used to produce it.
> You can exchange bitcoin at any time by doing a 1 satoshi transaction and pay the transaction fees. As a result, you will redeem the answer to a very specific math problem and some heat that will be delivered to you at the rate of diffusion through the atmosphere.
This is not what backing means - at all. Backing doesn't mean "is expensive to make", it means its value "has a direct correspondence to the cost of another commodity".
So a few questions to test if it is backed:
* Is the price of bitcoin directly linked to the cost of electricity? (No - there is a relationship between bitcoin price and the amount of energy used for bitcoin mining, but I can't track electricity and use that to guess what the cost of a bitcoin is and visa-versa). Meanwhile, Tether IS backed by USD so I can use the historic value of tether in BTC to act as a proxy to understand how much BTC cost in USD.
* Have we seen the cost of bitcoin track global electricity prices? (No!)
* If abundant cheap energy is discovered tomorrow, does bitcoin become valueless? (I believe no, it maintains value!)
Almost all modern currencies aren't backed, nor do they need to be, so this is a weird hill to fight for.
BitCoin's major purpose is as a hedge to massive fiat printing.