Harvey Alpha · @HarveyAlpha
11th Dec 2011 from Twitlonger
#Bitcoin: The Myth of Compromisable #Anonymity. In face of The People's Bank of China statement (http://bit.ly/uO2Nlu), people are beginning to claim mass mining of the Bitcoin currency by governments and central banks--such as China's--will inhibit anonymity of its purchasers and transactions. This is based on the folly assumption that the market for Bitcoin is zero-sum: The distributors of Bitcoin can become centralized and people will not be able to purchase Bitcoins without displaying ID to authorities.
This is easily refuted: Almost anybody can purchase and manufacturer computing power capable of producing Bitcoin, given proper market incentive. Bitcoin-capable hardware, whether it be GPUs or otherwise, will not be regulated and limited by states any time soon. In turn, people outside of government and banking cartels can still sell currency anonymously without requiring valid identification.
Even in the face of restrictions on Bitcoin-capable computer hardware, where one can only purchase Bitcoin and Bitcoin-hardware with a valid government-issued ID, people can still effectively launder Bitcoins through randomized protocols. This means transactions can still be anonymous in the face of a centralized cartel on computing power. This stands under the assumption that people can still act within modern internet protocols with little restriction.
So it stands that if the internet doesn't remain as the decentralized communication protocol today, yes, Bitcoin would be reasonably threatened.
The real question is such a situation feasible? I'll ponder on that and answer it all in good time.
Now, let's say governments and banks acquire numerous amounts of Bitcoin computing power through illicit funds acquired through taxation and monetary inflation; they outprice every small Bitcoin retailer on the block. This will not eliminate anonymity either considering that if anonymity is still highly desirable, people will still pay a higher price for anonymous transactions through the smaller Bitcoin resellers. Easy money won't achieve the centralized fantasy either.
The rational fact is if our current internet freedom is maintained, Bitcoin anonymity and its core virtues are not going anywhere. It will likely remain as the decentralized, anonymous currency it is today.
Harvey Alpha | 1MJFSyQyn9JuT8bUdpfb2XPfoQ9pQv9Tep | This work is licensed under the WTFPL - http://sam.zoy.org/wtfpl/COPYING.