You stumble upon a magical lamp. You rub it and a djinni appears. However, instead of granting you a wish, the bastard offers you a deal.
Should you accept, your country's government will tomorrow pass a Bitcoin Law similar to El Salvador's, meaning Bitcoin will function as legal tender alongside your current currency.
  • You can pay your income tax with Bitcoin.
  • Bitcoin is exempt from capital gains taxes.
  • Merchants are obligated to accept Bitcoin as payment (with conversion opt-in like in El Salvador).
  • You get to keep your coins in self-custody (but keep reading).
Along with that, you must accept a full KYC, AML, surveillance package.
  • To use Bitcoin legally, you must surrender your addresses/utxo ids/xpubs to a centralized government database and declare where you got it from. You receive a government-signed certificate with your "Financial ID" which you can keep as an app on your phone.
  • When accepting on-chain payments, merchants are obligated to verify the sender address against said database and your "Finacial ID" certificate.
  • You can't legally use mixed coins unless you "come clean" by declaring them, but you may be investigated and required to deanonymize the full chain that can be traced back to a purchase you made, say on a CEX.
  • For Lightning, merchants are obligated to store your "Financial ID" along with every paid invoice (preferably, it is embedded in the invoice data), so the point of sale must first scan your phone for the ID before issuing an invoice for payment.
Question: Would you accept this deal?
Nuances to consider:
  • If you think the trade-off is draconian, you should be made aware that this is pretty much a reality already in cashless societies (which includes, for example, most of Europe). It's just that the KYC info resides currently with banks and card providers and there is no centralized mass surveillance (as far as we know) other than mandatory reporting of transactions over X. But authorities can request this information at any point and piece together your entire digital financial history when needed.
  • What I described is what's legally required, but this does not preclude the existence of an inevitable grey zone/black market. Just like in the fiat world, many businesses use cash (or even some digital rails) to keep things off the books and dodge taxes. It's possible, just illegal, punishable and hard to enforce.
  • The "Financial ID" is not a revolutionary concept either. Many countries (again, hello European Megastate) already issue their citizens digital state IDs that we keep on our phones along with vaccination certificates and other state documents.
Bonus question: In such a world, would you conform to the law or try to stay in the grey zone where possible?
Accept, mostly compliant3.0%
Accept, grey zone, if possible15.2%
Reject81.8%
33 votes \ poll ended
So do (bookkeeping/reporting) work or be labeled a criminal... sounds like slavery.
They want you to potentially self-incriminate... sounds like a 5th amendment violation (USA).
Reject. Being "rich" means more than having a fat stack. Its the freedom that stack affords you. If you must surrender freedom for riches, you will have neither.
This revolution is about separation of money and state. If the state controls BTC, I'd sooner burn it all and start fresh using something they can't control.
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The State does not exactly "control" the Bitcoin, as in the network, in this scenario.
They just want full surveillance, which is more or less true for the fiat world as well - any bigger fiat transfer you make may trigger a manual check and require you to say whom are you sending to, why, and where did you get it from. I fully expect the State would want similar controls for Bitcoin.
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They don't control the coin, but they can point the gun at those who control keys. Surveillance is how they learn where to point the gun. Can't have freedom without privacy.
Surrender unto Caeser that which is Caeser's. Bitcoin is not a product of states, it was created to spite them.
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It's coming anyway and there is no way to stop it, because it's within the realm of politics and not the protocol. Grey markets will of course exist. But it's different from cash, because cash is more fungible, it has no recorded history of transactions. With Bitcoin, coins used in a grey market (e.g. with a coinjoin history) may be difficult / costly to move to the white market, which may result in a split of the UTXO set into a 'white set' and a 'grey set'. Such a split may make the grey markets less efficient due to the lack of division of labour and legal protections.
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for those who reject this deal, i'm curious ... realistically, in dealing with governments and organizations hell-bent on controlling everything, what do you see as the alternative?
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Starve the beast. Be a martyr for freedom. Live a life such that when you die, they will say, "he fought". Make them say they control you. Make them say it out loud.
Remind the tyrants that their blood is most refreshing to the Tree of Liberty.
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There should be some that won't, & they'll be rewarded economically by bitcoiners moving there.
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Less government power obviously. Citizens pushing back and shrinking the government to a more acceptable size and role.
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I think there is merit to considering the deal.
First of all, you're not deciding for yourself, but for your entire country. Some may be unphased by this fact but it's worth considering that not everyone is a rebel like you.
Second, like I tried to sneakily point out in the nuance section, most of the trade-offs are already a thing in most of the developed world, so it's not like we're significantly sliding towards totalitarianism.
Third, this is not necessarily a "capture" of Bitcoin. The State does not interfere with the network itself, just makes "best effort" to ensure tax compliance and control of criminal funding (granted, it's an ineffective attempt, but still probably the best a State can do).
Fourth, there will be inevitable grey zone anyway. The question is, would you go out of your way to seek out merchants willing to trade with you off the books? (Read: commit crime.)
Now the upside is, we're planting a huge "Trojan Horse of Freedom" (as Bitcoin has been characterized). Now, I only mentioned that this is the initial law that is passed by the will of the djinni, but it is worth considering how the situation evolves in years to come.
  • Would the people eventually demand further concession and abolishing of surveillance? (Trojan Horse eventually destroys the system from within.)
  • Or would a State that has given up control of monetary policy be able to form a partnership with its citizens (as it should be in a democracy) such that people would not mind complying?
I guess I shouldn't be surprised that most people here would rebel against this idea, but I actually think we should expect similar controls if a western democracy ever adopts Bitcoin as legal tender (for whatever reason).
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The state has the power that you allow them to have
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Who in their right mind would trade the freedom of Bitcoin for some CBDC that keeps you under surveillance?
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Where is a CBDC in the deal? The Bitcoin network operates as usual and you get to self-custody your coins.
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Fuck no.
Bitcoin is for anyone; not everyone.
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It would need to be rejected. Centralization is among other things a large security issue.
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There is no network centralization in the deal. The network continues to operate as usual and you even get to self-custody your coins.
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A centralized entity is taking all your info though right? They're collecting data thats like a honey pot to hackers. They steal that info, then target all the largest holders of bitcoin
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Fuck the djinni
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