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Meet The New York Superintendant Who Can't Wait To Regulate Bitcoin
Over the weekend, we reported that as Bitcoin's unprecedented, Caracas-like surge continues, legislators are finally starting to pay attention to the digital currency, a process that will culminate with a hearing on November 18 titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies,” in which witness would be invited to testify about "the challenges facing law enforcement and regulatory agencies, and include views from “non-governmental entities who can discuss the promises of virtual currency for the American and global economies." Which as everyone knows is code word for creeping, smothering regulation, especially since as was reported earlier, the FEC is debating allowing the use of Bitcoin for political donations (trust America's corrupt politicians to always pay attention to anything that appreciates a few thousand percent in one year).
However, one person is not waiting that long: Ben Lawsky, the New York financial services superintendent, is looking to regulate Bitcoin now by issuing BitLicenses for business that conduct transactions in Bitcoin, and to that end he will conduct a public hearing to discuss the "burgeoning world of digital money." Participants will discuss the feasibility of a license that would make the virtual currency market more like those for other forms of money. In other words: it will make BitCoin just like the fiat currency it is trying to replace, at least in the eyes of the government. At which point the primary utility of Bitcoin - as an unregulated medium of exchange- itself disappears.
Ben Lawsky with a Bloomberg terminal featured prominently in the background, photo credit NYT
If the plans go ahead, it would be an important step in bringing bitcoin and other virtual currencies closer to the financial mainstream. In another move in the same direction, the Federal Election Commission held a hearing on Thursday in which it considered whether to legalize campaign donations made in virtual currencies.
Since bitcoin was created in 2009 by anonymous programmers, it has frequently been treated with derision by many financial insiders and authorities, who have described it as a speculative mania. Many authorities still hold to that position, but the currency’s online network, which is not controlled by any centralized authority, has survived several crises.
But the truth behind the scenes is simpler:
Several regulators have been looking at ways to make sure virtual money cannot be used for laundering money or other criminal purposes. In October, the federal authorities arrested the operator of an online marketplace where they said bitcoin could be used to buy drugs and other illegal goods.
“The cloak of anonymity provided by virtual currencies has helped support dangerous criminal activity, such as drug smuggling, money laundering, gun running and child pornography,” Mr. Lawsky said in a letter announcing the hearing, which has not yet been scheduled.
So please everyone think of the children and some such hypocrisy.
And speaking of Hypocrisy, the last sentence of this paragraph has no peers:
"Virtual currencies may have a number of legitimate commercial purposes, including the facilitation of financial transactions," Benjamin Lawsky, superintendent of financial services, said in the notice. "That said, NYDFS also believes that it is in the long-term interest of the virtual currency industry to put in place appropriate guardrails that protect consumers, root out illegal activity, and safeguard our national security."
So, shouldn't he be looking at the dollar instead?
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Bitcoin developer Gregory Maxwell: “Problems with SHA-256 would be potentially more problematic as we cannot replace it in a backwards compatible way.”
You assume it needs to be backwards compatible. You really have no idea what you're talking about and obviously just hate bitcoin because you don't understand it and think it threatens your precious metals.
https://en.bitcoin.it/wiki/Contingency_plans#SHA-256_is_broken
http://bitcoin.stackexchange.com/questions/14278/if-sha256-were-compromised-tomorrow-would-bitcoin-collapse-or-is-there-some-co
The statement was made by a developer.
http://bitcoin.org/en/alert/2013-03-11-chain-fork --- remember this? when things break with bitcoin, all is not lost, roll backs are possible as has already been proven. Again, messy and damaging but survivable.
They were running SHA-256.
Satoshi deliberately used the most secure variant of the SHA-256 algorithm, twice. Because of suspicion or paranoia, bitcoin uses a double-hash, which makes reversing it virtually impossible even if backdoored.
What is the name of the variant? Who designed it? Was the NSA involved?
Actually I misremembered, the variant was for the elliptic curve crypto. The story can be found here: https://bitcointalk.org/index.php?topic=151120.0
As far as SHA-256, yes the NSA developed it, and virtually all cryptographers believe it to be secure after independent review. But even that wasn't good enough for Satoshi, so it was used twice. Reversing a secure hash function once is difficult, bording on impossible (e.g. millions/billions of years of compute cycles.) Doing the same for a double hash -- isn't going to happen. Any flaw/backdoor that would let a double-hash get reversed would be blatantly obvious as statistical variations in the single hash results.
There is no Satoshi. It remains a mystery who invented BTC.
"Reversing a secure hash function"
Key word 'secure.' I'm sure the NSA would not release anything giving complete security out into the wild, and I'm sure they know about double hashing.
In one of the comments I posted tonight, I quoted someone who can converse the intricate details of hashing with others who have strong knowledge, and he has big doubts that none of them were able to refute.
http://en.wikipedia.org/wiki/Talk:SHA-2#Secret_backdoor
If if SHA-256 is "broken" in the sense that the NSA can reverse it -- which there is ZERO evidence of -- it's statistically strong enough as it stands that a double hash can't be.
Ask your friend how one would reverse a double hash, even if the hash were compromised.
Seek, great contributions as always.
I found this in the bitcoin wiki:
____________
https://en.bitcoin.it/wiki/Hashcash
Double HashBitcoin is using two hash iterations (denoted SHA256^2 ie "SHA256 function squared") and the reason for this relates to a partial attack on the smaller but related SHA1 hash. SHA1's resistance to birthday attacks has been partially broken as of 2005 in O(2^64) vs the design O(2^80). While hashcash relies on pre-image resistance and so is not vulnerable to birthday attacks, a generic method of hardening SHA1 against the birthday collision attack is to iterate it twice. A comparable attack on SHA256 does not exist so far, however as the design of SHA256 is similar to SHA1 it is probably defensive for applications to use double SHA256. And this is what bitcoin does, it is not necessary given hashcash reliance on preimage security, but it is a defensive step against future cryptanalytic developments. The attack on SHA1 and in principle other hashes of similar design like SHA256, was also the motivation for the NIST SHA3 design competition which is still ongoing.
Future HashOnce the NIST SHA3 contest has finalised, bitcoin might in the future consider adopting hashcash-SHA3 as a security upgrade (eg a single invocation of SHA3 vs a double invocation of SHA256). It seems clear from the SHA1 break, and SHA256 is a similar design, that there was previously a misunderstanding about the security of hash functions against birthday collisions, and SHA3 finalists all aim to fix that issue. One aspect of relevance for hashcash-SHA3 is that there is some debate within the NIST comments process on the proposal of weakening SHA3's resistance to pre-image attacks down to 128-bit (vs the full hash size as with previous hashes). The motivation is a small performance gain, with the rationale that some hash-pluggable algorithms do not rely on full-length pre-image resistance. The proposal has met with significant negative feedback due to it creating a non-standard security assumption (compared to all previous hashes), and therefore it creates risk and all hash-pluggable algorithms (like HMAC, RSA, DSA, hashcash etc) would need to be re-examined on a case by case basis to see if SHA3 is safe to use with them; from the balance of the feedback it seems probable that NIST will accept the feedback and SHA3 will retain the full 256-bit pre-image resistance.
Cryptanalytic RisksA practical issue with switching to hashcash-SHA3 is that it would invalidate all existing ASIC mining hardware, and so is a change that would unlikely to be made except in the face of security risk; there is no indication that SHA1 or SHA256, or SHA256^2 are vulnerable to pre-image attack so the motivation is missing absent new cryptanalytic developments. In addition even if SHA256^2 became easier due to cryptanalytic attack, and miners started using whatever the new algorithmic approach was, it does not necessarily matter as difficulty would just adapt to it. One likely side-effect however would be that it would introduce more memory or pre-computation tradeoffs which could make ASICs unprofitable, or give advantages to people with large resources to do the pre-computations. Pre-computation advantages would perhaps be enough motivation to replace the hash with SHA3. Anyway this is all speculation if and until any pre-image affecting cryptanalytic attacks are found on SHA256.
_____________
I'm still learning about cryptography/cryptocurrency, but my take is that the protocol could evolve, and that would suck for any one that sunk capital into ASIC equipment, but could move the crypto algos towards more security as the world evolves. I'm reading things about ECC being the 'next big thing' and RSA potentially being broken in the next decade. Still trying to understand enough to be able to make an assesment.
Cheers - D
Here's another one promoted by NIST...
The Dual_EC_DRBG algorithm, a cryptographic random number generator designed for security purposes and promoted by the National Institute of Standards and Technology (NIST), served as a backdoor for the NSA. Its vulnerability was revealed by whistleblower Edward Snowden.
http://www.infowars.com/nsa-snooping-takes-down-u-s-computer-networking-...
http://en.wikipedia.org/wiki/Dual_EC_DRBG
NSA slime won't let it be without a backdoor.
We had a wicked hot teacher in HS who loved to sit in front of the class with her legs spread juuust enough to we could check out her goods. The douche who told her why we paid such close attention to her "lessons" looked just like this prick. Which leads me to...Fuck you LAAWSKY!
I hope you pounded on that fucker.
We should've got him with the Meat Hammer!
Bitcoins might be used for illegal activity? Please! And what percent of US currency is tainted with coke dust?
"....dangerous criminal activity, such as drug smuggling, money laundering, gun running and child pornography,”
Sounds like a list of everyday elite behavior.
You were expecting to be "anonymous"? Really?
But, cash and electrons are used by the VERY same entities and corrupt bunch of fools trying to get their 'cut' as the so called money launderers...lets not forget the big banks were in collusion with the launderers...just say'n
Papers please?
Papiere bitte?
The permit nazis will be the death of this republic.
“The cloak of anonymity provided by virtual currencies has helped support dangerous criminal activity..."
So, ummm, just what the hell is he talking about here?
The US government issuing future public debt (which can never be repaid now, do the demographic math Keynesians) to the Federal Reserve who then digitizes a virtual currency for Wall Street consumption...
...or BitCoin?
Just trying to help bitsters ;-)
I don't get this cloak of anonymity thingee. Doesn't physical cash provide the same service? Save the children, use a credit card.
Correct, but Bitcoin allows long distance "cash" transactions that are quick and cheap, not printed by Central Banks, and not counterfeitable.
When are the real bitsters going to do something about fonestars endless pumping for his DOLLAR profit?
This is on your guys head to correct...it looks pretty fucking tacky from an "outside perspective".
Sayin.
Lol, I moderate some message boards, certainly not this one (thank god). Usually it is best to just let them burn themselves out.
More on Lawsky..
https://www.google.com/search?q=ben+lawsky&ie=UTF-8&oe=UTF-8&hl=en&clien...
"That said, NYDFS also believes that it is in the long-term interest of the virtual currency industry to put in place appropriate guardrails that protect consumers,..." Because consumers are too fracking stupid to be responsible for themselves. Only government can protect them!
Bah!
All government is an unjust aggression against individual property rights.
Looks like BTC will go underground, making it even more valuable. Kinda like liquor during Prohibition.
Government: Making criminals out of innocent people since, like, forever.
Pretty sure gold and silver will go underground as well at some point in time.
Nothing surprises me anymore.
Nobody cares to use gold and silver as money. People use Bitcoin as money constantly.
Should be some nice dips coming.
BTC is up roughly 3X in 2 months? No, there's no bubble here!
Not if there are 3X as many users as there were 2 months ago. And thanks to media attention, both in the US and China, there very well might be.
New yawk, lol.
Stop and frisk the cryptographers!
Over.
Anything claiming to be a store of wealth that depends on electricity to redeem it could be useless when you need it the most.
True. But physical gold is pretty useless for day-to-day spending such as buying a bagel and coffee or a newspaper. Consider e-commerce ($226 billion in 2012) and remittances ($500 billion in 2012)... We are pretty much forced to use trash fiat but Bitcoin wants to provide an alternative (while the lights stay on). Bitcoin does not want to replace gold, it wants to replace fiat. There's a good chance it will out-perform gold for a while.
I don't know where people have been but the United States Government doesn't run things around here. We live under a global corporate fascist state and BitCoin is of corporate interests.
Also because of Washington D.C. and the US Government the United States of America is no longer powerful like it once was. The influence of Wall Street and their Washington D.C. politicians is in rapid decline. I would go so far as to say from the current evidence the globalist bankers in control of Washington D.C. are being recognized worldwide as a rouge regime that is very dangerous to the survival of everyone.
Yes, and their two biggest assets are mobility and playing the victim card.
Does anyone think they can really just go make up some fucking currency that doesn't have to listen to the gov't and get away with it for very long? Nice pipe dream. The people in the gov't are the problem. And you know what needs to be done to get rid of a problem.
The real question should be, Who gives a shit? Want to think about pipe dreams, think about prohibition of drugs or media downloads. They can't stop it, they can only make those who bow to authority anyways avoid it for a little longer. Yes, I think we do know what needs to be done, we need to ignore those ass hats until they bankrupt themselves trying to squeeze everything into their controlling fingers.
Yep noble. We live in the age of warrantless surveillance, drones, persecuted whistleblowers and a rotting government. It was a good run Bitcoin, but now it's time to be assimilated.
"Law"sky: FREEEEEEEEEEDDDOOOOOMMMMMMMMMMMMMM!!!!
Molon Labe!!!
Is there any way to prevent 'selfish mining' from taking over without having to rely on the honesty of miners?
http://www.sciencedaily.com/releases/2013/11/131104112234.htm
A trade-and-barter local economy is looking better everyday.
Who owns the company that operates bitcoin...hmmm? Bitcoin is now widely advertised on major media sites which are owned by the same people who control fiat. Welcome to your digital currency, tracked 24/7, with your compliance. A digital currency was the aim, one way or another.
everybody and nobody. It is a network anybody can connect to. Nobody owns HTTP which you use to connect to major media sites and this site.
A short while back, when bit coin had its first plunge, I remember somehow a central person somewhere hit a Kill switch, or pause switch, to stop trading. I don't know how they did it but that means someone is in control of bitcoin.
The main exchange where BTC were traded back then, Mt.Gox, was hit by a massive DDOS attack by hackers. It was chaos. Nowadays there are more exchanges and they are better protected from DDOS. Even so, Mt.Gox was attacked a few days ago and was actually down for about 30 minutes but that doesn't seem to affect the price anymore.
Bitcoin is anti-Semitic.
I have BitTulips for sale. Only 10 Bitcoins each. Better hurry, they may be 20 Bitcoins by morning.
Posterboy for those ignorant of the attributes of real money. You can now use 1btc to buy a lot of fertilizer for your tulips.
I think of it this way. The sooner everyone jumps into the pool together - whether it be Bitcoin, gold, silver, trade & barter, or what have you - the sooner we take away their funding to stop us. Every day that a person who says it won't work and doesn't tell absolutely everybody they know about it is another day that the very people who are trying to stop it will creep closer to their goal.
In other words, if you think they can stop it then that is your reason to hurry up and make it that much harder; tell your employer about it & ask to be paid in BTC...all they can say is no...at first; start a BTC business (I've been thinking about starting a craigslist-style website for my community where I'll promote the use of BTC and I need to get off my ass and do it); buy as many things as you can with BTC. Don't give the people who have the power to stop it more power by fearing them. That's called a self-fulfilling prophecy.
Fuck you Bernanke.
Nice one. Only use dollars one day a year: April 15th.
The ongoing debate often leans towards the technical side of BCs. The real thing is on the actual economic side and not just BCs, but cryptocurrencies in general. If that isn`t figured out then they`re fated to die.
All of this is a precursor for governments to intro their own digital currencies. They are likely studying how BC, Litecoin, etc are being handled for their own implementation plans.
Example: http://developer.mintchipchallenge.com
MintChip: "Canadian Mint ready to test its own digital money project"
http://business.financialpost.com/2013/09/19/canadian-mint-pushes-ahead-in-murky-world-of-crypto-currency-with-mintchip-project/
How will something like a legit gov't digital currency will effect something like bitcoin remains to be seen.
Chicago Fed paper - section: "Bitcoin is a fiduciary currency"
Like gov't paper, value is derived from belief that they will be accepted by someone else.
http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfldecember2013_317.pdf
Fiduciary money is a money substitute like trade credit that has to be ultimately settled in hard money. Bitcoin is hard money. The USD is neither hard money nor fiduciary currency, its value exists solely from widespread confidence which is undermined by supply expansion. Btc, gold and silver enjoy widespread confidence as money, btc is rigidly finite in supply and gold and silver have natural limitations to supply growth, therefore all three are hard money.
I keep having this deja vu thing with Bitcoin.
There are lots of dollars and yuan being exchanged for bitcoin lately. Aren't these the same currencies generally used to jigger the price of precious metals?
You really have to ask the question of how much manipulation is already going on with Bitcoin values. Seems like the same old faceless bastards are in there dickin' it around because it's so anonymous and uncontrolled.
So the tribe is sending a nice jewish boy from new yawk to deal with this upstart money that could threaten the death grip the tribe has on all of us via their fiat funny money con job. Good luck with that and remember if you fail that will futher embolden the doubtful adopters who fear TPTB will crush and cripple btc. If that virtual unmanipulatable money breaks loose it will nourish an underground tax free economy worldwide that could exceed 50% of the global economy. On par with gold btc has a potential value exceeding $85,000 to $1 usd.
Anybody who has the means should gamble with $5000 worth of btc, worst that can happen is you lose 5k best that can happen is you make millions, anybody who truly understands what money is can see this and so far the chances of btc making it look decent.
"anybody who truly understands what money is "
Money is "a promise to complete a trade". BitCoin is "not" money. It is an item of "perceived value" acceptable in simple barter by a growing number of people. By design it is deflationary. Before it can become ubiquitous in trade in will fail to its designed-in scarcity.
bitcoin can't be printed by central planners so it won't be reduced to other fiat currencies, that feature is not going to disappear
these attempts are silly, it can't be regulated. with upcoming fiscal pressure from governments the "developed world" will descend into gray zone just like Greece and post-communist countries. tax execution will deteriorate as overtaxed, overregulated citizens will increasingly feel being pwned by their masters, refusing to comply with legal order. attempts to regulate BTC will give statists nothing more than illusion of control. mr Lawsky is a godsend - statists will charge him with impossible task and forget about issue.
Given the amount of commerce that goes on in NY, what's going to prevent entities from outside the state or country from offering people the facility to pay with bitcoin? Given that NYS is so low on the ranking of freedom for its citizens, it's not surprising that they would make the attempt to control it.
"At which point the primary utility of Bitcoin - as an unregulated medium of exchange- itself disappears."
The primary utility of Bitcoin is that it can't be counterfeited by the criminals at the Fed.
... dangerous criminal activity, such as drug smuggling, money laundering, gun running ...
Does this mean Holder used bitcoin in Fast and Furious?