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Bitcoin seduction

It started with an observation based on the Equifax fiasco by Hao-Kai Pai: Defanging identity fraud by verifying identities – “part of the damage here stems from organizations assuming that Social Security Numbers are secret … another part of the problem is that some businesses are startlingly lax about confirming who they are extending credit to.”

That is a core issue in Bitcoins which brings up What you need to know about Bitcoins. This list of advantages includes this howler: “buyers are protected against merchants who may want to charge extra for a lower cost service.” That one is a red flag that socialist ideologies are at the top of the list. Another “advantage” asserts “Bitcoins are provided alternatives to major common currency catastrophes such as getting lost, frozen or damaged.” If you lose your key, you’ve lost your account and if someone steals your key, the steal your account. Anonymity is also asserted as a desirable feature and the implications of this in a properly functioning society needs very careful consideration of its implications.

The fact is that these ‘currencies’ depend upon identity assured via cryptographic means. The security depends upon what you know that others don’t – your private key. What you know that nobody else does is a rather poor basis for establishing identity. Anything that can be photographed needs a chain of authority. What you have is a bit better. This is why a smart phone with an address or telephone number assigned to you and backed by trusted networks is gaining popularity as a means of identity confirmation. But then, what you have can be stolen.

There are a lot of problems with this schema for electronic value transfer. aantonop is a zealot’s YouTube channel that acknowledges problems and rationalizes them by the fact that the phenomena is just getting started and solutions are being found. Those are mostly technical. The hidden ideological basis, though, is a fundamental flaw that is not subject to technical solution. 

But it is interesting that everybody knowing everything (except your private key) is a hallowed virtue of crypto-currencies in light of the fracas about the Equifax exposure of everything for everyone to know.