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Offline AsymmetricInformation

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Legal Trouble for Delegates
« on: July 29, 2014, 12:05:36 AM »

This is a continuation of a small comment I made here: https://bitsharestalk.org/index.php?topic=6304.msg84176#msg84176

My reasoning was just that US Senators might complain about BitUSD transfers, or even BTS transfers, claiming them to be money-laundering / tax-evasion / terrorist-financing. The NSA would then physically locate the 100 delegates and the government would throw them all in prison, as was done to so many Bitcoin predecessors.

Not wanting to derail the thread, which was about additional responsibilities for delegates, I just thought I would manually move the discussion here.

Offline maqifrnswa

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Re: Legal Trouble for Delegates
« Reply #1 on: July 29, 2014, 12:12:26 AM »
This is a continuation of a small comment I made here: https://bitsharestalk.org/index.php?topic=6304.msg84176#msg84176

My reasoning was just that US Senators might complain about BitUSD transfers, or even BTS transfers, claiming them to be money-laundering / tax-evasion / terrorist-financing. The NSA would then physically locate the 100 delegates and the government would throw them all in prison, as was done to so many Bitcoin predecessors.

Not wanting to derail the thread, which was about additional responsibilities for delegates, I just thought I would manually move the discussion here.

Delegates should not be from jurisdictions where there operation would be considered illegal. However, this is crazy grey area at the moment: regulatory guidance says that individual coin miners do not need licenses (and there is some tax guidance as well). At this moment, BTSX is just another alt coin. Once trading starts, then it is an entirely different situation - and one there is no regulatory guidance for a decentralized exchange system, just for a decentralized exchange of asset system.
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Offline thazel72

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Re: Legal Trouble for Delegates
« Reply #2 on: July 29, 2014, 12:14:32 AM »
Delegates are not just in the US, isn't that the point of a decentralized system? They can't arrest everyone.

Offline AsymmetricInformation

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Re: Legal Trouble for Delegates
« Reply #3 on: July 29, 2014, 12:22:31 AM »
I'm not a lawyer, and I hadn't really planned to represent my position in a debate, but I just want to point out a few things.

1. "US senators complain" is not the same as "illegal". Regrettably, in 2014 only the former is important.
2. The US has arrested non-Americans in many ways and on many occasions. I also point out that, instead of being arrested, "terrorist financiers" might just get killed via drone.
3. Even though the next 100 people may step up in line and continue the BTS-service offering, these people might be reluctant to do so. Moreover, they will have no reputation, may themselves be NSA employees, etc.

Again, I don't plan to run a full debate, the above points are very obvious to me. I anticipate some here to raise objections to which there are, again, obvious rebuttals. I don't really plan on pursuing the point, it was just something that crossed my mind, so if I don't respond please do not assume it is because I would have nothing to say.

Offline maqifrnswa

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Re: Legal Trouble for Delegates
« Reply #4 on: July 29, 2014, 12:57:47 AM »
I get your point, there are legitimate legal worries - but I'm more worried about the SEC than the CIA/NSA. Terrorist are funded by bearer bonds and other financial instruments (including cash), but it isn't illegal to own them. But you will get nailed to a wall by the SEC if you try to exchange them without a license.
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Offline chamme

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Re: Legal Trouble for Delegates
« Reply #5 on: July 29, 2014, 01:45:38 AM »
Yeah, that is why I dislike the finite number of delegates on a decentralized network. Maybe we can enable infinite number of delegates, if anybody want to be one and have clients support them to do so?

Offline gamey

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Re: Legal Trouble for Delegates
« Reply #6 on: July 29, 2014, 05:31:02 AM »
Yeah, that is why I dislike the finite number of delegates on a decentralized network. Maybe we can enable infinite number of delegates, if anybody want to be one and have clients support them to do so?

This would screw up the economics.  Delegates are currently barely a break even proposition. 
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Offline jae208

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Re: Legal Trouble for Delegates
« Reply #7 on: July 29, 2014, 06:50:08 AM »
In the long run the legal issue isn't much of an issue at all. Distributed networks are hard to destroy just take a look at how the music and film industry did with pirating through bit torrent.
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Offline mf-tzo

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Re: Legal Trouble for Delegates
« Reply #8 on: July 29, 2014, 08:54:19 AM »
I don't understand what is the problem. The fact that the market will assume that bitusd is usd that doesn't mean that it actually is usd and you are trading usd... Bitusd will be assumed to be usd because people could trade btsx for bitcoins and convert them in usd... So first governments should make illegal bitcoin and put all the miners in jail before they start chasing delegates..and even this happens the consensus might exist that bitusd is usd but again that will make it even les true..
I don't see anything illegal here but if you guys are so concerned about this just vote for Greek delegates.. We always had and we will always have true democracy andwe will always have the right to believe what we want irrespective of what other governments worldwide try to impose.

Offline AsymmetricInformation

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Re: Legal Trouble for Delegates
« Reply #9 on: July 29, 2014, 10:25:46 AM »
In the long run the legal issue isn't much of an issue at all. Distributed networks are hard to destroy just take a look at how the music and film industry did with pirating through bit torrent.
First, there is a question of scale: each film or mp3 is its own small project, and the music/film industries DO take them down, but the full system -including users who reupload content- regenerates quickly. With BTSX, the goal would be for one network to operate with high reliability, gain a large market depth, be seen as reliable to average computer-users. This leads to one big/important network. If by shutting down "100 golden dpos bittorrents", it destroyed all torrenting on the internet, then the bittorrent network would be weak (and this shutdown would be carried out as often as possible). I don't think you can "start up BitUSD again", the same way someone uploads another copy of the latest Game of Thrones (and law enforcement will understand that).

Second, dpos is not really a distributed network like bittorrent or Bitcoin. With bittorrent, anyone can step up and provide a replacement data-source ("be a seeder"), and with Bitcoin mining, anyone can step up and offer replacement tx-validation ("be a hasher/miner"). I don't fully understand dpos, but I don't see how individuals 101-200 can provide a perfect "replacement" service for individuals 1-100. Certainly it will not be identical, and probably not even close, because "the second 100" will have less experience, less reputation, less originally-at-stake, less support from the disorganized/confused tx-tapos-voters, and might react to the experience of their predecessors' downfall.

I don't see anything illegal here but if you guys are so concerned about this just vote for Greek delegates.. We always had and we will always have true democracy andwe will always have the right to believe what we want irrespective of what other governments worldwide try to impose.
My understanding is that your entire country is now owned by Germany / EU, in an almost-perfect example of Not Democracy.

Offline liondani

Re: Legal Trouble for Delegates
« Reply #10 on: July 29, 2014, 10:59:50 AM »
My understanding is that your entire country is now owned by Germany / EU, in an almost-perfect example of Not Democracy.

Yep they have the control of "our" money (I don't mean bitshares, bitcoin etc.)
But they don't have control of our lifes, our souls and our believes...
Believe me they fight Greece because they know we are spiritualy free ...

http://youtu.be/FRXEqvfRXII

"Our" goverment maybe is owned by Germany/EU but not our Country, not our people...
Think please twice before spreading FUD again.
I advice to read more history.

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http://youtu.be/RhVMd8iXHMo
« Last Edit: July 29, 2014, 12:21:15 PM by liondani »
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Offline chryspano

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Re: Legal Trouble for Delegates
« Reply #11 on: July 29, 2014, 11:35:08 AM »
I heard rumors that, if some priests complain, at least one major religion might excommunicate the 101 delegates claiming them to be heretics!

Offline GaltReport

Re: Legal Trouble for Delegates
« Reply #12 on: July 29, 2014, 11:40:13 AM »
Yeah, that is why I dislike the finite number of delegates on a decentralized network. Maybe we can enable infinite number of delegates, if anybody want to be one and have clients support them to do so?

This would screw up the economics.  Delegates are currently barely a break even proposition.
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Offline luckybit

Re: Legal Trouble for Delegates
« Reply #13 on: July 29, 2014, 03:27:23 PM »
This is a continuation of a small comment I made here: https://bitsharestalk.org/index.php?topic=6304.msg84176#msg84176

My reasoning was just that US Senators might complain about BitUSD transfers, or even BTS transfers, claiming them to be money-laundering / tax-evasion / terrorist-financing. The NSA would then physically locate the 100 delegates and the government would throw them all in prison, as was done to so many Bitcoin predecessors.


Not wanting to derail the thread, which was about additional responsibilities for delegates, I just thought I would manually move the discussion here.

The only people who have to worry about money laundering charges are the people who handle cash and who trade cash for Bitshares. BitUSD is not cash it's just digital property and a form of barter.

Why couldn't they make the same claims about all cryptocurrency and then ban Bitcoin? Why would Bitshares make it on their radar?

You are spreading FUD. Bitshares isn't going to be easy to stop and money laundering how? It's not like you can buy Bitshares with cash as easily as you can buy Bitcoins with cash. If the US government were to crack down on delegates then the delegates would move out of the USA and our fees would go up to pay for that.
« Last Edit: July 29, 2014, 04:46:08 PM by luckybit »
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Offline luckybit

Re: Legal Trouble for Delegates
« Reply #14 on: July 29, 2014, 03:45:59 PM »
I get your point, there are legitimate legal worries - but I'm more worried about the SEC than the CIA/NSA. Terrorist are funded by bearer bonds and other financial instruments (including cash), but it isn't illegal to own them. But you will get nailed to a wall by the SEC if you try to exchange them without a license.

The NSA and CIA probably can see what we are doing anyway and already know whether or not Bitshares is a national security threat. It's not like it's being developed in a secret bunker or in a part of the world known to be a safe haven for terrorists. The idea that the CIA and NSA are going to freak out over Bitshares is kind of silly. The NSA has the resources to take Bitcoin out and the CIA has the resources to monitor the entire tiny 10-12 billion dollar industry. The CIA topples entire countries and would have no difficulty with Bitshares.

That doesn't mean delegates don't face some risks if the market cap were high enough. If it were high enough that different agencies thought it might somehow effect what they are doing then they'd start by taxing the people who cash out and if no one cashes out and the market cap reached hundreds of billions to trillions of dollars that is when risk would increase exponentially.

Intelligence agencies at this point in time do not care about the crypto asset industry. Bitcoin only has an 8 billion dollar market cap. If we are even at our most optimistic then in the next few years perhaps it might be 80-100 billion and Bitshares might by a few billion in market cap. If that is the case it still wouldn't attract the attention of intelligence agencies.

If the market cap of Bitcoin reaches 1 trillion that is when everything will change. At that point all the nations in the world will know how important it is and we'll see a battle for control over it like we see with the Internet. In the case of Bitcoin if the United States wanted to gain control over it then Intel, AMD and Apple would all start making ASICs. Overnight the United States would have control over Bitcoin because there aren't any companies in the world better at making chips or easy to use computer products that these companies.

The main risk of intelligence agencies getting involved would be by confiscation or by weird situations where hundreds of thousands of coins go missing and no one can figure out where they went. That was easy to happen when you had a centralized exchange where some hackers could rob and loot with ease but it's not easy with Bitshares.

To hack Bitshares the hackers would have to target the delegates and if the delegates have information security backgrounds it will not be anywhere near as easy as hacking a centralized exchange. Even if delegates were hacked then we'd just select new ones so the Bitshares DPoS isn't anywhere near as vulnerable as what proceeded it.

The SEC and IRS are the only true risks in my opinion. The SEC might determine to treat these virtual assets as real. In that case there would still be limits to what they could do because it would be like kind exchanges. The IRS on the other hand could tax the hell out of it and there is nothing anyone can do to stop them.

If there is a legal precedent we are years away from it. That means we will be in the grey area for years before Bitcoin has a trillion dollar market cap or the congress wraps their heads around the technology enough to actually try to complain.
In the long run the legal issue isn't much of an issue at all. Distributed networks are hard to destroy just take a look at how the music and film industry did with pirating through bit torrent.
First, there is a question of scale: each film or mp3 is its own small project, and the music/film industries DO take them down, but the full system -including users who reupload content- regenerates quickly. With BTSX, the goal would be for one network to operate with high reliability, gain a large market depth, be seen as reliable to average computer-users. This leads to one big/important network. If by shutting down "100 golden dpos bittorrents", it destroyed all torrenting on the internet, then the bittorrent network would be weak (and this shutdown would be carried out as often as possible). I don't think you can "start up BitUSD again", the same way someone uploads another copy of the latest Game of Thrones (and law enforcement will understand that).

Second, dpos is not really a distributed network like bittorrent or Bitcoin. With bittorrent, anyone can step up and provide a replacement data-source ("be a seeder"), and with Bitcoin mining, anyone can step up and offer replacement tx-validation ("be a hasher/miner"). I don't fully understand dpos, but I don't see how individuals 101-200 can provide a perfect "replacement" service for individuals 1-100. Certainly it will not be identical, and probably not even close, because "the second 100" will have less experience, less reputation, less originally-at-stake, less support from the disorganized/confused tx-tapos-voters, and might react to the experience of their predecessors' downfall.

Bitshares is not one blockchain to rule them all. It's actually a toolkit which anyone can use. This means it will regenerate even faster than Napster or Bittorrent. That toolkit will eventually be ported to languages other than C++ so that it can be developed in other languages.

Bitshares is actually a family brand of chains. It's a franchise. So it's designed not to ever be taken out by political attack. The key to whether or not it survives political attack will be whether or not it offers enough measurable and demonstrated utility to the establishments of different countries.

For example if Bitshares is seen only as disruptive but doesn't offer opportunities to factions within the establishment then you might be right. Napster for example was mostly disruptive at the time because it didn't have an economy model to attract investors and speculators. Bitshares could become a better Forex than Forex so if Forex traders flock to it then it's offering a lot of utility. If Bitshares offers enough utility to the movers and shakers of society then it will be politically very difficult to shut down as well.

I don't really understand the points you're even trying to make. Aren't you trying to make a prediction market which is even more legally risky than what Bitshares is doing?
« Last Edit: July 29, 2014, 04:47:10 PM by luckybit »
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