Quote:
Originally Posted by Barry-xlovecam
(Post 19578124)
I like the idea of anonymity of a virtual currency in principle, for it's own sake and not for tax avoidance or as a conduit of unlawful activity.
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One could decide to declare its bitcoins transaction revenues, voluntarily, to tax guys.
But what, anonymous? Bitcoin it is not really anonymous.
Bitcoin let you hide behind the pseudonyms of public key ID's, but what your ID does business with, it is public.
The block chain shared in in peer to peer, visible by everyone, contains record of every Bitcoin transaction that's ever been conducted by anyone at any time. Including the source and destination public key id's. Knowing the id of an illegal shop, you can get the id's list of who purchased from them.
And if you know the id of a person (for example: I gift you a bitcoin, where I send?), you can then read the list of id's he buy or sell from, full history. Let's say a guy give me his bitcoin ID, or posts it somewhere. I go to see with what id's he transacted, then google for these id's. Maybe I find some id are by drugs or porn or otherwise controversial traders. So bitcoin users should create and use many different id's for different things they do, and be careful really.
But bitcoins is just the first cryptocurrency, flawed - a main flaw it is you mine it is gpu's and there can never be more than 21 million bitcoins by design, no economy can survive a constant deflation of fixed monetary base. There may be better cryptocurrencies in future, who are really anonymous, and, have a virtual "decentralized central bank" system.
I just found of Zerocoin, an anonymized vouchers extension for Bitcoin that (if adopted) would bring true anonymity to Bitcoin... or to next cryptocurrencies.
Details here:
http://spar.isi.jhu.edu/~mgreen/ZerocoinOakland.pdf