Quote:
Originally Posted by AlbertoKnox
Gehrig, I'm not against it in principle, but I would think that criminals will always have a few good places to get hapless folks to accept dirty coins and normal people will bear the cost and annoyance caused by the agencies.
All Bitcoin transactions are public
Let's say all my bitcoin wealth comes entirely from my employer, who can credibly claim to run an honest business.
Now a bank opens up that discriminates against all deposits that aren't credibly honest. Since the source of my Bitcoins is entirely transparent if I want them to be, the bank can discriminate very cheaply. The bank can allow me to limit my withdrawals to only addresses I trust. There's no cost in establishing trust in my address, my sister's or some small shop owner I'm friends with. Giant retailers can establish the Honest Retailers Alliance to vouch for their trust. Exchange between myself and these addresses is extremely cheap (we're just moving electricity around and there's minimal fraud risk) and thus profitable.
If I want to withdraw to an address I don't trust, I can minimize the cost of the lack of trust by adding transaction costs like:
- Needing extra verification, like extra secret passwords, or finger print scanning, or access to some digital key I keep on my smartphone
- Making the recipient agree to be liable if I can prove the transaction to be fraudulent
- Requiring some discount from the recipient
Or whatever I think minimizes the costs of my barter with an untrustworthy source.
If you make barter between trusted parties cheaper, you get a lot more trusted parties.