New Financial-Privacy Service Lets You Buy Bitcoin Directly From Mines, Challenges Concept Of Money Laundering
An exciting new service lets private individuals buy bitcoin directly from the bitcoin mines for the first time. The obvious advantage of doing so is the accompanying gains in privacy: freshly-mined coin have no history, and therefore, can’t be traced. The downside is that the usual technology luddites will throw a fit and call it “money laundering”.
As we’ve written before, bitcoin is extremely traceable in that it’s only anonymous until your first transaction is identified. After that, it’s far more traceable than any currency before it – any transaction you do after that with the same address can be traced to you as an individual by the whole world. To counter this, a new privacy-oriented service has appeared that let you buy bitcoin direct from the mines at a 10% markup – to exchange your bitcoin, which has a history and are theoretically traceable, for fresh bitcoin that has no history at all.
This means that you’re exchanging your money that has a history – a public, well-known, traceable history – for freshly-minted (freshly-mined) money that has no history at all. Not a different history, but no history. In some aspect, it’s similar to getting crisp freshly-printed central-bank bills.
It this sounds like money laundering, that’s because the classic definition of money laundering fits this like hand in a glove. But that’s because ordinary cash didn’t come with a complete traceable history – only select cash was traceable, and the only reason for such traceability was because it had been used in a crime. This means that the only reason to get rid of traceability, up until 2008, was to rid your money of traceability to a crime. With bitcoin, for the first time, somebody may have perfectly legitimate and good-faith reasons to erase the history of their purse, for no other reason than desiring simple privacy – which is a constititionally guaranteed right and which supersedes any kind of blanket bad-faith assumption.
It turns out that there are perfectly good privacy reasons to erase the history of money, and there doesn’t have to be any kind of bad faith involved, just a desire for simple privacy. Seeing how privacy is a constitutional right, this means that the previously cut-and-dried concept of “money laundering” isn’t so black-and-white anymore.
Bitcoin will challenge many assumptions, this being just one of them. But the best aspect of it is that it can’t be regulated, regardless of what bureaucrats would like to do. It can not be regulated any more than gravity. That won’t stop the bureaucrats from trying, and trying hard.
Privacy remains your own responsibility.