Bitcoin is often treated as a haven for black market buyers and people who want to avoid illegitimate laws. However 3 simple steps would suffice to mostly obliterate Bitcoin for black market usage of ordinary users.
Three steps to break Bitcoin for small scale anonymous usage:
That’s it. It will not deanonymize all of Bitcoin, but it will deanonymize most users, and making any kind of sustainable profit from Bitcoin will require identity fraud - which carries so harsh penalties that most small scale black market sellers will not dare going that far.
And it gets worse: large scale Bitcoin owners and black market sellers will have an incentive to pressure their buyers into registration after their sale, because that will increase the effective value of their Bitcoins. Implement the method I outlined, and greed will drive the users themselves to make Bitcoin a hostile place for anonymous users.
People might run shemes to sell at high price to anonymous users and then pressure them into registering, so the bitcoins will become more valuable. Or to sell them registration with false identities. Which they could even report later, after they transferred their bitcoins at high value to someone else to disrupt a competitors business.
Voilà, for ordinary Bitcoin becomes a viable, happy do-good, decentralized currency with full public accountability which can reduce the trust requirement in the banking system and simplify tax enforcement, while people who can launder money today can still use that power in Bitcoin and even get a few new tools in their toolbox to increase their power relative to ordinary and/or law-abiding users.
The prince marries the princess, the king exercises his right of the first night and all live happily ever after.
I hope I could show that Bitcoin isn’t the haven for freedom and state-free happiness it is often touted to be. It can reduce the power of banks due to the required trust in their actions - and I think that it will be used by banks themselves as a very efficient backend for reliable transactions - but the total accountability inherent in Bitcoin is hostile to any kind of free expression and independent life, because it allows others to judge you by your actions years later and as such creates pressure to self-censor how you use Bitcoin. In this it is inferior to cash.
And as I showed here, on the longterm only large criminal organizations will be able to retain anonymous usage of Bitcoin, while all others will either be driven into buying the services of these organizations to stay anonymous (which makes them susceptible to blackmail: their Bitcoins could lose most of their value at any point) or into registering their Bitcoin identity and giving up on anonymous usage of Bitcoin.
The European Copyright directive threatens online communication in Europe.
But thanks to massive shared action earlier this year, the European parliament can still prevent the problems. For each of the articles there are proposals which fix them. The parliamentarians (MEPs) just have to vote for them. And since they are under massive pressure from large media companies, that went as far as defaming those who took action as fake people, the MEPs need to hear your voice to know that your are real.
If you care about the future of the Internet in the EU, please Call your MEPs.