Why The Government Will Have To Shut Down The Internet To Take Down Bitcoin

I am sure you might have noticed, but the governments have been getting scared about the more pervasive use of bitcoin and are taking actions directed by their master planners, the global banking cabal. The latest absurdity by the US police state involves the arrest of several people involved with a bitcoin exchange in the U.S. Their crime – helping people protect their constitutionally guaranteed right to privacy.

Banks in the United States have been widely reported to shutting down the accounts of bitcoin exchanges, for no good reason. Now they appear to be prosecuting the founders of these businesses, which is tantamount to prosecuting people just for using cash. Anonymity is something that the criminal corporations who control our governments want to destroy. They eventually want to make cash illegal, and they cannot allow a cryptocurrency like bitcoin to flourish.

But That Might Be More Difficult Than They Expect…

I see another business model emerging, assuming it does not already. Exchanges are convenient, but are open targets for government oppression. Overreliance on centralization can kill cryptocurrencies, which is the problem with the exchanges. I agree that they are a nice convenience, the same way a hybrid design with a central server with distributed infrastructure as a backup (and to keep the central server honest) would be a better implementation of a cryptocurrency. However conventional currency exchanges such as this need not exist.

A Better Model Which the Government Cannot Touch

You can set up an exchange outside the confines of the global SWIFT structure, run by completely anonymous individuals or corporations. This is the globalist’s worst nightmare. Imagine getting an anonymous corporation in some tax haven (it would not even be necessary, as you will see in a moment) and then using it to start a new type of exchange. You can register the domain privately by providing bitcoin payment and get server space using bitcoin as payment. You can use the name of the anonymous corporation for the address (and let’s be blunt, you could make something up and they would probably never verify it if in a foreign jurisdiction; but I would not recommend that). This would make participants pretty hard to arrest, just like it is hard for governments to track who is using bitcoins after they have their coins.

Next, you set up an email style auction system serving as a peer to peer warehouse for bitcoin buys and sales. A good example is the Nucleo Exchange at BullionDirect.com or even any ECN used to trade stocks. The system would match buy orders versus sell orders for bitcoins. This is basically what the exchanges sort of do right now (although some of them might make a market as well as that would make a lot of sense). However, normally now the money goes in and out of the bitcoin exchanges physical SWIFT-linked accounts. The bankers can, and have, shut down these accounts at any time. This is a problem.

However, in the exchange I am describing here, the owner would never physically take hold of any electronic digi-dollars from a central bank. The protocol would work as follows: (1) a trade is matched between a buyer and a seller of bitcoins; (2) the buyer and seller both digitally sign with the bitcoin IDs to be used with the transaction a bill of receipt that is publicly distributed indicating the intent to do a transaction; (3) the seller of the bitcoin transfer his bitcoins to the exchange wallet; (4) the buyer of bitcoins receives notification that the bitcoins have been transferred; (5) The buyer transfers the money through a Paypal account, obviously not indicating to Paypal that it is bitcoins being transferred; (6) the seller notifies the exchange that he has received the funds; and (7) the exchange transfers the bitcoins to the buyer less an exchange fee. Except for the rare cases of a dispute where a human might need to get involved to investigate the money transfer and whether it occurred, most of these transactions can be handled automatically by software.

This is basically a typical escrow relationship, except the escrow agent never touches SWIFT dollars, only cryptocurrencies. That is what makes this exchange invulnerable to being taken down by the government. The one thing that might take it down is systemic corruption at the exchange level, the same problem with any escrow arrangement. However, given that there is a lot more money to be made from running an above board operation, there would not be as much incentive to cheat long term (but does not mean some people would not get short term greedy). That is the reason I suggest doing this through and anonymous corporation that could server as the face of the operation and even potentially put up a bond with a trusted third party (in bitcoins) to handle any disputes.

How Would the Government Likely Try to Take It Down

I would try to attack the credibility of the exchange if I were an evil government conspirator, even if it was honest. As a result, it would be crucial that the exchange takes precautions to prevent this. For example, all transactions should be carried out a one wallet or series of wallets that everyone identifies. Anyone claiming they have been defrauded would then be challenged to show the record of the transaction of where they were defrauded (as all transactions with the exchange keys can be looked up if everyone knows them) and show they own the secret key involved in that transaction. This is the reason I added step two to the above transaction, as otherwise a buyer could claim to be ripped off who never was part of any actual transaction. Anyone can see if the bitcoins were transferred or not.

The only thing that could be of dispute is whether the physical money is transferred. A government employee could engage in a bunch of transactions and just not transfer the money, on purpose. However, that person would be required to send a proof of transfer to the exchange. This process should be done in a way that is distributed as well so that all such claims have to be timestamped to prove they happened (although the data can be encrypted in a public key the exchange generates). If the buyer claims there is an error, and can prove they own the exchange key by producing a digital signature, then the exchange can use its public key to show the evidence, available to everyone, to see. Then people can judge whether the complaint is valid or one is dealing with a government troll. Note that the seller can also send in proof that he or she did not receive the money. There can be cases where one party presents false evidence (most likely a government stooge), which could present some problems. However, such would likely become a criminal matter as a transaction ID can be verified ultimately by Paypal. If a government employee were caught doing this, chances are that there would be repercussions. However, I would expect the vast majority of transactions to go through smoothly, and it would take a lot of systemic government abuse to take down the system, especially if there were entire networks of exchanges out there. The fact of the matter is disputes are problems with every business, and unless there are really systemic problems it is hard to bring down a company. When you have verifiable secure protocols that allow things to be investigated with digital signatures and distributed infrastructure, that makes a system even more difficult to corrupt.

Most likely, if the government really wants to take down bitcoin, they will have to take down the entire internet, or at least the servers of those places that serve cryptocurrency content. Chances are there is at least one nation that will allow them, and with the magic of proxy servers and VPNs, and the ability to start networks all the time, you probably really would have to take down the entire internet. Censorship in China is not nearly as effective as the government would hope even proxy and VPN technology, and you have failed to see even networks such as the Pirate Bay taken down. That is why the government wants to do away with the internet and move to a internet 2.0 that kills privacy. Hopefully peoples and nations will not let that happen…