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Comment by bureaucrat | Hacker News Reader

Watching things like this, I think bitcoin could eventually replace the government-backed currency.

Everyone can watch them move. If you spend 1$ from that wallet to buy even a mars bar, your identity will be known to others. How CLEAN and clear is that?

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Only if people own their wallets and transactions happen on-chain. We're far from that point, both for technical and social reasons. I like having my money in a bank and using my Visa card because I feel safe doing it. If I lose my card or get a bogus transaction? Just use your insurance. Beyond that, if you want additional services not provided by a blockchain such as getting a loan, I'm sure banks will ask you to put your money into one of their accounts so that they can do... banking. I love it when a cryptocurrency enthusiasts replies to "bitcoin is useless in the real world" with "well actually my Coinbase-issued off-chain-settled Visa card works really well thank you". Congrats, you've got yourself a bank.

If your wallet is actually owned by a bank then chances are your actual purchases will be obfuscated. Banks will only settle transactions with other trusted establishments "in bulk" to speed things up and reduce fees.

Don't drink the overenthusiastic cryptofanatic kool-aid, banks are going nowhere. Those who say that cryptocurrencies can replace them either don't understand banks or they don't understand cryptocurrency. Probably both.

Theoretically crypto will never replace government backed currency if the world economy and politics is stable.

Look at Turkey. Venezuela. Argentina. China. North Korea. People are already not trusting government backed currency. I don’t mean to over generalize. I just want to say it’s not just a dream. It’s possible.

And if the world economy and politics isn't stable your USB key isn't going to buy you something to eat any more than your amex.

At least cash can be burnt for warmth.

Nope, you got it wrong. Look at Venezuela.

If people can trust people they can trade. With crypto government trust can be replaced.

Crypto is only working in places like Venezuela because other states ARE stable (America). If the whole worlds situation goes to shit then it's just as worthless as fiat.

But why?

I don't understand why "account transaction visibility" is the thing that will negate the need for government-backed currency?

Because governments could regulate this currency. With improving blockchain analysis technologies, they can watch, audit and impose tax.

The only thing lacking is the control by the government.

But on the other hand it goes against every rule about privacy, why do people know how much I have, or what I buy, the only privacy this give is privacy by obfuscation.

A billion was moved and we don’t know the identity of the person. Not sure what you are describing.

That doesn’t matter. The billion is worthless if you can’t spend it. Spend 1$ from that wallet and your identity will be known.

you have no more tricks up your sleeves?

yeah. you obviously don’t get how bitcoin wallets work. you can have more that one address associated with the wallet and you can spend out of multiple addresses. there are also ways to anonymize the addresses (not to mention that you can create as many addresses as you want to begin with).

see:

https://github.com/bitcoin/bips/blob/master/bip-0032.mediawi...

https://cryptalker.com/bitcoin-mixer/

Fungibility is the only essential property of money missing, and that's why I have high hopes for Monero.

The rich and powerful wouldn't be affected by this. Having this kind of transparency would be annoying and inconsequential for most people, and then it would be border line dangerous for many groups (the poor, those in abusive relationships, etc). No thanks.

In a way. Washing it is pretty easy though. Send $50 into whatever exchange-du-jour is popular, then withdraw it back out into a clean wallet. Now you can buy all the Mars bars you want.

Washing that little amount is more easy with just cash.

You leave all your trace. Unlike cash laundering. That’s what matters.

You understand that many transactions among influential people are not denominated in dollars, right?

Power is money is truer than money is power.

If anything, it seems to me like dollars are used in two ways. One, to 'make change', to balance out a transaction. Two, as a salve to ease stress about expectations of quid pro quo. Or maybe that's just two ways to say the same thing.

Money balances the books of a somewhat cynical gift economy.

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