I was referring to the inability of the government to freeze your funds. But there are ways to prevent surveillance using zkproofs where you can break the onchain connection for private transactions.
Putting your eth wallet keys on a “do not transact with” list would be pretty similar. Having to engage in “money laundering” such as those privacy measures you bring up being a reason the government may put an address on the block list would make it quite difficult to get around too.
That is assuming Ethereum sees that kind of mass adoption to the point governments start to regulate its usage.
Is there actually a "block list" of this kind? It seems like it couldn't possibly work, e.g. there is a huge foreign entity that does zillions of honest transactions but isn't in a jurisdiction that subjects it to a given block list and it gets a transfer from some wallet that is. Either you now block anyone who transacts with them in turn and by Six Degrees of Kevin Bacon therefore the entire world, or transfers from "blocked" wallets go in there and come out non-blocked.
This is what all those chain analysis companies claim to solve for, and allegedly law enforcement agencies have done in the past to de-anonymize people. Perhaps you are right about it not being feasible given enough volume and so on.
But at that point, if a government level threat actor wants to stop you from doing something and you are in their jurisdiction, jail cells tend to be quite effective at limiting people from spending money. If using non-government sanctioned cryptocurrencies is a crime in the future, than it doesn’t really matter if it is perfectly privacy preserving or not does it if you need to pay taxes in not the privacy preserving crypto.
> This is what all those chain analysis companies claim to solve for, and allegedly law enforcement agencies have done in the past to de-anonymize people. Perhaps you are right about it not being feasible given enough volume and so on.
De-anonymizing people who are not attempting to prevent it is fairly trivial. You tie one transaction to their wallet and they use the same wallet for everything. But that's an entirely different question than whether you can have a "block list" for wallets.
What do you do when people in other jurisdictions pay no attention to the block list and then someone uses the money in the "blocked" wallet to buy some other fungible commodity there?
> But at that point, if a government level threat actor wants to stop you from doing something and you are in their jurisdiction, jail cells tend to be quite effective at limiting people from spending money.
But then it has nothing to do with the money at all. "You can't sell heroin for cryptocurrency because heroin is illegal" applies just as well to cash or gold or iTunes gift cards.
And then, in a country with rule of law, they have to prove your guilt beyond a reasonable doubt in a court of law. The original problem was a random bank's fraud algorithm unjustly stealing your money as an innocent person.
I will concede the concern that the bank won’t be able to just take your money in the case of using ethereum, but being unable to legally spend your ethereum in the country you physically reside in complicates things. And buying things over the internet would get the government to wonder how you can afford these things and how you will pay your taxes, thus investigating your finances and discovering the proscribed crypto wallet. Capone got busted this way and cash is 100% fungible and private.
> being unable to legally spend your ethereum in the country you physically reside in complicates things
But you can legally spend it, because nobody has found you guilty of a crime, because you haven't committed a crime.
The existing problem is that you don't have to be convicted of a crime to have some payment intermediary extrajudicially lock your account. To which the solution is to not have a payment intermediary.
Then if the government wants to stop you spending your own money, they can accuse you of a crime, but then they would presumably have to prove that you have committed the crime that makes it unlawful to spend the money instead of just letting the bank steal it from you without due process.
Yes, let's just give in completely then and give them the ability to freeze any funds they want. That's definitely the logical approach. I gave up with privacy because I can't stay 100% anonymous online against a motivated adversary so now I just install government spyware with root access so they can watch me all the time and control my user accounts!
One can be anti-extrajudicial government powers and anti-cryptocurrency. For one, I believe cryptocurrencies will be the government spyware of the future that allows for total control over our finances, since crypto evangelists push “code is law” and the blockchain is immutable and completely transparent. There will be no privacy in such a system. We could spend our efforts making the current financial system be private and secure instead of doing nothing to fix that problem and utilize a system that gives them even more insight into your finances.
> One can be anti-extrajudicial government powers and anti-cryptocurrency.
The trouble is the current system has failed to provide both of those at once, because of the incentive structure. The government wants the intermediary to try to prevent fraud or crimethink or what have you so they don't punish the intermediary for making mistakes, so the intermediary makes lots of mistakes and tramples over innocent people without enough power to push back.
In other words, it's much harder to have a non-abusive intermediary than to remove the intermediary.
> For one, I believe cryptocurrencies will be the government spyware of the future that allows for total control over our finances, since crypto evangelists push “code is law” and the blockchain is immutable and completely transparent.
This is true of Bitcoin to an extent but there are at least two ways to avoid this.
One, you can have a blockchain that doesn't work like that but still doesn't subject you to the whims of an intermediary, e.g. Monero.
Two, a blockchain like Bitcoin is completely transparent, but it also doesn't tie your name to your wallet or limit you to a single wallet, so in principle you can use a separate wallet for separate activities without any way for someone with only access to the blockchain to correlate them. Apps could make this easier to automate.
You could also just use a third party payment processor which is only using cryptocurrency for settlement between payment processors, so the individual transactions aren't being recorded on the blockchain. But then you don't have to, which is important to give the user leverage over the intermediaries, and make it easy to switch because anyone who accepts Bitcoin accepts Bitcoin regardless of whether or which intermediary is used to send or receive it.
The solution to, the government is extrajudicially spying on our transactions and without due process blocking people from their finances, is not a system that uses an immutable public ledger. It’s reforming the law to protect people’s right to privacy and due process.
Ignoring solving the problem of the government not respecting people’s right to privacy and due process is not acceptable to me in my opinion. Saying Ethereum has private transactions isn’t any different than telling someone whose bank account was frozen without due process that they should just use cash.
