FWIW I've run into a lot of regulatory people who have pretty clear views that Bitcoin mining should be regulated such that addresses are blacklisted or even whitelisted. Obviously that's a goal, not necessarily what they'll succeed in making happen, but that's what the long-term intent is. For instance, one regulator I talked to a few months ago at a conference was *very* clear in her view that the Bitcoin protocol simply must be changed to add verified digital identities to the protocol itself, and mining blocks with transactions without valid identities and/or extending blockchains with non-compliant transactions should be an illegal activity that's prosecuted.
This assumes that bitcoin would fall under a country's legal jurisdiction... but the blockchain is global.
So how could this ever possibly be enforced let alone have any legal precedence?
Most likely their would end up being two versions. A legal one for the USA and the real one for the rest of the world.
This push toward tainting and increased control is entirely predictable. It is one of the driving forces behind my wishing to have one layer of abstraction sliced horizontally vs. vertically (sidechains vs. treechains.)
A PoliceStateCoin sidechain could have all of the identity and tracking stuff that big brother wants. I would use it day in and day out just as I do Visa, PayPal, etc today. The big difference is that if it could possibly maintain a peg to a free backing store (such as Bitcoin if it remained free) I could have some hope of swaping out of it as needed.
Of course it is true that a totalitarian regime such as the one Mike Hearn and Peter's friend in the mainstream financial system long for, sidecoins could be outlawed on simply the basis of being backed by a free reserve. It would, however, be one more hurdle for the fascists to jump through both legally and operationally. It would also make chain analysis to the individual level highly impractical.
From a system design point of view, a solution involving subordinate chains which can come and go creates a 'whack-a-mole' problem that can evolve quickly to take advantage of niches and adapt readily to threats. The one thing that needs serious focus is keeping the backing store itself as well defended as possible. Even then there is are some significant advantages:
- If the backing store came under attack and was damaged for periods of time, the subordinate chain systems would keep right on functioning in probably a degraded capability form to serve daily needs (depending on implementation.)
- If the backing store completely failed it is likely that it would be replaced by something else with something less than a full loss realized by the subordinate chain users.