http://www.forbes.com/sites/kashmirhill/2013/11/13/sanitizing-bitcoin-coin-validation/Its based on significant misunderstanding about bitcoins value proposition - destroy its fungibility and the costs float up to meet credit cards and paypal.
It is also a ridiculous approach. If they want to certify users, they should do that as optional KYC, AML certificates that regulated merchants in respective jurisdictions can request, which could be attached to wallets/identities, not to fully fungible coins. The certificates should be non-transitive they attest to the identity of the user, not the coins. They should be optionally sent - if the recipient does not request it, it is privacy destructive and a security risk to send identifying information to unregulated businesses and individuals.
Their technical representatives of Coin Validation should be ashamed. How can someone who doesnt understand a concept as basic as fungibility and its relation to transaction costs, and the difference between identity and coins hope to exist in this ecosystem.
What they are proposing so far at least as explained by the Forbes article is stupid, dangerous and just wrong.
I am also incensed frankly that someone would step into the market with such a muddle-headed thinking, and attempt to sabotage or destroy the core bitcoin feature that gives its value, where the value has been created by Satoshi and a cast of millions of man-hours of contributions of the community and technical wizards developing it mostly on volunteer time. I am not someone prone to swearing, but this is astonishingly stupid and dangerous. Please stop now. In the article it is claimed they sought advice from the Winklevoss twins, if the twins value their estimated $30million bitcoin holding they should advise them to stop: if fungibility is destroyed bitcoins value as a transaction currency is impacted.
I encourage anyone with technical skills to put their thinking caps on to find ways to increase fungibility in the short term like CoinJoin, coin control in wallets, helping less technical people migrate to better wallets, educating people about privacy practices that defend fungibility. And longer term privacy technologies like zero coin, homomorphic encrypted value and committed (hidden) transactions.
I encourage all bitcoin businesses to shun Coin Validation unless we see some major U-turn or corrections. If your business depends on the success bitcoin, it depends on the fungibility of bitcoin, and Coin Validation seem to be set on destroying both.
You can quote me on that.
I welcome Coin Validations corrections of the claims in the Forbes article. Tell me you were misquoted.
Adam
ps For people who have no idea who
http://cypherspace.org/adam/ I am
https://bitcointalk.org/index.php?topic=225463.msg237167 , my small part in bitcoin is I invented distributed mining in 1997
https://en.bitcoin.it/wiki/Hashcash (you can find the reference in Satoshi's paper) and worked on opensource ecash & crypto currency research & implementation for about a decade alongside Wei Dai & Hal Finney & others.
I agree with a lot of what you have to say but how can we have transparency with privacy?
For instance if I want to claim my transactions under a pseudo-nym as being transactions I have made then this would be possible with a digital signature and public key. It is also possible that I could have that digital signature verified by Coinbase. My personal identifiable information does not need to be shared with anyone other than Coinbase and then Coinbase could verify me and all of my transactions would be connected to a real world identity. My public key could be uploaded to a decentralized blockchain/database along with a verified digital signature.
I don't really like the idea of tainting coins but no one is offering a better alternative either. So what is an alternative idea which does not involve tainting coins which can preserve privacy, pseudo-anonymity and fungibility while also removing bank secrecy and providing transparency?
I think in order to have democracy we cannot have bank secrecy and must have transparency. In order to combat institutionalized corruption we must have the ability to follow the money trail and this means transparency. So I don't want to remove the ability of the community to use the tactic of sousveillance to investigate itself and I do not want to remove the ability of law enforcement to investigate (with the cooperation of the global Bitcoin community).
I want the ability to be able to claim my transactions under a pseudo-anonymous but verified identity so that I can be cleared if there is an investigation. Is it possible to do this?