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by elsjaako 1571 days ago
You mention cryptocurrencies as an alternative. But many/most of these have an open ledger. Isn't it possible for a government to sanction certain bitcoin accounts, making any bitcoin coming from them either worthless or less valuable?
1 comments
almostkorean 1571 days ago
That is mostly correct and a big issue with crypto in its current state IMO. If government blocks your off-ramps, it's possible you could still sell via a bitcoin ATM or find someone to do an OTC trade but those are obviously not ideal.

If we are talking ETH, it's possible to use zero knowledge proofs to send money and make it impossible to trace back to the source (see https://tornado.cash/). This also has some limitations, like you wouldn't be able to tornado 8 figures worth of ETH but certainly better than an OTC deal. It's also possible that the off-ramp exchanges could block any ETH that was sent through tornado. This gets hairy pretty quickly though, as the tornado ETH could easily be wash traded or mixed. Or it could be used legitimately, swapped for stablecoins, etc.

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gfdfddd 1571 days ago
if you were trying to block russia on ETH, and you were already blocking certain BTC addresses and it's "descendants" to the end of the blockchain... how many hours do you think ETH addresses associated with things like tornado would last? 24? 48?

all of crypto ignores the real world.

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almostkorean 1571 days ago
No idea what the actual numbers look like, but I think I see your point and think that level of overreach is unlikely to happen in most scenarios. If the government could track cash as well as they could track crypto, should a business or individual that unknowingly receives illicit cash be punished? It's certainly possible but I think it would be untenable in a country where people can vote. I also didn't expect Canada to freeze bank accounts before last month, so maybe I'm off base
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elsjaako 1571 days ago
What I imagine is them releasing publicly a list of "tainted" bitcoin. The government would consider it basic due diligence to not accept those bitcoins for payment.

If I buy a product from you, and I then transferred the payment to you through a US sanctioned entity, it would be your responsibility to not accept the payment. If you accept the payment, an FBI agent might come remind you of your duties.

In case of Bitcoin transactions, if such a law came into place, you might for example add to the contract that the payment in bitcoin needs to be made in non-tainted bitcoin.

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