Innocence is No Excuse
For those who can't conceive of why they need privacy, we offer the following tongue-in-cheek altcoin parable in the tradition of Aesop's Fables - who always had a moral that his stories helped to make obvious.
Reprinted from the original Invictus Innovations collection.
This is only a story.
Innocence Is No Excuse
“It’s my nature,” said the scorpion to the frog.
Johnny was ecstatic! He had just signed up member number 1000 in Alternative Realities, his high school science fiction writers club. He now had at least one member in every country on the planet. Finally he could launch his idea for a writing contest where members could vote using the Alternative Realities Coin he had cloned from the open Bitcoin library. While the coins would have no monetary value, they would make a great limited source of votes that members could use to tip authors of stories they liked. At the end of the year, the author with the most ARcoins would be the club champion. He got everybody together on Skype, explained the contest, and they all launched their ARcoin miners when he said, “Go!”
Wile E. Regulator awoke with a start in his cubicle in a non-descript building somewhere just outside the Washington Beltway. The alarms on his six monitors were all going off at once! Someone had just launched another Bitcoin-derived block chain and his supercomputers had quickly traced the participating nodes to literally every country on his global map display. Traffic analyzers showed dense interconnectivity between all the nodes. This was big!
It only took 30 seconds for him to sneak through the back door of the ongoing global Skype call. He was just in time to hear Johnny’s closing remarks, “Ok guys, you’ve got 30 days to submit your stories. You can use all the ARcoins you’ve mined by then to send tips for your favorite stories. May the best author win!”
Wile E. Regulator was crestfallen. This was just a bunch of kids voting on their own amateur fiction. Glumly, he fed what he had collected from their past years’ Skype conversations and emails into his legal analyzers to crosscheck them against local laws and regulations. He found seven of them would be in violation of their countries’ voting laws when they cast their first vote, but this was hardly the kind of thing that would get him promoted. He forwarded their names to his counterparts in those countries, set his computers to routinely monitor all ARcoin transactions, and went back to sleep.
The next day, a retired banker in Panama got a Google alert about Johnny’s ARcoin blog article. Since his business, ACME Altcoins prided itself in listing every altcoin in existence; he punched in their data and listed them as available for trading. Naturally, they appeared at the bottom of the 98-page list since they had no value and none were offered for sale, but his list was once again complete.
Later that week, Wile E. Regulator noted in a routine status display that 132 of the ARcoin boys were now in violation of their local currency exchange laws for unauthorized use of a digital currency. He briefly wondered,
If one group thinks of an altcoin as a ballot and another considers it a currency, which regulations apply?
He shrugged. The regulations that applied were whatever he and his buddies said they were. He’d get more hits if he just added all the regulations together. He fired off alerts to his appropriate colleagues and continued patrolling his screens for violations.
Meanwhile, a realtor in Ukraine decided to have a special promotion announcing that he now accepted bitcoins. He wanted to give each of his clients a coupon good for 10% off. He couldn’t just send them all some bitcoins for the discount amount – they might spend it on something else. So he went to ACME Altcoins looking for a cheap alternative. He found ARcoins at the bottom of the list. He posted an offer to pay one kopiyka per ARcoin. It didn’t take long for some of the Alternative Realities boys to notice their coins were worth a couple of iTunes songs and some of them sold their whole supply.
If an altcoin is being used by different people, in different places, at different times, in different ways as a ballot, a currency, a coupon, and a medium for transmitting capital across borders, which regulations apply to it?
Wile E. Regulator pounced! Now he had ‘em! 397 of the boys had now violated some kind of money laundering, capital controls, or currency transmission regulations. And now he could put a watch on their parents to see if they reported those cumulative $293 worth of capital gains. In fact, because of their associations, he now had probable cause to access communications and purchase habits for all 1000 of them – and those of their relatives as well! There was way too much material for him to read all at once, so he decided to focus on their relationships with female classmates. This was bound to lead to all kinds of new infractions!
Somewhere in San Francisco, a junior partner in a small venture capital firm had a novel idea. He had gone through hundreds of Distributed Autonomous Corporation (DAC) start-up proposals and picked a dozen that had potential. But the task of evaluating them was daunting. He wondered if there was some way he could post them on a web site and simulate each having an initial public offering (IPO). Maybe he could construct a game where people could bet on the likelihood of success of each of the companies. He set up a web forum where they could debate the merits. Then they could buy and sell shares in each IPO using the altcoins as play money. Whichever IPO developed the best simulated market cap is the one he would recommend to his boss – and he’d have best arguments from the debate forums with which to make his case. He went to ACME Altcoins and picked some of the least used altcoins for his market. One of them was ARcoin, which he figured he could use as an IPO score-keeping currency for his Antibiotics Recycling DAC.
If others start using your altcoin for their alternative realities, do new regulations suddenly apply to you?
Wile E. Regulator couldn’t believe his eyes! People were buying and selling shares of an IPO for a Distributed Autonomous Corporation (DAC) using a crypto-currency that had traded for real fiat money on an international exchange. This was a clear violation of securities and exchange regulations in 44 countries! He could now pin something on 998 of the AR club members, 2194 of their relatives and friends, and every other world-wide ARcoin user! The only two boys he couldn’t get had kept all their votes for themselves.
He decided to check their email conversations in detail (they were obviously part of an international crime syndicate). Sure enough, he found a short exchange discussing a Bugs Bunny cartoon plot involving Marvin the Martian attempting to destroy the earth “with an earth shattering ka-boom”. He redacted the parts about cartoons and Martians (because it might reveal sources and methods) and forwarded the remainder of the email to the appropriate authorities.
Wile E. Regulator smiled. He would make his monthly quota after all!