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Senate HSGAC Hearings


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#1 Patrick Murck

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Posted 08 November 2013 - 11:41 PM

As you all may have heard, the Senate Homeland Security and Government Affairs Committee will be holding a hearing on Monday, November 18th on the Digital Economy entitled: "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies".

The Foundation has been invited to testify at this hearing and we will accept the invitation. The invitation was specifically made to Jon Matonis but he is unavailable. Next in line would be Gavin, but he is unavailable. Consensus from our policy team was that it leaves me to represent the Foundation and I hope to do right by you all.

To that end we will be developing our messaging and testimony over the course of next week. I would like your input into what points you would like me to stress.

What do you think we should include in our testimony?

Thanks,
Patrick

#2 Charles Hoskinson

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Posted 09 November 2013 - 12:18 AM

Not to rock the boat, but shouldn't attending a hearing by the United States Senate be a priority for our executive director? This isn't a media interview or a conference, it's the most powerful sub branch of the most powerful legislature in the world who happen to have enormous influence over global financial policy.

I'm really at a loss as to what is more important? That said, I'm glad you're going Patrick; you'll represent the foundation well.

#3 Patrick Murck

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Posted 09 November 2013 - 12:23 AM

View PostCharles Hoskinson, on 09 November 2013 - 12:18 AM, said:

Not to rock the boat, but shouldn't attending a hearing by the United States Senate be a priority for our executive director? This isn't a media interview or a conference, it's the most powerful sub branch of the most powerful legislature in the world who happen to have enormous influence over global financial policy.

I'm really at a loss as to what is more important? That said, I'm glad you're going Patrick; you'll represent the foundation well.

Thanks Charles. I apologize if I gave off the impression that Jon, or any of us, aren't treating this seriously. Keep in mind that it's a lot of travel and time commitment to prepare on very short notice. It's easier for me to step back from prior commitments and day-to-day responsibilities and go into the "war room" for a week than for Jon or Gavin to do that.

#4 Charles Hoskinson

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Posted 09 November 2013 - 12:59 AM

This is the US Senate. They call; people answer. I understand that sometimes they do things without any consideration to people's schedules or human factors, yet like the Federal Reserve we just have to deal with it.

Some things need to be a priority Patrick and this is one of them. All the gains with the IRS, FinCEN and the others can be undone by a single piece of legislation. Conversely a single piece of legislation could make the United States the best country to start a bitcoin business.

An election year is coming and that means politicians are searching for low hanging fruit to improve their odds. It can be jobs from a revolutionary new financial instrument or defending against terrorists using evil Internet money. How do we get the former. I like having a bank account.

#5 Brian Goss

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Posted 11 November 2013 - 01:30 AM

I think Charles's point is valid. We need to understand the etiquette involved here. I'm not convinced we know what message we are sending by not sending the invited person. I think we should know what our plan implies.

Do we want to force the senate to subpoena Jon? I think they can do that. Will they?

#6 Stephen Sunderlin

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Posted 11 November 2013 - 10:20 AM

I have a big problem with Jon not attending.  This could be one of the single most significant political events in the emerging history of bitcoin an the Executive Director of the self-proclaimed Bitcoin Foundation "can't make it?"  Anyone familiar with these hearings were made aware they would be happening in aproximattly this time frame last summer.  Frankly that shows poor leadership or worse fear of being put on the hot seat.

My first choice would actually be Gavin. Anyone who has met him in person or heard him speak knows, that besides the fact that he is "chief scientist" he is one of our best, most even keeled and most completing and articulate advocates.  Not to criticize Gavin but again the fact that our "chief scientist" can not attend is highly problematic.

I feel so strongly about this that I would personally contribute up to $1000 If anyone would like to join me in paying for his hotel and round trip airfare to make it possible for him to attend if financial burden is a concern.

Finally, Patrick you are certainly one of the most knowledgeable attorneys in the bitcoin space but I can't help thinking that you are being made the sacrificial lamb.

This hearing is not called "Beyond Silkroad" for nothing. It may not be pretty. But I applaud you for taking one for the team. And I will be there to support our effort.

We have yet to hear who the other witnesses. Hopefully they are completing and articulate and can handle the tough questions.

Finally Jon and Gavin I implore you to reconsider your decisions not to attend.   And if your real fear is that you could possibly be led out of the hearings in handcuffs then I think you shoul make that clear.

I have a big problem with Jon not attending.  This could be one of the single most significant political events in the emerging history of bitcoin an the Executive Director of the self-proclaimed Bitcoin Foundation "can't make it?"  Anyone familiar with these hearings were made aware they would be happening in aproximattly this time frame last summer.  Frankly that shows poor leadership or worse fear of being put on the hot seat.

My first choice would actually be Gavin. Anyone who has met him in person or heard him speak knows, that besides the fact that he is "chief scientist" he is one of our best, most even keeled and most completing and articulate advocates.  Not to criticize Gavin but again the fact that our "chief scientist" can not attend is highly problematic.

I feel so strongly about this that I would personally contribute up to $1000 If anyone would like to join me in paying for his hotel and round trip airfare to make it possible for him to attend if financial burden is a concern.

Finally, Patrick you are certainly one of the most knowledgeable attorneys in the bitcoin space but I can't help thinking that you are being made the sacrificial lamb.

This hearing is not called "Beyond Silkroad" for nothing. It may not be pretty. But I applaud you for taking one for the team. And I will be there to support our effort.

This is the HOMELAND SECURITY COMMITTEE. These guy don't want to know what an innovative technology bitcoin is or that you can buy cupcakes in San Francisco with them. They will want to know things like why, with only 12 million bitcoins in circulation they they have already traced 9 million bitcoin through silkroad. The will want to know the legal uses of protocols like zero coin and dark wallet.  They will want to know if a bad actor could manipulate the system by selfish mining. The will want to know who "Satoshi Nakamato" , why he or they remain anonymous  and more important how we don't know that he or they are not bad actors and we are all contributing to an illicit economy. If the witnesses don't have compelling answers to these questions it won't be pretty.

We have yet to hear who the other witnesses. Hopefully they are completing and articulate and can handle the tough questions.

Finally Jon and Gavin I implore you to reconsider your decisions not to attend.   And if your real fear is that you could possibly be led out of the hearings in handcuffs then I think you shoul make that clear.

#7 Dan Plante

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Posted 11 November 2013 - 06:31 PM

Personally speaking I don't have a problem with it. I suspect the majority of the membership from other countries might feel the same way.

Certainly there are strategic considerations, but the pros & cons of going & not going net out to zero when I weigh them.

At any rate, the reaction (or lack thereof) will be interesting.

#8 Patrick Murck

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Posted 11 November 2013 - 06:40 PM

View PostBrian Goss, on 11 November 2013 - 01:30 AM, said:

I think Charles's point is valid. We need to understand the etiquette involved here. I'm not convinced we know what message we are sending by not sending the invited person. I think we should know what our plan implies.

Do we want to force the senate to subpoena Jon? I think they can do that. Will they?

Thanks Brian, keep in mind that we are working with people who have broad and deep knowledge of how things work on the Hill. In addition, I have a strong relationship with the Committee staff and have been meeting with them for months now. They knew in advance of the invitation (to Jon OR his designee) that if the Foundation were invited that I would most likely be the one in attendance and they were happy with that.

There will be no subpoena's or handcuffs, and, I'm not a sacrificial lamb.

As for priorities, I'd rather that Gavin keep up the good work on V 0.9 and that Jon keep pushing forward on the internationalization efforts. Because I am closest to these issues it is less time consuming for me to get prepared.

#9 Patrick Murck

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Posted 11 November 2013 - 07:00 PM

View PostNikola Pekas, on 09 November 2013 - 04:30 AM, said:

Can we anticipate the "risks and threats" arguments, and prepare to defuse them effectively?

Money laundering: there is absolutelly no unique advantage that Bitcoin technology offers to someone attempting to misrepresent illegal income as originating from a legitimate source. Can anyone think of a specific hypothetical example?

Anonymity: Bitcoin is not inherently anonymous. Like with any other type of online transaction, users can deploy additional, external mechanisms to obfuscate their identity and money flow patterns (Tor, VPNs, stolen identities, infected computers, offshore services), these mechanisms are external to and separate from Bitcoin.

Those are the easy ones. A potentially ugly issue is CoinJoin, which indeed is something inherent to Bitcoin, and would allow an easy, ad-hoc mixing of funds between multiple users.

Thanks for this, we are trying to anticipate the types of questions that will be presented and the most effective responses. We will be gaming out those lines of questioning during the week with the policy team, including of course Jon and the legal committee chairs.

Money Laundering concerns are likely to come up as is Silk Road and Silk Road 2.0. Concerns over anonymity will almost certainly come up as well. I agree with you that bitcoin and decentralized currencies have a different risk profile from centralized currencies (Liberty Reserve, MasterCard, HSBC) and they may turn out to be inherently less appealing to illicit actors.

#10 Brian Goss

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Posted 11 November 2013 - 09:03 PM

I'm glad to hear we aren't snubbing the senate. I'm also really glad to hear we have working relationships with staffers.

#11 Patrick Murck

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Posted 11 November 2013 - 09:32 PM

View PostBrian Goss, on 11 November 2013 - 09:03 PM, said:

I'm glad to hear we aren't snubbing the senate. I'm also really glad to hear we have working relationships with staffers.

Thanks Brian, I realize reading my OP how that would cause confusion. As usual, Mike Hearn is better at this than I am: https://bitcointalk....?topic=329932.0

#12 Gavin Andresen

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Posted 12 November 2013 - 12:45 AM

RE: testifying before the Senate:  if I was in Amherst, I'd definitely volunteer. But flying back and forth from here means almost a week of lost productivity. And, actually, I think Patrick's training makes him a better choice to testify, he's less likely to say something really stupid or politically incorrect than I am.

I'll be back in the US in January, and something tells me these won't be the last congressional hearings on Bitcoin, so maybe I'll get another chance to tick the  "testify before Congress" box on my bucket list.

PS: I'm incredibly impressed with the hard work Patrick has done to build the right relationships and get smart, knowledgeable, experienced people working together to help keep Bitcoin flourishing. And I've never been happier that we decided to create a Foundation than today.

#13 Steven Schram

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Posted 12 November 2013 - 01:36 AM

The key here is to prepare a SWOT analysis for them
  • Strengths: characteristics of the business or project that give it an advantage over others
  • Weaknesses: are characteristics that place the team at a disadvantage relative to others
  • Opportunities: elements that the project could exploit to its advantage
  • Threats: elements in the environment that could cause trouble for the business or project


#14 Simon delaRouviere

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Posted 12 November 2013 - 08:21 AM

Will we able to see the testimony before-hand?

#15 Joel Dalais

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Posted 12 November 2013 - 10:55 AM

Just to throw my 2 cents in for whatever it matters.

Personally, for all the reasons stated above, I'm very happy that Patrick is going and representing us.

It's what he's been trained for as a lawyer :) And seeing his work and words on the subject, I believe he will do us all proud.

#16 Jonathan Routledge

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Posted 12 November 2013 - 01:19 PM

Well I would have said the best option was the Lawyer as well.

Personally I just think the US needs to get with the program instead of fighting Bitcoin all the way.
It would be much more productive for them to look at ways of improving it use with the $ rather then trying to destroy it.
its the best digital transfer medium invented since the start of the internet.

#17 Michael Toomim

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Posted 12 November 2013 - 08:35 PM

I propose an approach to working with the US Senate, which could extend to other governments and bodies.

The US Senate is focused on the potential problems of bitcoin—financial and drug crimes—but not the possibilities of technology to solve those problems in a nuance way. As a result, we worry that they will take brute actions toward short-sighted, blanket legislation, and outlaw beautiful budding bitcoin possibilities before they come to fruition.

The Bitcoin Community, on the other hand, has an unbridled imagination and programming ability. We solve social problems with code, in Satoshi's spirit. We have technological creativity. Bitcoin itself is the best example of this.

A more recent example of technological creativity is the budding discussion in Mike Hearn's recent thread on Coin Tracking, where our community is envisioning nuanced technological approaches to save grannies from internet extortion, without destroying Bitcoin's freedoms. These solutions are too complex for a Senate committee to design. They can identify the problem, but not solutions.

Therefore, I propose an explicit relationship with the US Senate (and other regulators):
  • The Senate formalizes the problems they want solved, in an open call. Like an engineering spec.

  • The Bitcoin Community of open-source hackers and startup businesses try to solve these problems by evolving the technology in nuanced ways that we like, before the Senate regulates bitcoin into oblivion.
This is a new approach to government-technology development. We need a new approach with Bitcoin, because the technology is moving too fast for governments. If we don't evolve our solutions and problems in concert, governments will panic.

Imagine if a Senate committee formalized their fears into an engineering spec on concrete outcomes with objective metrics:
  • Limit virtual currency money laundering to < 5% of current cash money laundering market
  • Limit cases of extortion to $1M/year
Bitcoin hackers and startups could rise to this challenge, as a broad force of technological creativity.

Imagine if the Senate provided funding (bounties, grants) for achieving certain metrics. Government could be sponsors of Bitcoin's free evolution, rather than regulators. We could work together to solve problems.

Then the Bitcoin Community would have a clear set of goals to work towards. If we achieve these goals, we will have both solved some concrete social problems, and have ensured a good relationship with government.

And the Bitcoin Community is free NOT to work towards those goals, as well. It's the community's choice. Maybe we don't want to limit drug freedoms, and inhibit Silk Roads. But this way, at least we would know our relationship with government, if we choose so.

The essence of my proposal is to stress the US Senate to distill their fears into formalized concrete objectives—an engineering spec—so the broader community can act before stifling legislation looks attractive.

#18 Michael Goldstein

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Posted 12 November 2013 - 09:14 PM

View PostNikola Pekas, on 09 November 2013 - 04:30 AM, said:

Anonymity: Bitcoin is not inherently anonymous. Like with any other type of online transaction, users can deploy additional, external mechanisms to obfuscate their identity and money flow patterns (Tor, VPNs, stolen identities, infected computers, offshore services), these mechanisms are external to and separate from Bitcoin.

Those are the easy ones. A potentially ugly issue is CoinJoin, which indeed is something inherent to Bitcoin, and would allow an easy, ad-hoc mixing of funds between multiple users.

I just ask that no one talk about the lack of anonymity in Bitcoin as if it's a feature, because Bitcoin certainly isn't pseudonymous to placate their bureaucratic fury. Recall that in the original Cryptography Mailing List post, Satoshi had "Participants can be anonymous" under the main properties of the protocol.

Misconceptions should be cleared up, but new ones should not arise. Most importantly, self-censorship must absolutely not be an option.

#19 Stephen Sunderlin

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Posted 12 November 2013 - 09:56 PM

The US Government will not allow an anonymous access point into the financial system.  The anonymity issues is the Number One issue for both Government and Law Enforcement. How would you suggest that be addressed.

#20 Joel Dalais

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Posted 13 November 2013 - 12:59 AM

Quote

The US Government will not allow an anonymous access point into the financial system.  The anonymity issues is the Number One issue for both Government and Law Enforcement. How would you suggest that be addressed.

Very focused point. Do you have references? I mean, hearsay is good an all, and I could say a LOT about the UK in this regard .. But ye, if you have some senator, or president, saying these words, I'd be very interested to see where/how they said it. Otherwise its just a conjectural personal point of view.

(don't get me wrong, I agree with you, but its a bit.. how can I say it .. presumptuous? to state such thing without references, etc)