Regulation of Magic

Magic is this thing that technology appears to be when it is observed without being understood, or rather it is the product of a though process that sees something without understanding it. Well, this at least can suffice as a crude definition. It's this thing that from the olden times survives in the stories of learned persons finding salvation when surrounded by less learned person through predicting the appearance of eclipses and comets. In more modern times it magic could be a small child who when learning about the origin of the fictional Incredible Hulk wish to find a source of massive radiation exposure not knowing what the outcome was for actual heros like Louis Slotin in his encounter will the villainous Demon Core.1 Yes, I'll get to the Bitcoin part.

The thinking that leads people to think magic when they see technology, can be harmful. It leads people to thing they can improve on a device by adding magical wireless connectivity because:

My suggestion is that the air gap with the computer be maintained, by running (a different brick) that is a wireless access point. You can connect to its wifi and use Firefox on localhost to upload and sign or upload and encrypt/decrypt files, which it would then serve back. This requires a computer with access to WIFI. However, I think in general a network stack is more resilient than a USB stack against, for example, man in the middle attacks (if someone knows that you will use that usb drive they could put a fake USB controller in that MITM attacks it.

Now the mystical confusion in question happens when people with a vague familiarity with perhaps some of the uses of the technology and has heard some of the vocabulary used to describe parts or happenings in the thing. The person in the state of magical bewilderment begins using the bits of vocabulary they are familiar with as something closer to incantation than to informed speech on a subject. The most benign outcome is the incantor appears a fool in front of a a more informed audience.

More maliciously though this sort of incanting many scams are born and perpetrated by refined practitioners of this sort of incantation. People peddling perpetual mining bonds and mining ASICs they lack the ability to make. More dangerous still however are those who do not know that their incantations are gibberish and proceed as though their stringing together bits of a vocabulary they have heard is a form of competence.

Yesterday, Mircea Popescu released to Trilema a series of emails where a person alleging affiliation to the United States Securities and Exchange commission initiated contact with him. The emails make a great read, and there's really no reason to proceed further without reading them.2 Mircea lays out clearly positions that he and MPEx have held and documented for quite some time. The exchange, as release comes of as rather straightforward and cordial. Fellow writers on Bitcoin related things bitcoinpete and benkay have done write ups on specific things addressed.

At issue in this matter is the US Securities and Exchange Commission3 and its likely position of being still in the state of magical confusion about this whole Bitcoin thing and how the space around it is organized and continues to organize, especially around people involved in, rather than merely around Bitcoin. Being in the United States it is likely that much of the Securities and Exchange Commission's current positions and ideas about Bitcoin might have largely been shaped by the largely irrelevant operation parading around under the guise of being a Bitcoin Foundation. They also likely feel a bit empowered in how their prosecution of a Texan who ran a Ponzi scheme in Texas that just happened to be denominated in Bitcoins.

A key part of the email exchange is that there is an amiable way forward for both parties

As a key step, the commissioners of the SEC are to at their earliest convenience adopt a resolution, to be jointly drafted at expert level, which is to include a) a plain statement of the SEC’s lack of jurisdiction with regards to Bitcoin, thus alligning itself with the position of the US FED and the US GAO ; b) a statement recognising MPEx’ regulatory authority over Bitcoin finance as a SRO ; c) an appointment of any one of the commissioners as authorised Bitcoin liaison, which would include the creation of a dedicated PGP key and a Web of Trust membership, which would be recognised as such by MPEx, and on the basis of which all further communication is to be conducted, as well as minimal technical provisions for the operation of this system ; as well as further points as the parties may deem expedient.

This will both provide a solid basis for future, continued cooperation as well as conveniently insulate either party from unwelcome legal and technical complexities. Kindly let me know as soon as you are ready to proceed.

These measures aren't unreasonable considered in turn:

  • "a" places the activities of the Securities and Exchange Commission squarely in line with those of other organs of the US Government with respect to Bitcoin.
  • "b" merely recognizes the De facto state of regulation in Bitcoin finance
  • "c" is truly the minimum standard of identification necessary for communication as an actor in the Bitcoin space.

Probably the most exciting possible outcome is one where the US Securities and Exchange Commission with little resistance comes to undertake these measures in turn. This might take considerable time,4 at least according to the way it is perceived to a five year old like Bitcoin.


  1. The fearsome Demon Core was slain in the Crossroads Able test yielding 23 kilotons and sinking five ships in the process.  

  2. In this article, in Bitcoin, or in living really.  

  3. I won't call it the SEC in this piece. I'd prefer that shorthand be reserved for the glorious South East Conference. Not dissing the agency, but Roll Tide!  

  4. Generally a considerable amount of time in Bitcoin is anything in the 3-12 month range.  

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  1. Pingback: The SEC Bares its Gums and Settles with Erik | Bingo Blog

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