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No need to wait for more adoption - this list already exists. It's illegal to transact with anyone on OFAC's "Specially Designated Nationals And Blocked Persons List": https://ofac.treasury.gov/specially-designated-nationals-and...

This list contains (among other types of identifiers) a bunch of cryptocurrency addresses, and exchanges/hosted wallets/etc in the United States will refuse to do business with you if there's any association with one of these addresses.

Then I'll send blacklisted coins to your addresses and theses of my enemies, so they couldn't use their money.

But if we’re using an L2 like the lightning network or some Ethereum based one, you wouldn’t be able to do that. Using specific smart contracts with the guardrails I am talking about, your flagged addresses wouldn’t be able to open or complete that transaction without my approval.

And also this highlights why cryptocurrency probably won’t achieve mass adoption. Being able to send nfts that are actually viruses that drain a user’s wallet if they interact with it could allow for automated fraud on a scale never seen before.

How is this a valid argument? One's enemies don't get to choose how they receive coins. Even if an L2 exists, one can still send via a classic L1.

This fictional scenario would have people not sharing their L1 address. Like you currently don’t share your bank account number when you use a credit card.

I’m highlighting how cryptocurrency would probably not be adopted as it works today and would likely have guardrails to prevent fraud, abuse, and a block list of “bad addresses” associated with transactions the government and corporate do not approve of. Like how fiat works today. It’s on cryptocurrency advocates to explain how mass adoption would avoid bad governance. And if we can eliminate bad governance by developing strong legal protections, rights to privacy and so on, why is the transition to crypto necessary if you had a right to freely, privately, and securely make digital transactions?

It doesn't quite work like this, what the banks are doing is blocking the ingress/egress points, the points where real money is transferred back and forth from real money to blockchain money. The bank never sees a bitcoin address and it would be rather useless anyway.

The way bitcoin wallets work nowadays is that when you have some bitcoin on an address and you sent some coins to somebody it splits into two addresses, the receiver and a new address signed with your wallet key. But it is non-trivial to introspect the blockchain to know which of the two addresses you control now. It isn't perfect anonymity but it also isn't as trivial as creating a blocklist of addresses or wallets.

My argument is, if we wave a magic wand and suddenly all transactions are now in Bitcoin (or Ethereum or whatever) instead of dollars, without changing our culture, rights, and everything else, why would we not end up in the current system of guardrails, block lists, proscribed organizations and individuals?

Without a legal right to private digital transactions why would the mass adoption of Bitcoin make that a reality and the system not just be rebuilt in a few years? And if we had a legal right to private digital transactions, why would Bitcoin even be used for everyday transactions if dollars are good enough?

Well I was just commenting on the technical side of things. I would assume that the people who advocate / invented Bitcoin believe that the monetary system with those regulations is corrupt/repressive/broken. The point of Bitcoin is a technical workaround of these issues they see. If those issues didn't exist there would be no reason for Bitcoin to exist.

The point isn't to fix the system, its to figure out a way around the system. To make the regulation of Bitcoin/etc. a technical impossibility. So even if you don't have a right to private digital transactions it doesn't matter. Right now, you don't need a bank to transfer bitcoin to/from dollars, there exist already countless ways around it.

Thats all to say if you believe in unregulated capitalism and not that there are very good reasons for a lot of the regulations, and even the parts that are corrupt or broken should not lead you to advocate for no regulations at all, which would effectively end up in a Mad Max dystopia.

>why would there not be a block list of “known bad addresses” (for cryptocurrencies)

It’s a good question.

The soft libertarian crypto-advocate answer might be: Because this discrimination based on ‘badness’ of transaction purposes is antithetical to the whole original ethos of Bitcoin.

The practical answer, in my opinion, might be: Because this powers the adoption of Zero Knowledge obfuscation technologies that make tracing transactions almost impossible. So then the only solution is a total ban on all non-approved, untracked financial transactions, which is a frightening intrusion into personal liberties.

And, obviously, many people’s answer would be: Yes, that sounds good, and it will protect us from many bad things.

So the solution to me is protecting personal liberties with respect to private transactions. A right to privacy with regards to digital transactions, a culture of impeaching, recalling, or otherwise voting out politicians who propose legislation that would curtail those rights, and a legal system that would punish corporations and people who violate others rights to privacy doesn’t necessarily mean that we need crypto. It could help facilitate that, but fiat, specifically cash can do all that (just not yet digitally).

Well, yes. Good. We work the political, regulatory and legal systems to develop this utopia. I agree this is what we should be working towards. I am delighted by your optimism, it’s wonderful.

But, looking At Washington right now (for example), can you honestly see this happening anytime soon? I’m sorry, but I can’t.

I think we should think about how we can work around that gridlock, even if we’re just doing it to pressure the powers-that-be (government, banks etc) to do a slightly better job.

Substantial amount of various systemic reforms would be required to reach this. Election reform, voting reform, constitutional reforms (to the point a new one would probably be necessary), and so much more. All while, like you point out, dozens if not hundreds of thousands of people, politicians, legal frameworks, and corporate interests would work to undermine, delay, or prevent these reforms.

They are possible. But it isn’t easy. I just feel, that what cryptocurrency advocates want is really a right to privacy. That the current systems do not have. A currency using a hardcoded hyper deflationary monetary policy and is barely able to make a fraction of the current rate of fiat transactions is hopefully not what they are actually after.

Thanks that’s a good answer. I don’t have time to respond, but I appreciate your thoughtful response.

because it's trivial to create new addresses

And your tainted funds associated with a flagged address can never be associated with it.

An empty new wallet doesn’t help you pay for groceries right now.

You should just use a coin tumbler from a secondary wallet whenever you're buying legal stuff. That way you never have to risk your main wallet.

We don’t even need to invent a hypothetical scenario to say that wouldn’t work. Tornado cash was shutdown by the US government. Why would operations like that and wallet addresses associated with those types of transactions, not be banned in a crypto mass adoption scenario?

Ah, true. Ironically we might have to go back to exchanging physical cash to make anonymous transactions in that future.