The world of cryptocurrency has grown tremendously over the past 12 years, aiding a new order of independent peer to peer transactions on the web. Bitcoin was designed for those who wished to move away from the ‘manipulating politics’ surrounding fiat currencies and the centralisation of power within that regulated realm.
Regulators have been intent on slapping the cuffs on decentralised currencies for years now, with prominent political figures, like President Donald Trump, having personally expressed disdain for blockchain and its associated investment and trade.
Up until this point, blockchains like Bitcoin and others have managed to stay the course with very little interruption in the way they do things. But this may be set to change as punters side with national regulators in a bid to curb the criminal element within crypto circles.
A U.S-based company called DMG Blockchain Solutions has recently launched a Bitcoin mining pool subsidiary, called ‘Blockseer’. It is a private beta version mining pool with a difference – a difference that crypto purists may come to hate.
The Blockseer Mining Pool has introduced an innovative tool, called Walletscore, which is an independent forensic tool that can filter Bitcoin transactions efficiently for the company. It is the initiative of this pool to exclude transactions from blacklisted wallets and miners that have been connected to criminal activities by the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC). This is so that the company can regulate the amount of crime associated with their mined Bitcoins.
To top things off, Blockseer’s Pool forces its members to pass KYC protocols before joining, which throws crypto’s principle of anonymity out the window. Each investor and miner associated with the company will be registered and verified.
The COO of DMG Blockchain Solutions, Sheldon Bennett, had this to say:
“Blockseer’s pool brings a new compliance-focused standard to the industry, not only in the data the pool provides to its users but also in the Bitcoin blocks it mines on the network. The pool is focused on being devoid of transactions from known nefarious wallets.”
While applaudable for the merits connected to fighting crime, this move could present the stage for regulators to tighten the noose and finally take the freedoms that crypto has enjoyed for so long.
Governance May Take a Swim in the Pools
Various professional commentators in the business think that this initiative provides a slippery slope for the Bitcoin brand and perhaps even cryptocurrency as a whole.
Riccardo Spagni, a former lead maintainer of Monero has voiced his views on the matter via Twitter, stating:
“It’s only a matter of time till most Bitcoin mining pools are forced to do this transaction filtering.”
He calls for a change to be made to the pooling process and for Bitcoin to be made more private in a bid to thwart regulatory control.
His opinion should come as no surprise though, as Monero is a brand of crypto that highly emphasises privacy and it implements a tight control over maintaining anonymity with its transactions. This has made this particular currency a target for criminal syndicates and it has become a notorious channel for money laundering.
However, there is merit to his views. The pools dominate mining in Bitcoin realms. Due to their makeup, many of them are centralised in nature, which could make it easier for the government to control them through their centralised fiat currency accounts.
To capture this market would equate to capturing the currency, enabling the Treasury Department to change and control the way the entire industry operates.
Where is the Balance?
Perhaps its time that decentralised markets were reigned in. Any proponent to crime should be thwarted. But it should be done without taking the independence away from good citizens who wish to cut out the middleman and enjoy the freedoms of true peer to peer transaction ability.
As a result, regulators should tread carefully so as not to disrupt the fundamental rights of citizens who choose to trade legally and freely with their own assets.
For further reading read our complete Bitcoin FAQ guide.