Philosophy & Economics of Bitcoin

Andrew M. Bailey, Bitcoin Policy Institute

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Week 7: Financial Censorship

Lecture: Chokepoints

Key Themes

• The main forms of financial censorship, how they manifest, and the place of physical cash in criminal or otherwise unsavory transactions
• International sanctions, anti-ransomware measures, and other possibly socially-beneficial uses of financial censorship
• How bitcoin achieves censorship-resistance, and where it remains vulnerable

Focal Readings

• Resistance Money, Chapter 7: 'Resisting Censorship'
• Rogoff, The Curse of Cash (selections)
• Messina, Private Censorship (selections)

Secondary Readings

• Cohen and Cohen, ‘The Possibility and Defensibility of Non-State "Censorship"’
• Bridy, ‘Internet Payment Blockades’
• Hendrickson, Hogan, and Luther, ‘The Political Economy of Bitcoin’
• Hendrickson and Luther, ‘Banning Bitcoin’
• Hendrickson and Luther, ‘Cash, Crime, and Cryptocurrencies’
• Warren, Bitcoin: A Game-Theoretic Analysis (selections)
• Wales and Ovelmen, Bitcoin Is Speech
• McDowell, Payments Power

Reflections

1. 100 words or less: give your own example of actual financial censorship, and the underlying technical and social factors that make it possible
2. 125 words: what is the most convincing case for the thesis that bitcoin transactions can indeed be censored? How, precisely, might would-be censors block transactions, and who or what could do this?
3. 100 words: drawing on what you learned this week and in the previous week, explain the main ways in which cash transactions are vulnerable to financial censorship.
4. 100 words or less: prepare exactly two critical discussion questions about any of the focal readings. For each question, be sure to include a specific quotation or citation to indicate how the readings prompt it, and one sentence about why it matters.

Practicum

• Imagine you are a legal authority who has reason to think that a given bitcoin address is going to receive funds in exchange for contraband (drugs, weapons, assassination contracts, exploitative sexual material – take your pick). In half a page or less, describe an action plan with the goal of both stopping that transaction and ultimately apprehending the perpetrator. What steps could you take? What resources and allies would you need in order to execute the plan successfully? What are the risks and possible downsides?
• Imagine you are an ordinary bitcoin node operator who wishes to prevent the use of the bitcoin blockchain for so-called ‘Inscriptions’. In half a page or less: What steps could you take? What resources and allies would you need in order to execute the plan successfully? What are the risks and possible downsides?

Schedule

Tuesday 5 March
Readings	Read Chapter 7 carefully and in its entirety; skim the selections from Private Censorship.
Reflections	Complete one of Reflections 1-2 and one of Reflections 3-4, and submit by midnight before class.
Friday 8 March
Readings	Read the Curse of Cash selections in their entirety. Read at least one of the secondary readings (your choice), and bring any thoughts about it to class.
Practicum Assignment	Complete your group's assigned Practicum task; post your findings to our Practicum document by midnight before class.