In an interesting turn of events, the self-proclaimed creator of Bitcoin, Craig Wright has begun to claim that Bitcoin confiscation is easy.
With Bitcoin finally reaching the mainstream enough that there are going to be court orders over the hacking of exchanges, this issue was bound to come up eventually. What happens when we know where the cryptocurrency is, but can’t physically take it?
True Confiscation Is Impossible
The United States has been able to seize large quantities of Bitcoin over the years, but that was only possible when it was physically stored. If someone has their private key or the seed password committed to memory, there is no way that information can be accessed. It is as secure as it can be, and there’s nothing the U.S. government can do about it.
At least that’s what Bitcoin proponents used to say. Now, Wright is claiming that network miners for Bitcoin will comply with court orders and patch the code so the tokens are recovered. By mandating the miners to patch code, the courts can recover this Bitcoin.
The tone of Wright’s tweets on the topic is very paternalistic. He is trying to take ownership of the Bitcoin protocol, but there are two problems here. First, not nearly enough people believe him. Second, even if it was true, the network is bigger than he is now, and he has no claim or leadership over something that was designed to be decentralized.
The Case for Bitcoin
A big part of the value-add case for Bitcoin is that the transactions are immutable. So if what Wright is saying is true, he is actually hurting the Bitcoin ecosystem. People who own Bitcoin as a matter of self-sovereignty would be more likely to sell Bitcoin and buy another token that could be considered more secure.
Bitcoin functions without a bank and is better that way, because there is no intermediary who can be coerced into forfeiting the money on a person’s behalf. Whether this is a good thing for society at large is a whole other question.
The irony behind this, of course, is the fact that Craig Wright himself has a court order to forfeit a large sum of Bitcoin. So this could be used against him (more than anyone else) if it was enacted. But there’s also the fact that he is closely tied with a spinoff of Bitcoin, Bitcoin SV, and this type of publicity will hurt Bitcoin and its credibility. That could be exactly what he wants.