Despite Promises by Advocates, Bitcoin Technology Resists Government Control

It's designed for anonymity

Federal regulators are increasingly paying attention to Bitcoin, the decentralized virtual currency. Last week, two of the most senior figures of the Bitcoin community trekked to Washington to try convince D.C.'s power brokers that they are eager to work with federal officials. But that may prove easier said than done. …

But the reality is that there's only so much the Bitcoin Foundation can do to help law enforcement. If Bitcoin were an ordinary startup, federal regulators might demand that it make changes to its network to accommodate the needs of law enforcement. But while the official Bitcoin software is published by the Bitcoin Foundation, the project is organized as a consensus-driven open source project. That means that even project leader Gavin Andresen doesn't have the authority to make the kinds of major architectural changes that would be necessary to make it work the way the feds are used to.

For example, while it's true that the Bitcoin ledger is public, the network doesn't provide a mechanism for tying Bitcoin addresses to the real-world identities of their owners. That means that even if the police determine that a particular sequence of transactions is connected to illicit activities, they may not be able to figure out who is responsible for the transactions.