[FoRK] Bitcoin: "tied cryptologically to all the criminal activities that contributed to its shared value"

Joseph S. Barrera III joe at barrera.org
Mon Apr 15 21:50:16 PDT 2013

"tied cryptologically to all the criminal activities that contributed to 
its shared value"

Greg, you've seen this, but I post this for folks on this list who haven't.

I'm curious if anyone can convincingly refute the following statements 
from this article. Oh, and also note: 


".... In order to do this the system that implements the currency must 
maintain and expose a full and complete record of each and every 
transfer from the origin of that particular coin forward!

"This is the only way I can know that nobody else was presented the same 
token before I was, and that the last transfer made of that token was to 
you.  I must know with certainty that both of these conditions are true, 
and then to be able to spend that coin I must make the fact that I hold 
it and you transferred it to me known to everyone as well.

"Now consider the typical clandestine transaction -- Joe wishes to buy a 
bag of pot, which happens to be illegal to transact.  He has Bitcoins to 
buy the pot with.  He finds a dealer willing to sell the pot despite it 
being illegal to do so, and transfers the coins to the dealer.  The 
dealer must verify the block chain of the coins to insure that he is not 
being given coins that were already spent on gasoline or that Joe didn't 
counterfeit them, and then he transfers the pot to Joe.  There is now an 
indelible and permanent record of the transfer of funds and that record 
will never go away.

"This creates several problems for both Joe and the dealer.  The dealer 
can (and might) take steps such as using "throw-away" wallets to try to 
unlink the transfer from his person, but that's dangerous.  In all 
jurisdictions "structuring" transactions to evade money laundering or 
reporting constraints is a separate and unique crime and usually is a 
felony.  Therefore, the very act of trying to split up transactions or 
use of "throw-away" wallets in and of itself is likely to be ruled a 
crime, leaving any party doing that exposed to separate and distinct 
criminal charges (along with whatever else they can bust you for.)

"Second, due to the indelible nature of the records you're exposed for 
much longer that with traditional currencies to the risk of a bust and 
in many cases you might be exposed for the rest of your life.  In 
particular if there is a tax evasion issue that arises you're in big 
trouble because there is no statute of limitations on willful 
non-reporting of taxes in the United States, along with many other 
jurisdictions.  Since the records never go away your exposure, once you 
engage in a transaction that leads to liability, is permanent.

"Third, because Bitcoin is not state-linked and thus fluctuates in value 
there is an FX tax issue.  Let's say you "buy" Bitcoins (whether for 
cash or in exchange for a good or service you provide) at a time when 
they have a "value" of $5 each against the US dollar.  You spend them 
when they have a "value" of $20 each.  You have a capital gain of $15.  
At the time of the sale you have a tax liability too, and I'm willing to 
bet you didn't keep track of it or report it.  That liability never goes 
away as it was wilfully evaded and yet the ability to track the 
transaction never goes away either! [...]"

On 11/16/2012 8:25 AM, Gregory Alan Bolcer wrote:
 > Bitcoin, while elegant in theory, is blood money, tied 
cryptologically to all the criminal activities that contributed to its 
shared value--with its participants condoning that criminal activity by 
being compensated through accretive value by turning a blind eye to that 
very same criminal activity.
 > Greg
 > On 11/16/2012 8:13 AM, Gary Stock wrote:
 >> Does ZS have a "loyal opposition"?  The presentation is appealing, but
 >> avoids revealing any weaknesses.
 >> Brief examples of triggers of doubt:
 >> Discussing BCI, without ever defining the acronym, suggests a mild but
 >> natural flavor of "inbreeding toward irrelevance."  It leaves me
 >> wondering if the group is too self-referential.
 >> Pitching Bitcoin as so highly profitable has all the hallmarks of an
 >> investment scam.  It leaves me wondering if the group is unaware of how
 >> that appears to outsiders.
 >> Can someone recommend a usable -- i.e., rational, moderate, concise --
 >> statement of ways in which ZS or bitcoin may ~not~ work as intended?
 >> Of what has not been said, but might ~need~ to be considered?
 >> Thanks,
 >> GS
 >> On 11/16/12 5:13 AM, Eugen Leitl wrote:
 >>> ----- Forwarded message from "ZeroState.net"<info at zerostate.net>  -----
 >>> From: "ZeroState.net"<info at zerostate.net>
 >>> Date: Fri, 16 Nov 2012 09:34:57 +0000
 >>> To: Doctrine Zero<DoctrineZero at googlegroups.com>,
 >>>     zs-business at googlegroups.com
 >>> Subject: Reminder: ZSF launch event tomorrow! Please help spread the
 >>> word if
 >>>     you can!
 >>> Reply-To: zs-business at googlegroups.com
 >>> Reminder: ZSF launch event tomorrow! Please help spread the word if
 >>> you can!
 >>> http://zerostate.net/ZSF.html
 >>> ZSF - The Zero State Fund - is a mutual fund being planned by and for
 >>> Zero State citizens and friends.
 >>> This is an important historical opportunity for avowed Transhumanists
 >>> and others aware of a radically disruptive future to achieve a degree
 >>> of control over their collective fates by beginning to gather
 >>> resources and a degree of influence over how world events affect us.
 >>> It is particularly important that you inform yourself ahead of the
 >>> launch event by watching the Youtube presentation beforehand, and
 >>> thinking about it carefully. Please also allow yourself time to test
 >>> the Openqwaq client software (again, details below), to minimise the
 >>> chance of having any difficulties on the day.
 >>> The following message is from Anu (Rudiger Koch), regarding the ZSF
 >>> launch event on November 17th, 2012:
 >>> Hi all,
 >>> I'd like to invite you to the first virtual ZSF conference on Nov
 >>> 17th, 18:00h UTC ( 05:00h ZST). This meeting will start where the
 >>> Youtube presentation (http://www.youtube.com/watch?v=QihIz59sfxY) ends
 >>> - it will mainly be a panel discussion of the Zero State Fund (ZSF).
 >>> A video of the event will be published via this webpage
 >>> (http://zerostate.net/ZSF.html) immediately after discussion has
 >>> finished, and an email thread will be created for discussion of
 >>> pledges on the main Zero State mailing list:
 >>> http://groups.google.com/group/DoctrineZero
 >>> Pledges are currently at $6,015 for options, $48,120 for shares. As
 >>> the minimum initial capital for a mutual fund in St.Kitts is $100,000,
 >>> we need at least $12,500 in pledges on options to reach that. But we
 >>> need to be a bit higher just to make sure.
 >>> Deadline for Pledges will be Nov 19, 24:00h ZST. If at this point we
 >>> have more than $15,000 in pledges, ZSF will happen, otherwise it will
 >>> be canceled and a chance for ZS to shape history will have passed
 >>> unused.
 >>> The Conference will take place in Openqwaq. Please get the client
 >>> software from:
 >>> http://qwaq.3dicc.com/client/
 >>> Please ask Eugen [eleitl at zerostate.net] for a login.
 >>> We'll meet at the teleXLR8 Main Conference Hall.
 >>> Thanks
 >>> Anu
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