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

Stephen Williams sdw at lig.net
Tue Apr 16 12:04:41 PDT 2013

On 4/16/13 11:02 AM, Gregory Alan Bolcer wrote:
> All good scenarios.
> But back to the point.  Unlike other currencies, each individual bitcoin is cryptographically tied to every single transaction 
> such that you can track the individual bitcoin all the way back to any previous uses of it.  The equivalent to the USD would 
> be if each time any bill was used, the serial number was captured at the point of that exchange similar to the where's george 
> app.
> http://www.wheresgeorge.com/
> In the early days of bitcoin, it was the most popular way to purchase social security numbers, credit card numbers, and mass 
> password lists because it was capable of completing transactions online, using grey and black market exchanges, and not 
> dependent on common financial tools and methods.  Many criminal groups had a vested interest in seeing the value of bitcoin 
> remain high so that these initial markets didn't dry up.
> Also, similar to Napster where there was a percent of Napster used for illegal copyright violation, at that time, bitcoin had 
> a higher use for legitimate transactions for illegal goods.  Using the Napster legal argument, my comment was that at that 
> time and without much galloping inferentialism, it wouldn't be a stretch to state that bitcoin would be considered a criminal 
> enterprise by certain US courts.
> I swear I've explained this concept on 5 different lists already.
> Let me ask two questions on the subject of perfect information.
> Would you feel comfortable using a US dollar bill that was stolen from a little old lady that was murdered on the street?  
> Maybe, maybe not.  If the bank gave you the note and it was recovered, sure why not. Ignorance is bliss.  If you personally 
> saw the murder and the murderer gave you the dollar bill to make you pretend you didn't see anything, probably not.
> If you had an ability to look up the provenance of every single bitcoin and found that someone wanting to pay you for your 
> pizza or your porsche with 20% "dirty" bitcoins and 80% clean ones. Would you take it?  Would you insist on only the clean 
> ones? Would it matter depending on how dirty the coins were?  If at all?

It doesn't matter at all in either case.  If someone gave you stolen goods, which are not money, in the US at least, then you 
can't take them.  This is one reason I don't understand the final outcome of this:

Because the end-recipient isn't a thief he apologizes and says she should keep it in return for him embarrassing her?  Is this a 
European thing?  In the US, she has committed an illegal act: receiving stolen property.  Under a theory not unlike that used to 
justify anti- child pornography, making reception of stolen good illegal tends to dry up the supply chain.  Is this a foreign 
concept in both Iran and Europe?


But money or other fungible money-like commodities are generic stored value.  In the case of the LoL / murderer, there are three 
reasons to take the money:

 1. It's money.
 2. The social contract to report a violent crime is much stronger than the contract to make a personal agreement, so I'd report
    the crime anyway.
 3. It would be the safest thing under the circumstances.  Why telegraph that you're going to turn him in, turning you into a
    100% liability?

While there is some tracking for "conflict diamonds", doing something similar for gold, in general, is pretty tough.  And you 
could use similar reasoning as above to make the case that any gold not freshly mined is blood-gold, probably many times over. 
And the dirt your food is grown in has dead people in it.  You drink water that has been everywhere.  And the land you live on 
was stolen from American Indians, etc.  Anything other than direct causality or supportive causality inducement (i.e. creating a 
market that encourages repeating) is superstitious and irrational.

I'm not sure how to resolve the capital gains problem of Bitcoin, although it seems that currency traders and really everyone 
who uses any monetary system would have exactly the same problem.  How is that resolved?  Isn't it technically a problem that I 
use money from a month ago to buy an ebook in EU?

As far as legitimacy and criminal intent, if there is an active, legal use of Bitcoin, then it doesn't matter if some people use 
it to further illegal purposes.
The tracking problem is interesting since the goal of early Cypherpunk talk about digital currency was to have something that 
was untraceable.  Presumably there is some way to achieve this, but presumably those would be illegal if there weren't strong 
legal purpose.  You could easily argue that there are simple privacy reasons to have private transactions: which books you read, 
movies, etc., but most people don't care now.

> Greg


> On 4/16/2013 10:00 AM, Lucas Gonze wrote:
>> http://bitcoinintro.com/bitcoin-overview/use-cases/
>> Send emergency Bitcoins instantly to stranded family and friends abroad
>> directly to their smartphone! No waiting for the bank to open, no $25 wire
>> fees. Instant assistance!
>> Want to store a value of bitcoins securely for a long period of time.
>> Generate Bitcoin keys off-line, print them, store them in a safe at your
>> bank. Transfer Bitcoins to the off-line address and they are super secure
>> until you need to spend them! Offline Bitcoins are not vulnerable to
>> malicous software that may lurk on your computer.
>> Safer than a lemonade stand for kids to make their first earned money (more
>> anonymous, no real world contact). They can sell their arts and crafts,
>> like home made beads/necklaces/bracelets/etc.
>> Worried about making large transactions in public and having to safely
>> transport the money to safety afterwards? Accept Bitcoins to your smart
>> phone, then transfer them to your home computer or off-line Bitcoin address.
>> Your computer just failed to boot with a wierd error message. You Google it
>> and discover a forum thread where someone already solved the problem and
>> helps you get your computer back online. You decide to reward them by
>> sending a few BTC to the Bitcoin address in their signature line as thanks
>> for helping you get back to business.
>> Are you a merchant and tired of payment processor usage fees? Tired of
>> dealing with fraud and chargebacks? Transactions do not require transaction
>> fees. And once the money is sent to you, the transaction cannot be reversed.
>> Storing cash for a long period of time is not profitable because of
>> inflation – a government’s printing of unbacked notes. After Bitcoin’s
>> pre-programmed inflation period ends, it will begin to deflate due to
>> attrition. Storing your coins for a long period of time may actually
>> increase their value!

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