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Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to

Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society. By that same argument, the US could round up every illegal immigrant and deport them, or every casual drug user and lock them up for life. We don't do that because it'd be ruinously expensive (not to mention immoral) and transform us into a police state. The combination of privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals short of extremely draconian measures, and changes the strategic calculus for the society as a whole.

JumpCrisscross 9y ago
> the point is whether the increasing marginal costs of enforcement are worth it to the government and society The same applies to cash. Investigating them is expensive. We don't bust the kid who fails to report the proceeds from their lemonade stand because (a) it's too small and (b) it's too mean. > privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals Analogs for each of these exist for cash. None of this is new, it's just shinier. (In any case, now you're talking about willful money laundering.)
- smallnamespace 9y ago
  > None of this is new, it's just shinier Yes, but again, costs matter (this time on the other side). Money laundering with physical cash is expensive, risky, and time consuming. You need to first get a bunch of physical cash, which itself raises suspicion and is easily tracked. Then you need to find someone in the physical world that you trust to help launder for you. If you reduce the cost of 'money laundering' by 2-3 orders of magnitude, it indirectly raises the cost of enforcement significantly, because then the government will have to sort out all the 'harmless' infringement from the serious crimes that it cares about today.
rblatz 9y ago
I'm shocked at how often tumblers come up on this site. It seems very clear to me that using a tumbler is straight up money laundering.
- campers 9y ago
  While there's no doubt they are used for money laundering, they also serve an essential privacy purpose. Imagine if every vendor you made a purchase from with your credit card also received a copy of your entire transaction history with that card. The mafia run business, the fetish porn shop, the megacorp, the government agency. While it wouldn't be that easy to connect a wallets previous transactions to the real world sources, the more people use it, the more incentive there would be for databases/services to grow mapping wallets to people/companies. Just like the services now where you can provide an email address and get the persons full details. And that transaction history is out there forever, to keep re-analysing as more wallet data is discovered.
  - rspeer 9y ago
    It's not that tumblers are just "used for" money laundering, it's that they are money laundering, definitionally. All the terrible privacy implications of using Bitcoin that you've described are true. The conclusion "so therefore it's okay if I launder money" does not follow. You could instead not use Bitcoin.
    - smallnamespace 9y ago
      You're taking the different definitions of money laundering and switching between them as it suits you. If by 'money laundering' you simply mean transacting in a way that is mostly anonymous, you can do this today just be using cash, finding someone else with cash, mixing your bills together, and none of that is either wrong or illegal. If by money laundering you mean committing a criminal act and then hiding its financial traces, then that is only one possible use of tumblers, but there are other legitimate uses.
      - 9y ago
deleted 9y ago
[deleted]
vec 9y ago
I think the phrase "motivated individuals" is doing a lot of work there. I don't currently take any steps to try and obscure my transaction history from the authorities, and I presume that most if not all of the merchants I transact with keep some form of subpoena-able records. I'm not certain why I would expect that to change just because we switched currencies. I don't personally have any desire to violate any financial regulations, so why should I go to all the extra effort? Anonymity protections aren't of much use if your counterparty isn't also using them, and they're worse than useless if they make you pop out of the statistical background noise for one reason or another.
gamblor956 9y ago
The government doesn't need to go beyond finding the tumbler. Here's how a sample investigation would go: Honeypot drug purchase, paid via bitcoin to DumbSeller. DumbSeller routes bitcoins to tumbler. Using the NSA backdoor in TOR, they trace DumbSeller to VPN service, who they then subpoena. VPN service either complies or gets charged as accomplice to money laundering and other crimes and gives up customer as part of plea deal. They then trace the payment to VPN until they reach a warm body at the other end.
- hluch 9y ago
  >Using the NSA backdoor in TOR hurr durr
- rspeer 9y ago
  Let me give you some more parsimonious paranoia: the tumbler operator is likely already working for the government, or accepting money from governments to forward them DumbSeller's transaction history. Why would they not? Running a tumbler seems like a great racket if you can cope with the amorality (and particularly if you can rationalize the fact that you're sending money to ISIS with probability approaching 1). People pay you fees in exchange for "privacy", and have no way to tell if they got it. If there exist tumblers that don't sell their customers' transaction history, in the ruthless capitalist world of Bitcoin, they are easily outcompeted by the ones that do. And a tumbler "customer" has no way to shop around for privacy.
- emmanuel_1234 9y ago
  Why in the world would one host a VPN service in the US?
coldtea 9y ago
>Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society. They have been fighting a war where the "marginal costs of enforcement" are not worth it, with the "war on drugs" for a century now. And they'll not fight something that cuts the governments and society's tax funds?

JumpCrisscross 9y ago

> the point is whether the increasing marginal costs of enforcement are worth it to the government and society The same applies to cash. Investigating them is expensive. We don't bust the kid who fails to report the proceeds from their lemonade stand because (a) it's too small and (b) it's too mean. > privacy coins + tumblers + crypto + VPNs + TOR will make it very hard for a government to punish motivated individuals Analogs for each of these exist for cash. None of this is new, it's just shinier. (In any case, now you're talking about willful money laundering.)

smallnamespace 9y ago
> None of this is new, it's just shinier Yes, but again, costs matter (this time on the other side). Money laundering with physical cash is expensive, risky, and time consuming. You need to first get a bunch of physical cash, which itself raises suspicion and is easily tracked. Then you need to find someone in the physical world that you trust to help launder for you. If you reduce the cost of 'money laundering' by 2-3 orders of magnitude, it indirectly raises the cost of enforcement significantly, because then the government will have to sort out all the 'harmless' infringement from the serious crimes that it cares about today.

rblatz 9y ago

I'm shocked at how often tumblers come up on this site. It seems very clear to me that using a tumbler is straight up money laundering.

campers 9y ago
While there's no doubt they are used for money laundering, they also serve an essential privacy purpose. Imagine if every vendor you made a purchase from with your credit card also received a copy of your entire transaction history with that card. The mafia run business, the fetish porn shop, the megacorp, the government agency. While it wouldn't be that easy to connect a wallets previous transactions to the real world sources, the more people use it, the more incentive there would be for databases/services to grow mapping wallets to people/companies. Just like the services now where you can provide an email address and get the persons full details. And that transaction history is out there forever, to keep re-analysing as more wallet data is discovered.
- rspeer 9y ago
  It's not that tumblers are just "used for" money laundering, it's that they are money laundering, definitionally. All the terrible privacy implications of using Bitcoin that you've described are true. The conclusion "so therefore it's okay if I launder money" does not follow. You could instead not use Bitcoin.
  - smallnamespace 9y ago
    You're taking the different definitions of money laundering and switching between them as it suits you. If by 'money laundering' you simply mean transacting in a way that is mostly anonymous, you can do this today just be using cash, finding someone else with cash, mixing your bills together, and none of that is either wrong or illegal. If by money laundering you mean committing a criminal act and then hiding its financial traces, then that is only one possible use of tumblers, but there are other legitimate uses.
    - 9y ago

deleted 9y ago

[deleted]

vec 9y ago

I think the phrase "motivated individuals" is doing a lot of work there. I don't currently take any steps to try and obscure my transaction history from the authorities, and I presume that most if not all of the merchants I transact with keep some form of subpoena-able records. I'm not certain why I would expect that to change just because we switched currencies. I don't personally have any desire to violate any financial regulations, so why should I go to all the extra effort? Anonymity protections aren't of much use if your counterparty isn't also using them, and they're worse than useless if they make you pop out of the statistical background noise for one reason or another.

gamblor956 9y ago

The government doesn't need to go beyond finding the tumbler. Here's how a sample investigation would go: Honeypot drug purchase, paid via bitcoin to DumbSeller. DumbSeller routes bitcoins to tumbler. Using the NSA backdoor in TOR, they trace DumbSeller to VPN service, who they then subpoena. VPN service either complies or gets charged as accomplice to money laundering and other crimes and gives up customer as part of plea deal. They then trace the payment to VPN until they reach a warm body at the other end.

hluch 9y ago
>Using the NSA backdoor in TOR hurr durr
rspeer 9y ago
Let me give you some more parsimonious paranoia: the tumbler operator is likely already working for the government, or accepting money from governments to forward them DumbSeller's transaction history. Why would they not? Running a tumbler seems like a great racket if you can cope with the amorality (and particularly if you can rationalize the fact that you're sending money to ISIS with probability approaching 1). People pay you fees in exchange for "privacy", and have no way to tell if they got it. If there exist tumblers that don't sell their customers' transaction history, in the ruthless capitalist world of Bitcoin, they are easily outcompeted by the ones that do. And a tumbler "customer" has no way to shop around for privacy.
emmanuel_1234 9y ago
Why in the world would one host a VPN service in the US?

coldtea 9y ago

>Of course with enough effort and investment you can probably stop many things, the point is whether the increasing marginal costs of enforcement are worth it to the government and society. They have been fighting a war where the "marginal costs of enforcement" are not worth it, with the "war on drugs" for a century now. And they'll not fight something that cuts the governments and society's tax funds?