4 ms·

If you trade in and out for cash, in person with a counterparty, from a self-hosted wallet that you never use to send or receive from any other wallet that's c

If you trade in and out for cash, in person with a counterparty, from a self-hosted wallet that you never use to send or receive from any other wallet that's connected to an exchange... then yes. The use case for this is mainly moving money over borders.

funstuff007 4y ago
except that person(s) you gave and received the cash from know who you are.
- marksmith2996 4y ago
  only if they're still alive
  - 8note 4y ago
    Or if they brought their phone with them
    - alex_young 4y ago
      In this scenario the person transacting the bitcoin murdered their counterparty but the cellphone is still intact?
      - hedora 4y ago
        Either that, or they didn't ask the counterparty to uninstall google maps before the meeting.
        alex_young 4y ago
        It’s a pretty amusing crime plot in any case. If your goal is to find people to off who have money on them there are surely less complicated options.
- noduerme 4y ago
  in reality, no, they don't know who I am. Back when LocalBitcoins.com facilitated face to face trades for cash around the world, you just had to have a high rating from previous transactions. Now... how safe do you feel showing up to meet an anonymous guy in a bar with thousands of dollars in Benjamins? That's the downside of being anonymous. /edit: The downside of operating completely outside the system. /edit 2: I should also clarify that I never cashed out my casino's BTC in this manner. That obviously wouldn't make sense because anything that touched a casino wallet would be traceable to that nexus. I only used it to bring extra spending cash and rent money to countries where it was hard or expensive to transfer USD through banks.
  - nibbleshifter 4y ago
    I bought and sold bitcoin in exactly that way (in person, in public) back in the day. Never has anything even remotely untoward happen. Just sit, have a beer, wait for confirmations to happen, and be on your way.
- squeaky-clean 4y ago
  Are Bitcoin ATM's still a thing? There used to be one in a coffee shop near where I lived. If I deposited cash and wore a facemask and sunglasses, how would anyone ever know who did the transaction?
  - gertlex 4y ago
    A couple months ago, I was incredulous when I noticed about a half dozen of them on google maps within a mile radius of where I am in San Jose. I haven't gone looking for them physically, though.
  - MivLives 4y ago
    They require a phone number and an ID in some cases. Their exchange rates are normally not great either.
    - vertis 4y ago
      Bad exchange rates are the cost of money laundering, along with the eventual jail sentence.
kjellsbells 4y ago
This makes bitcoin sounds like a complicated technical reimplementation of hawala https://en.wikipedia.org/wiki/Hawala?wprov=sfla1 https://en.wikipedia.org/wiki/Hawala?wprov=sfla1
- noduerme 4y ago
  It actually is exactly like Hawala, and I've traded BTC in and out with networks that had roughly the same human topography. That was the original killer app or crypto. FWIW, we Jews (speaking for my family) mostly think the Rothschilds were pretty smart for working out the same type of system by placing a brother in each European capital and banking to kings, keeping a ledger instead of moving physical gold whenever possible. It seems obvious now, but it was "moving fast and breaking things" in the 18th Century.
  - deleted 4y ago
    [deleted]
- nayuki 4y ago
  No, Bitcoin is like sending cash directly to the recipient. Lightning is exactly like cryptographic Hawala, with many hops along the way.
TrapLord_Rhodo 4y ago
... lol. Going to a site to exchange bitcoin for cold cash seems like the worst idea ever if you want to stay anonomyous. Did everyone just forget about snowden?
vertis 4y ago
Let's game this out. Bob and Alice are the first parties. You trade in cash, in person, probably in a public place. Say that Alice then gets in trouble for the drug dealing they also do (or maybe the government just pings her for not doing KYC and being licensed to do financial transactions), it could be years later. The authorities seize Alice's computers and subpoena "localbitcoins", or the whatsapp/telegram/signal chat that you had to organise the meetup. They might even have a list of addresses that Alice used for transactions at this point. Alice may or may not have had good OpSec, Bob doesn't know. From that there a myrriad options to identify Bob and Bob's addresses. In your example you don't use an exchange, but that's not the only method of identifying Bob. Mass survelliance and metadata gathering noticed 100 phones within the location and timeframe Bob and Alice were supposed to meet. Bob had to take a phone to do the actual transfer of bitcoin (or any altcoin), so just leaving it at home wouldn't work. They also know the amount Alice transferred to Bob and the rough timeframe that it was completed and put into the ledger. Bob was also seen drawing out roughly the right amount from the ATM an hour before the meeting. Of the 100 phones, most haven't drawn out that much money recently. So they can correlate a set of phones with a set of addresses. Even if Bob is not completely unmasked at this point. He has the money in but has to get the money out as well. Bob wanted as you say, to move money across the border. In order to do that Bob must cross the border[0] and meet with Charlie to do the reverse of the transfer. Only a handful of those 100 phones crossed borders shortly after meeting with Alice. As soon as the money in that address moves again the cross reference with the locations of the tagged phones and discover that they know Charlie because he's done a KYC with an exchange and installed their app (even if he doesn't use that address for the transaction). They ask Charlie some pointed questions about whether he is following KYC procedures in his financial dealing and he caves and gives up the chat logs confirming your meeting, or maybe they just install NSO spyware on his phone and watch to find all the other people Charlie is dealing with. So... In a perfectly isolated one off instance maybe that's pseudonymous. In any real world transaction it's extremely unlikely that a state can't use it's resources to unmask the participants. In a one shot, the rules might be one way, but in multi-shot there are always factors that will serve to unmask the participants, and in reality you have to do those transactions over and over until you slip up and just combine them with a KYC exchange account and it doesn't even require that level of effort on the part of the state. OpSec is hard, as they say. [0]: there is an alternative where only the bitcoin transaction crosses the border in return for something of value, either physical or digital, both have alternative paths that can be tracked in similar ways.

funstuff007 4y ago

except that person(s) you gave and received the cash from know who you are.

marksmith2996 4y ago
only if they're still alive
- 8note 4y ago
  Or if they brought their phone with them
  - alex_young 4y ago
    In this scenario the person transacting the bitcoin murdered their counterparty but the cellphone is still intact?
    - hedora 4y ago
      Either that, or they didn't ask the counterparty to uninstall google maps before the meeting.
      - alex_young 4y ago
        It’s a pretty amusing crime plot in any case. If your goal is to find people to off who have money on them there are surely less complicated options.
noduerme 4y ago
in reality, no, they don't know who I am. Back when LocalBitcoins.com facilitated face to face trades for cash around the world, you just had to have a high rating from previous transactions. Now... how safe do you feel showing up to meet an anonymous guy in a bar with thousands of dollars in Benjamins? That's the downside of being anonymous. /edit: The downside of operating completely outside the system. /edit 2: I should also clarify that I never cashed out my casino's BTC in this manner. That obviously wouldn't make sense because anything that touched a casino wallet would be traceable to that nexus. I only used it to bring extra spending cash and rent money to countries where it was hard or expensive to transfer USD through banks.
- nibbleshifter 4y ago
  I bought and sold bitcoin in exactly that way (in person, in public) back in the day. Never has anything even remotely untoward happen. Just sit, have a beer, wait for confirmations to happen, and be on your way.
squeaky-clean 4y ago
Are Bitcoin ATM's still a thing? There used to be one in a coffee shop near where I lived. If I deposited cash and wore a facemask and sunglasses, how would anyone ever know who did the transaction?
- gertlex 4y ago
  A couple months ago, I was incredulous when I noticed about a half dozen of them on google maps within a mile radius of where I am in San Jose. I haven't gone looking for them physically, though.
- MivLives 4y ago
  They require a phone number and an ID in some cases. Their exchange rates are normally not great either.
  - vertis 4y ago
    Bad exchange rates are the cost of money laundering, along with the eventual jail sentence.

kjellsbells 4y ago

This makes bitcoin sounds like a complicated technical reimplementation of hawala https://en.wikipedia.org/wiki/Hawala?wprov=sfla1 https://en.wikipedia.org/wiki/Hawala?wprov=sfla1

noduerme 4y ago
It actually is exactly like Hawala, and I've traded BTC in and out with networks that had roughly the same human topography. That was the original killer app or crypto. FWIW, we Jews (speaking for my family) mostly think the Rothschilds were pretty smart for working out the same type of system by placing a brother in each European capital and banking to kings, keeping a ledger instead of moving physical gold whenever possible. It seems obvious now, but it was "moving fast and breaking things" in the 18th Century.
- deleted 4y ago
  [deleted]
nayuki 4y ago
No, Bitcoin is like sending cash directly to the recipient. Lightning is exactly like cryptographic Hawala, with many hops along the way.

TrapLord_Rhodo 4y ago

... lol. Going to a site to exchange bitcoin for cold cash seems like the worst idea ever if you want to stay anonomyous. Did everyone just forget about snowden?

vertis 4y ago

Let's game this out. Bob and Alice are the first parties. You trade in cash, in person, probably in a public place. Say that Alice then gets in trouble for the drug dealing they also do (or maybe the government just pings her for not doing KYC and being licensed to do financial transactions), it could be years later. The authorities seize Alice's computers and subpoena "localbitcoins", or the whatsapp/telegram/signal chat that you had to organise the meetup. They might even have a list of addresses that Alice used for transactions at this point. Alice may or may not have had good OpSec, Bob doesn't know. From that there a myrriad options to identify Bob and Bob's addresses. In your example you don't use an exchange, but that's not the only method of identifying Bob. Mass survelliance and metadata gathering noticed 100 phones within the location and timeframe Bob and Alice were supposed to meet. Bob had to take a phone to do the actual transfer of bitcoin (or any altcoin), so just leaving it at home wouldn't work. They also know the amount Alice transferred to Bob and the rough timeframe that it was completed and put into the ledger. Bob was also seen drawing out roughly the right amount from the ATM an hour before the meeting. Of the 100 phones, most haven't drawn out that much money recently. So they can correlate a set of phones with a set of addresses. Even if Bob is not completely unmasked at this point. He has the money in but has to get the money out as well. Bob wanted as you say, to move money across the border. In order to do that Bob must cross the border[0] and meet with Charlie to do the reverse of the transfer. Only a handful of those 100 phones crossed borders shortly after meeting with Alice. As soon as the money in that address moves again the cross reference with the locations of the tagged phones and discover that they know Charlie because he's done a KYC with an exchange and installed their app (even if he doesn't use that address for the transaction). They ask Charlie some pointed questions about whether he is following KYC procedures in his financial dealing and he caves and gives up the chat logs confirming your meeting, or maybe they just install NSO spyware on his phone and watch to find all the other people Charlie is dealing with. So... In a perfectly isolated one off instance maybe that's pseudonymous. In any real world transaction it's extremely unlikely that a state can't use it's resources to unmask the participants. In a one shot, the rules might be one way, but in multi-shot there are always factors that will serve to unmask the participants, and in reality you have to do those transactions over and over until you slip up and just combine them with a KYC exchange account and it doesn't even require that level of effort on the part of the state. OpSec is hard, as they say. [0]: there is an alternative where only the bitcoin transaction crosses the border in return for something of value, either physical or digital, both have alternative paths that can be tracked in similar ways.