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Even the most oppressive governments can't monitor or trace payments made with physical cash. But tracing Bitcoins is easy, thanks to the blockchain. I wouldn'

Even the most oppressive governments can't monitor or trace payments made with physical cash. But tracing Bitcoins is easy, thanks to the blockchain. I wouldn't be surprised if there is a sudden crackdown, in which BTC China's records are seized and used to identify individuals who are using Bitcoin to shift money overseas. In fact, who's to say it's not happening already?

wisty 13y ago
I can think of one good reason why the government wouldn't want to do that - because it's the people running the government who are using it to transfer public money to their overseas bank accounts. Obviously not all of them (there's more common methods, and not all of them are on the take), but enough to make it a bad idea to go fishing for money launderers. They don't want to catch anyone unless they already know who they are going to catch. I suspect this is also a factor in why it is taking them so long to unify their land ownership databases.
- jackgavigan 13y ago
  > ..it's the people running the government who are using it to transfer public money to their overseas bank accounts. I really doubt that. People "running the government" are far more likely to use pseudo-legitimate methods of transferring their wealth overseas (i.e. methods that are not available to anyone who doesn't inhabit the corridors of power) than Bitcoin. No, the people transferring wealth via Bitcoin will be in the emerging middle class demographic, not the the ruling class. Besides, if someone with political clout were to be identified as a Bitcoin launderer, it's likely that the evidence would simply be "lost". It's far more likely that the authorities would selectively prosecute those who they wished to imprison for other reasons.
bernatfp 13y ago
In these cases, use of CoinJoin is encouraged.
- jackgavigan 13y ago
  That would not prevent the authorities from discovering that someone had bought bitcoins via BTC China. Unless the target was able to produce the bitcoins or give a plausible explanation as to what they did with them, they would likely find themselves on the wrong side of a money-laundering conviction.
pjc50 13y ago
can't monitor or trace payments made with physical cash For large values of cash, yes they can; cash is bulky and has to be smuggled if you want to do it secretly, which is expensive. Hence all the US asset forfeiture laws, and various countries rules on bringing currency in or out.
- jzwinck 13y ago
  I've travelled places where a single note is worth very little, so I needed to carry enough that if they were USD could be perhaps $8K. Nobody seems to notice. Money launderers can expect to pay at least 10% of face value in "fees," perhaps up to 30%. So if someone wants to launder $100K they might be willing to pay $20K to get it done. Let's divide the money among ten mules, and one of those gets caught or defects, losing $10K. That leaves $10K total, $1K per mule, for "travel expenses." That's enough for each to book plane tickets and take a few hundred back home. For you and I, doing this would make no sense. For plenty of people in the world, it could be the best career opportunity they have. It's not really clear to me how we can expect to stop this, apart from some more obvious markers in bills to show up in airport (and seaport) scanners (imagine embedding the Audi logo using metal film in every note--something like that).
- jackgavigan 13y ago
  > For large values of cash, yes they can... No they can't, unless they have taken special measures (e.g. surveillance[1]) which are invariably resource-intensive. If a $100 turns up in a Miami drug dealer's wallet, there's no way of tracing it from the ATM is was issued from in NYC a month earlier. Cash does not leave a trail of breadcrumbs leading back to every wallet it passed through. Bitcoins, on the other hand, are traceable by default. Users have to make an effort to cover their tracks using a laundering service (vulnerable to compromise) or something like CoinJoin (potentially vulnerable to network analysis). [1]: http://www.kickstarter.com/projects/1460639069/follow-the-money-0 http://www.kickstarter.com/projects/1460639069/follow-the-mo...

wisty 13y ago

I can think of one good reason why the government wouldn't want to do that - because it's the people running the government who are using it to transfer public money to their overseas bank accounts. Obviously not all of them (there's more common methods, and not all of them are on the take), but enough to make it a bad idea to go fishing for money launderers. They don't want to catch anyone unless they already know who they are going to catch. I suspect this is also a factor in why it is taking them so long to unify their land ownership databases.

jackgavigan 13y ago
> ..it's the people running the government who are using it to transfer public money to their overseas bank accounts. I really doubt that. People "running the government" are far more likely to use pseudo-legitimate methods of transferring their wealth overseas (i.e. methods that are not available to anyone who doesn't inhabit the corridors of power) than Bitcoin. No, the people transferring wealth via Bitcoin will be in the emerging middle class demographic, not the the ruling class. Besides, if someone with political clout were to be identified as a Bitcoin launderer, it's likely that the evidence would simply be "lost". It's far more likely that the authorities would selectively prosecute those who they wished to imprison for other reasons.

bernatfp 13y ago

In these cases, use of CoinJoin is encouraged.

jackgavigan 13y ago
That would not prevent the authorities from discovering that someone had bought bitcoins via BTC China. Unless the target was able to produce the bitcoins or give a plausible explanation as to what they did with them, they would likely find themselves on the wrong side of a money-laundering conviction.

pjc50 13y ago

can't monitor or trace payments made with physical cash For large values of cash, yes they can; cash is bulky and has to be smuggled if you want to do it secretly, which is expensive. Hence all the US asset forfeiture laws, and various countries rules on bringing currency in or out.

jzwinck 13y ago
I've travelled places where a single note is worth very little, so I needed to carry enough that if they were USD could be perhaps $8K. Nobody seems to notice. Money launderers can expect to pay at least 10% of face value in "fees," perhaps up to 30%. So if someone wants to launder $100K they might be willing to pay $20K to get it done. Let's divide the money among ten mules, and one of those gets caught or defects, losing $10K. That leaves $10K total, $1K per mule, for "travel expenses." That's enough for each to book plane tickets and take a few hundred back home. For you and I, doing this would make no sense. For plenty of people in the world, it could be the best career opportunity they have. It's not really clear to me how we can expect to stop this, apart from some more obvious markers in bills to show up in airport (and seaport) scanners (imagine embedding the Audi logo using metal film in every note--something like that).
jackgavigan 13y ago
> For large values of cash, yes they can... No they can't, unless they have taken special measures (e.g. surveillance[1]) which are invariably resource-intensive. If a $100 turns up in a Miami drug dealer's wallet, there's no way of tracing it from the ATM is was issued from in NYC a month earlier. Cash does not leave a trail of breadcrumbs leading back to every wallet it passed through. Bitcoins, on the other hand, are traceable by default. Users have to make an effort to cover their tracks using a laundering service (vulnerable to compromise) or something like CoinJoin (potentially vulnerable to network analysis). [1]: http://www.kickstarter.com/projects/1460639069/follow-the-money-0 http://www.kickstarter.com/projects/1460639069/follow-the-mo...