

Schumer Bashes BitCoin, Wants to Shut Down Silk Road Drug Site - bproper
http://www.betabeat.com/2011/06/06/chuck-schumer-silk-road-bitcoin-drugs/

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narrator
The most interesting thing about bitcoins is that when the cops come and seize
your big pile of bitcoins, if it's on a truecrypted drive, and you don't give
them the password, or they shoot you because you appeared armed with a USB
drive, that just increases the value of the bitcoins in general and the cops
can't use it to buy a new police helicopter. This is the most dangerous aspect
of bitcoins by far. If properly protected, they cannot be confiscated.

~~~
blhack
How is this different than storing dollars in an offshore account?

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jrockway
It's much easier.

(That's what the government hates the most: things that make it easy to
subvert it. If you can subvert the government in some super difficult manner
that requires a lot of effort, they don't care so much. If you can type in
your paypal id and have anonymous money... that's too easy, and it makes them
mad.)

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lukev
That's the whole point of bitcoins. Anonymous, hard-to-trace payments. You
can't get that kind of "freedom" without also being really attractive for
illegal uses.

Bitcoin is designed to be subversive, and subversive means illegal as far as
the government is concerned.

This is the main/only reason I'm not making any long term investment in
Bitcoin.

~~~
mycroftiv
I think it is entirely possible Bitcoin will provoke the mother-of-all battles
for control over communication networks and how people use them. The outlines
are very clear: Bitcoin allows nearly complete escape from the current
financial regulatory systems that control currency movements and taxation.
Trying to prevent people from moving money from one country to another or
using Bitcoins for buying drugs, weapons, whatever is impossible without a
truly draconian censorship and control regime in which private citizens are
more or less forbidden from using encrypted communications.

I see government control over money as basically an immovable object - I don't
think so-called constitutional protections mean anything when it comes to
governments doing what they feel is necessary to maintain control. Internet
freedom and encryption are not as much of an irresistible force as net-
romantics would like to think.

If anything can force governments into legislating backdoors into all
encryption systems and creating a clearly established set of "choke points"
for control of data flows, it is the possibility of Bitcoin and other crypto-
currencies to render basic imperatives of the modern nation state impossible
to enforce.

It is more or less infinitely depressing to me, because as much as I would
like to believe that the "good guys" are going to win, I doubt it. People
generally don't realize how much we are already living in a dystopian
panopticon, and Bitcoin is one of the rays of light shining through the cracks
in the prison walls.

What is even more depressing to me is my own cowardice. I am too scared of the
US government to even try to resist in any way, no matter how trivial. I would
like to participate in Bitcoin and other projects, but I don't want to end up
in a federal prison for conspiracy to assist in money laundering and tax
evasion, as I imagine that any participation in Bitcoin will be interpreted by
government prosecutors of the near-future.

~~~
wmf
It seems like it would be a lot easier to just shut down the USD-BTC
exchanges. If people can't get money in or out of the system they don't need
to worry about what happens inside the system. (I'm ignoring mining, since
there's a serious limit on how large that can get.)

~~~
elliottcarlson
And yet, just yesterday I met with someone and sold him bitcoins for cash.
Anyone can be an exchange.

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mike_esspe
I like how senator's statement sounds more like a positive site review:

 _Even more amazing, said Schumer, is that users rate their delivery
performance and the quality of the drug on the site._

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byrneseyeview
Drugs are a great market for bitcoin. If you're speculating against fiat
currencies, you'll want to use a combination of gold, mining stocks, and
bitcoins, but if you're just buying drugs on the Internet, and bitcoins are an
option, I don't know why you'd use anything else.

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webXL
Chuck Schumer exemplifies the Nanny State: You aren't enlightened as we
politicians are. Therefore, we will make the decisions regarding your health
for you.

Democracy should exist to create/manage _public_ goods, not private ones. A
drug or an electronic store of value that a group of adults voluntarily use
isn't any of my business. _Everything_ is Schumer's business, apparently.

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jrockway
What if someone under 18 uses the site to buy some pot? He might share it with
his friends and they would all find bad movies to be hilarious for a few
hours! Then they would be really sleepy!

Much better if the kids go to a real movie theater and pay $20 to eat
artificial popcorn covered with artificial butter and wash it down with
artificial sugar water.

~~~
webXL
Well, then parents might actually have to "parent", and teach their children
things like "responsibility" and "moderation" so that when they're older than
18, they won't be "a drain on society".

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gwern
Silk Road, btw, has responded on the forums; I quoted them here:
[http://www.reddit.com/r/Bitcoin/comments/hscno/bitcoin_is_an...](http://www.reddit.com/r/Bitcoin/comments/hscno/bitcoin_is_an_online_form_of_money_laundering/c1xz3t4)

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mml
Yes, we must get silkroad shut down. Kids will have to buy their drugs the old
fashioned way (like mom & dad): on the bus, in a back alley, or from their
senator, or somewhere equally perilous and sleazy. God forfend our little
dumplings should be able to have their weed delivered safely by the fedex guy.

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AlexandrB
Someone previously linked this on a discussion on copyright, and I think it's
also relevant here:

<http://ansuz.sooke.bc.ca/lawpoli/colour/2004061001.php>

All money is not created equal - there are host of laws related to taxation,
tracking, and legality that apply to real-world currencies. Bitcoins are great
because they have none of this baggage, but bitcoins are also a political non-
starter for the same reason.

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GeoffreyHull
Despite the snark in the thread title, Sen. Chuck Schumer draws a reasonable
conclusion. Bitcoin, despite its various other uses, theoretically can be used
for money laundering.

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sliverstorm
I think the odds are if Sen. Chuck Schumer can conceive that Bitcoins can be
used for money laundering, other folks have thought of the exact same thing.

I.E. it _is_ already being actively used to launder money.

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hnsmurf
I get the impression that the supply and utility of Bitcoin are both still far
too low to be used for serious money laundering.

Laundering isn't particularly difficult anyway. You're probably still just
better off buying a bar and pouring vodka down the drain.

~~~
feydr
uhhh... check your math bro -- as of this moment there are 6,453,450 BTC in
existence -- and you can buy them for $18.24 a piece leading to --
117,710,928M USD -- sure it isn't a billion but it's more than enough to
hustle a few hundred k through whenever you want

~~~
vrotaru
I am wrong, or the dollars should be already _laundered_ before they reach
MtGox?

You have to transfer them from a bank account, right?

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weavejester
No, you could buy bitcoins with unlaundered dollars, even with a credit card,
and then launder the bitcoins themselves so that when you spend them they
can't be traced back to the account you bought them with.

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hnsmurf
You can do that but it would serve no purpose. If you bought $100k bitcoins on
a credit card, now the IRS has a paper trail. They'll want to know where that
$100k you paid the credit card bill came from.

Even if you got the money in without being traced and spent them that's not
laundering, it's tax evasion.

~~~
weavejester
Ah, I misunderstood what was being proposed.

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bgruber
I don't see anything here about schumer 'bashing' bitcoin. What he says (in
the source linked to by this article) is:

> "It's an online form of money laundering used to disguise the source of
> money, and to disguise who's both selling and buying the drug"

From the article, it's not clear what the "it" refers to; while it's possible
it refers to bitcoin in general, it sounds more to me like he's talking about
the use of bitcoin on silkroad, in which case I believe his statement is
completely factual.

There's really not much remarkable here about bitcoin other than its
appearance in a statement by a prominent senator and mention in a mainstream
news article. If you accept that the government should be able to regulate or
outlaw the drug trade, there's nothing remarkable here at all. I recognize
that there is a significant population here who might think that drug sales
and use should not be regulated, but the majority of the American public does
not agree with you.

~~~
hollerith
>From the article, it's not clear what the "it" refers to; while it's possible
it refers to bitcoin in general, it sounds more to me like he's talking about
the use of bitcoin on silkroad

Knowing what Bitcoin is and what money laundering is is enough to tell you
that he's talking about Bitcoin, not Silk Road.

Legit business can and often are used to launder money, but a drug market
cannot.

~~~
bgruber
I never said I thought "it" referred to silk road. "It" clearly refers to the
use of bitcoin. What's unclear is whether "it" is "all uses of bitcoin" or
"the use of bitcoin on silk road."

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ahi
Bitcoin is ideal for the 3 P's: Porn, Poker, and Pharmaceuticals.

~~~
braindead_in
The 3P's have really been an early adopter of new technologies on the net
before they became mainstream. It's a good sign for Bitcoin.

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JanezStupar
Governments WILL kill BitCoin and any other attempts. They are already issuing
their own.

Nowadays the whole point of sovereignity is that you can issue your fiat
currency. Allowing and thus defacto accepting this currency would mean that
sovereignity has been granted. And this will not happen.

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zbanks
Not being too familiar with the Tor network, how hard will it be for the
government to shut this site down?

I mean, it will have to be problematic if they can't even get an IP, right?

And they obviously can't get Bitcoins directly...

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seanalltogether
The goods have to be shipped from somewhere to somewhere. How hard would it be
for the feds to find the origin of the packages?

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zbanks
Its tough separating the wheat from the chaff. Presumably, Silk Road merchants
aren't the first to ship drugs: it's pretty tough to detect without slowing
_everything_ down.

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code_duck
Makes sense; Bitcoin is a monetary system outside of the control of a
government. It's likely to be favored for transactions that are outside the
control of a government. They're sure to not like this.

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zitterbewegung
I really think this is the beginning of the end for bitcoins. Once the
government starts going after the endpoints you will start to see the price of
bitcoins dropping as everyone tries to liquidate them. I was wondering when
this was going to happen. Maybe the next design will improve on these flaws?

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jrockway
I don't think this will happen. My prediction is that the price of drugs in
bitcoins will go up as the difficulty of converting bitcoins to dollars
increases. But as long as it's easy to _buy_ bitcoins (which will be hard to
regulate, just as it's hard to regulate the sale of illegal drugs), then there
will be a market for people that have them.

~~~
LeBleu
Isn't the ability to _sell_ bitcoins also important?

Unless you think farmers in Colombia and electric companies in California are
going to start accepting bitcoins directly?

~~~
jrockway
Yes, but you don't need to sell _your_ BitCoins, the people you are buying
goods from are the ones that do that. It's similar to how _you_ can't directly
accept credit cards, but Amazon can, so they are still very useful.

When the governments decide to shut down Bitcoin, it will probably be in the
"exchanging bitcoins for money" area, since that's relatively easy to
regulate. But it's hard to convince Offshore Bank Of Unfriendly Country to not
exchange Bitcoins for money in person, so big "dealers" will have no trouble
making the trip and getting their cash. This will involve more effort, so
prices for goods sold in Bitcoins will increase.

Similarly, if everyone could grow and sell their own pot, prices would come
down. Make that illegal, and people want more money for their work. The same
effect will occur if cashing out Bitcoins becomes difficult.

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daimyoyo
As a .onion site, the silk road is not subject to US jurisdiction. I
understand that Sen. Chuckles want's it shut down, but it won't happen. The
nature of the internet makes sites like this virtually impossible to stop.

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pnathan
in order for bitcoins to be generally accepted by, e.g., a federal entity,
they need to be taxable.

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feydr
think we need a prediction market to take pre-emptive action against federal
intervention

~~~
AretNCarlsen
There might not be a formal, publicly-accessible market, but two-party short-
selling contracts could already be active. This is what an unregulated and
anonymous currency feels like: you have no idea whether I have purchased half
of the bitcoin market over the last few weeks just to unload all of it at
once, in small chunks, before the market can adjust to the reduced value. In
fact, you won't even know if that has already happened; you will just see a
"market correction" when I sell.

<http://en.m.wikipedia.org/wiki/Market_manipulation>

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justinbaker
Fuck him. Really, is the web black market that big of an issue? How about the
fucking economy?

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philthy
HAHA this sucks for bitcoin, too bad this has been going on since the internet
first started. In fact drug selling was one of the first activities on BBSs.
Too bad for bitcoin, services like Pecunix have been harboring this kind of
stuff for years.

