
A Putin Aide Is Eyeing Cryptocurrencies to Beat Sanctions, Report Says - aalleavitch
https://www.bloomberg.com/news/articles/2017-12-12/putin-aide-eyes-cryptocurrencies-to-beat-sanctions-rambler-says?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social
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jaredhansen
"The Treasury today announced new regulations on cryptocurrencies, citing a
2017 report showing that cryptocurrencies are often used by rogue regimes and
terrorist states to evade sanctions..."

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afsina
"rogue regimes" "terrorist states" and "sanctions" sounds like government
inventions and scare words to me.

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sdwa
All three of those things sound pretty plausible to me. ISIS is known to use
bitcoin, and I doubt they're the only one, and the single biggest use case for
bitcoin up until this year was to buy illegal drugs. Using bitcoin for illegal
and nefarious purposes would surely be one of the most obvious things to do.

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AlexCoventry
What's its biggest use case now? Funding ERC20 ICOs?

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tCfD
Appearing to is good enough. Just as it funds and underwrites altcoin hustles.
Need to lure in $1MM of real money to your ICO? Pay an old school bitcoiner to
move $10MM to an address you claim to control and call it organic market
interest.

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bufferoverflow
Yeah, but it's not like the country runs on cryptocurrencies. Let's say you
get a billion dollars worth of BTC, then what? You would want to convert to
fiat, both foreign (for imports) and rubles (for local projects). They can
definitely print more rubles, devaluing them, but no real way of getting
dollars/euros.

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wutbrodo
"Laundering" their BTC seems like a pretty easy arbitrage opportunity: you can
sell stuff to Russians for BTC and then convert your BTC to dollars, in both
cases avoiding the conventional fund transfer systems that the US gov't exerts
control over.

I might be misunderstanding something about how this works though.

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bufferoverflow
1) You didn't explain where the dollars come from, while the country is under
sanctions.

And my billion dollars example was just an example, Russia needs hundreds of
billions.

2) What do you mean by "sell stuff to Russians for BTC"? Did you mean buy
stuff with BTC? What stuff is that?

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hueving
Well one of the selling points of bitcoin is lack of government intervention.
Seems like a prime use case.

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stock_toaster
Hasn't the North Korea been doing this for a while now?

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avmich
An interesting comparison came to mind. Germany was prohibited from developing
some weapons following defeat in World War I. However the list didn't include
rockets, so a lot of efforts were spent to create V-2 and to manufacture them
in numbers no other country matched during World War II. This lead to
explosive development in rocketry after the war.

Here the technology - cryptocurrency instead rocketry - can get an unusual
boost from state-sponsored efforts. Disregarding what we're going to see
unfolding - a man in a high castle or a space race - the technology may likely
benefit.

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Frogolocalypse
> However the list didn't include rockets

Or submarines. Which is probably an even closer parallel.

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DoveBrown
The Treaty of Versailles specifically prohibited the German navy from having
any submarines. They got around this by creating a company in the Netherlands
through which the German high command ran their research and development.

After 1933, it's a different story, but it doesn't really hold as an example
of restrictions increasing technological innovation.

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Frogolocalypse
Thanks for the clarification.

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sova
Misread that as "sancti-coins" ...

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nasredin
Nice.

I think these are the "new" sanctions that concern Putin.

Basically Congress told the IC to draw up a list of Russian oligarchs, so they
may be targeted.

Since a lot of these oligarchs have money in the West (houses in Italy and
Miami) this "Putin aide" may be worried about his future.

Don't forget Putin is getting another 6 (?) year term.

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tehlike
If anything, I am sure kremlin would do this on cryptocurrencies that support
privacy - otherwise no sane business would like to accept money from a
"tainted" address.

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omarforgotpwd
As if they're not already heavily using cryptocurrencies to circumvent
sanctions, as this isn't part of the recent major run up in the price.
Tomorrow there will be a story about how North Korea and Iran and drug dealers
are thinking about starting to use cryptocurrencies...

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m3kw9
First they would have to buy enough crypto, which will drive up prices, and
they’d had to wait for prices to go up to gain any benefits. 3rd, the US will
probably start some heavy regulations on it as it could start to pose a
national security issue

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rmason
What about North Korea and Iran? Or is that where the Russians got the idea
;<)?

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azangru
Funny thing: only today I saw a link to an article (my apologies, it's from
infowars, but it is quoting some other source - a report by a Danish bank:
[https://www.infowars.com/russia-china-will-engineer-
bitcoin-...](https://www.infowars.com/russia-china-will-engineer-bitcoin-
apocalypse-saxo-bank-predicts)) that argued that Russia will crack down on
cryptocurrencies in 2018.

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aalleavitch
If an infowars article is quoting another source, why the hell are you not
linking the other source instead of the infowars article?

[https://www.home.saxo/campaigns/outrageous-
predictions-2018?...](https://www.home.saxo/campaigns/outrageous-
predictions-2018?int_cmpid=op18-button1/#/appShell)

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Larrikin
He was trying to legitimize info wars

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Frogolocalypse
I'm surprised that it is taking as long as it is taking for this to occur.
It's also one of the reasons why it is going to be virtually impossible to
stop.

Over the past year there has been a corporate hijack attempt of the bitcoin
consensus rules. The thing that is painfully obvious is how totally
disorganised and incompetent the attack was. Anyone who understands how the
technology works has listened to armies of get-rich-quick junkies explaining
how their new fandangled blockchainz are gonna takeova da cryptoz. In reality,
bitcoin is now stronger than it was six months ago, as its nodes are even more
decentralized, and it is apparent to anyone who cares to look, that the threat
of a PoW change that started being bandied about in bitcoin, actually made the
corporate types slam on the brakes before they got crushed.

But when state actors get involved, that is going to be an entirely different
story. I expect that at some point over the next couple of years, governments
(like the US) will black-list bitcoin addresses, which undermines the ability
to shift funds. They'll go to coinbase, or every other exchange in western
nations, and tell them which addresses they want payments halted in. Which is
why technologies such as lightning have been developed, to further
decentralize value transfers in the system. It will even allow for the routing
of payments through a multiple of different blockchains if a route can't be
found between participants.

When any state actor decides that they want to start utilizing this value
transfer system for things like oil, it will be trivially easy to circumvent
sanctions. The greater the value of the market capitalization, the easier it
will be to do this. I make no comment on whether it is good or bad. In many
diplomatic arguments, sanctions are indeed a perfectly reasonable and
effective way of addressing issues. They worked perfectly well in Iraq until
the US invaded them anyway. They worked extremely well in the former
Yugoslavia, and have curbed many of the worst excesses of Iran. But that only
works when you control the money supply. The US, unfortunately, has abused
that privilege for completely unrelated reasons, and now there is a method of
permanently removing that control. It is what it is.

The fireworks haven't even started in this space yet.

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alanfalcon
How do you effectively blacklist an address when you can just generate a new
one? Treat it like a one time pad; unless the government is sending out these
black lists in real time (but even then...)

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quickthrower2
You could blacklist the originated address and then algorithmically ban any
addresses they have spent money to, recursively.

If your address is banned by being downstream, you have to do an in person ID
check or whatever and explain where you got the coins from.

Edit:

I have always wondered about the fungability of bitcoin. The case above would
mean you have some 'hot' bitcoins that are probably worth less than market
value. Someone may buy them with freshly mined ones for an exchange rate < 1.

Another scenario is really old bitcoins from 2010. Would they be worth more to
'collectors' if you can get a nice lineage.

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tCfD
Old transaction outputs will be worth more at very least because future forks
will try to legitimize their distribution as being, at least, no worse than
Bitcoin by cloning its blockchain. Though that tactic may have run its course
by now, if you already hold old outputs you probably aren't inclined to move
them anyway, especially if they have the potential to spawn new, disposable
offspring.

