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Bitcoin offers privacy as long as you don't cash out or spend it (itworld.com)
68 points by pwg 1544 days ago | hide | past | web | 33 comments | favorite



Folks on the SR and so forth are fully aware of this. There are people offering incredibly technical solutions to cashing out. And there are also some incredibly simple ones. You can buy cash in the mail for bitcoins. You could sell bitcoins in person. You could use OTR or localbitcoins. Most of these have pretty small risk profiles.

But if you are even more paranoid (which perhaps you should be) you can buy fake ID, fake documents, anonymous drop offs and so on. You could even buy an anonymous swiss bank account on SR last I checked.

There are several people making money just selling consultancy for secure cashing out on the silk road. I think it is pretty interesting.


The incredibly technical solutions suck if you live in the USA. If you have $10k and are stopped in a car, there is a high likelihood that the government thugs (police) will attempt to relieve you of the money, or you will have to prove where you earned it. Doubly so if you are a minority in the south.

Otherwise you might be able to get a Swiss bank acct, set up an offshore investment trust in some tax haven like the caymans (invest everything for awhile), transfer the money to a third country and then to a US bank. Another way would be to open up a quickie-mart/nail salon/hotdog stand and over-report income - this is what criminals do.

If you are an actual criminal with $billions then you could just talk to one of the big banks like Wells Fargo (which absorbed Wachovia) and ask them to launder it for you. So the government has already made criminals of anyone that decides to cash out large chunks of btc and bring the cash home.


Doubly so if you are a minority in the south.

Yeah, because police targeting of minorities restricted purely to the south. 'Stop and Frisk' was all on the up-and-up, and I'm absolutely positive that the LAPD would never unfairly target minorities.

This stupid meme needs to die - this is a problem everywhere in this country, not just areas you don't live.


For one I don't think that's a meme, but I think he was more referencing specific instances that had been in the news somewhat recently of this happening in the south.


If you have $10k and are stopped in a car, there is a high likelihood that the government thugs (police) will attempt to relieve you of the money, or you will have to prove where you earned it. Doubly so if you are a minority in the south.

Just don't give them any probable cause (visible drugs/paraphernalia, alcohol, weapons) and don't consent to any searches. People who get bullied by the police are those who don't know their rights.


You're forgetting that a dog "alert" on a vehicle provides probable cause. If an officer suspects someone in a car has cash, here's the algorithm to get probable cause every time.

- Pull car over for x (x=illegal lane change, minor speeding, tinted windows) - "Smell" oder of marijuana and notice driver acting suspicious - Call for K9 unit - Coax the dog into "alerting" on some portion of the car, usually the front where the cameras don't see.

Once the K9 alerts, you have probable cause to search the vehicle even if the owner does not consent to the search. Cash you find, you can take, even if there are no drugs found. The owner of the cash must be able to legitimately explain why they have $10k in cash and burden is on the owner to prove that it is legit cash. That's very hard to do, even for a legitimate business or someone who deals in a lot of cash like a dancer. This is a civil, not a criminal matter and the burden of proof is actually on the defendant.

Even with the above algorithm, if a judge declares a stop to be illegal, the cash is still kept as it's not a criminal manner but a civil one.

|Edited to be less flippant


Oh, the odour of marijuana is another thing to avoid. That's borderline probable cause right there.

Really, if you're transporting thousands of dollars in cash you should adopt a security-oriented mindset. You need to be air-tight and leave nothing to chance.


Notice how "smell" was in quotes? You could apply this algorithm to my grandmother's car, because it's your word against the cop's. Being squeaky clean won't save you.


Bitcoin cashing out is simple. Use different addresses to receive, use coincontrol program, use a mixing service or just start a front company to launder. Could also change into litecoins and cash them out


Translated to commonese:

Bitcoin cashing out is simple. Use different zorblaxes to receive, use zirbasses program, use a yrblogging service or just buy a bank to launder. Could also change into urine and cash them out


I don't think these are supposed to be useful instructions prima facie; they're just a set of things you could look up and understand in ~30 minutes or so, and then use in 5. Sometimes the hardest part of solving a problem is just knowing that a solution exists and has a name you can google. Of course the names are all gibberish until you know what they mean; telling you "you can solve that math problem with eigenvectors" is gibberish, but it's exactly the missing link you need to go look up eigenvectors and see how they solve your problem.

(For the case of "just start a front company to launder", though--I imagine that advice is directed toward people who are using Bitcoin for criminal activities anyway; fraudsters already have "start a front company" as a low-level primitive in their thinking, on the same level as "start an EC2 instance." You can ignore that one if you aren't in that "industry.")


Not really,, fraudsters use stolen identities and fake/and or stolen bank accounts to move money around, they wouldn't touch bitcoin, no need to. The banking sytem is insecure enough for all their needs.

Go on any Russian fraud forum (simply google 'carding forum') such as infraud (google it) and you won't see bitcoins anywhere. They are using stacks of stolen prepaid visas, and networks of fradulent accounts, no reason to use coins.

Edit: I voted you down accidentally, fail smartphone is fail.


The completely public ledger of all transactions until the end of time (by design!) also makes BTC rather unattractive for serious criminals. They are much happier with digital currencies (like Liberty Reserve) which are designed to enable money laundering through and through.


Bitcoin wiki spells out exactly what to do:

- avoid reusing addresses - keep inputs separated using separate wallets or coincontrol - use mixers

This is coincontrol: https://bitcointalk.org/index.php?topic=144331.0

Read the wiki: https://en.bitcoin.it/wiki/Anonymity


Like you said, simple!


Link to cited paper: https://news.ycombinator.com/item?id=6289550

This research, which tracked the actual actions of actual addresses, is so much better than the theoretical crap I usually see about BTC.


The article doesn't touch one service that can be, and is used regularly by people that want to stay anonymous with Bitcoin and yet cash out - mixing services. You can essentially lose the block chain trail using them. Say you have money on address A, and want to deposit it to address B. Mixing service gives you a deposit address X, and also controls a totally unrelated (not "tainted", i.e. there are no shared inputs outputs between the two) address Y). So it goes like this:

A --> X . . . Y --> B

Using this there is no way to tell that A is connected to B.


This is true, and does provide some anonymity, but there are several situations, at least in the US, in which you can basically be considered guilty until proven innocent where the burden is on you to prove that everything is legal (tax evasion and asset forfeiture). If you can be linked with either side of the mixing service, the fact that nobody can tell where the money went (or came from), might not protect you.

For example, suppose your standard of living suddenly improves and you start buying cool expensive toys, but you don't report increased income with the IRS. As I understand it, the IRS can audit you and ask you to prove to them where the money came from.

Similarly, if you get stopped with a large pile of "anonymous" cash in your car, you may be asked to prove that the cash was obtained legitimately, and they may hold the cash until you can prove otherwise.


Money laundering has two parts. Obscuring the money, and making the money look legitimate.

If you are dealing with cash, the first is more or less done for you (though if you are dealing with counterfeit cash, you still need to worry about the first).

Mixers do the first and don't advertise themselves as services for the second. Mixers basically put you in the same position as organized crime is traditionally in before laundering, lots of cash that isn't really tied with a crime, but has no good reason to be in your possession.


The paper mentions mixing services but suggests that they are unsuitable for large-scale laundering due to their relatively low volume. That is, if someone wanted to cash out thousands of bitcoins, it would not be possible to disconnect the block chain trail as the value of bitcoins being transferred would dwarf the rest of the transactions being mixing in.


Unless the service maintains a log of all the transactions, which I would imagine they would have to do to ensure that the BTC was properly transferred, and that the transaction has been properly executed.

So you're still just a subpoena away from it getting revealed.


For all the reasons you mentioned the logs can be deleted after the process has been completed, if logging is necessary for that.


This isn't a trustworthy arrangement. It may be true for a short time that a company holds true to its promise to delete logs, but especially in the US the government can and does issue subpoenas that require companies to keep all logs, and also prevent them from disclosing that they have received such orders.


Mixing services can be anonymous, and their physical location or corresponding legal entities unknown.

As others have said though, the law could just require you to reveal to the authorities where you got your wealth from.


If it is not possible to link X and Y, how do bitcoin network recognize Y as a valid address with bitcoins, if there is no history of bitcoins arriving to the address?


Presumably as well as facilitating this transaction with you A->X...Y->B they are also facilitating this with someone else: C->Y...X->D

(In reality they would probably have many addresses and not just orchestrate simple pairs like that, but the idea is that the transactions balance out.)

So they only need to seed each address with a bit of initial capital, then balance out the transactions.


Surely the aspiration is for bitcoins to become a widely accepted alternative currency. If/when that happens, you won't have to "cash out" - you just finance your lifestyle with bitcoins.


Zerocoin, if it's ever adopted, will go a long way to solving this problem.


There are better alternatives to Zerocoin that don't require "adoption" because they don't change the protocol... in fact, they cannot be blocked:

See CoinJoin https://bitcointalk.org/index.php?topic=279249.0


So, and I'm not advocating it, as long as you legalise or conceal the source of the money invested, you can hold money and earn any [capital appreciation against your currency] without your government tax authority knowing that you even have this capital. As long as you divest it when you have changed jurisdiction to somewhere you are willing to pay tax (eg. 0%) on this "income" or wealth you are tax-free? Same as offshore banking with no remittances to your home accounts?


> While there are sophisticated methods that can be used to cloud whether a bitcoin is indeed still held by a thief

I'm not sure what the cloud has to do with this. What word did they mean to put there? conclude?


Cloud in this instance is synonymous with obscure.


of course. thanks. I'm not sure why my mind was convinced it was a typo. I misread the context i guess.




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