If people manage to identify people behind the blockchains, I strongly suppose that law enforcements, depending on countries where the theift physically is, can force the thieft to give it back without any modifications to existing laws.
I think we can catch him when he is going to want to laundry his bitcoins.
Expect Reddit and 4Chan to spend weeks tracking the wrong transactions and the finally identifying a poor sap whose only fault was once buying coins from mtgox years ago. Which is not much different than being audited by the irs...
If 4chan gets pissed off at me, my available recourse involves scouring all data traces I've made across the Internet and then hoping I did it fast enough before the pain train begins. At best, I could post some kind of apology or concession and pray they lose interest.
If the government wanted to put me in jail, my available recourse starts with a reasonably well documented legal system interested in fairly representing and judging me and extends all the way to, well... asking 4chan for help.
Maybe if I were black or female or gay, I'd prefer 4chan's treatment, but only maybe.
Don't bitcoin tumbling services pretty much make it logistically impossible to follow the path of bitcoins if they cycle it enough? Also I wouldn't rely on the governments to do much to return people's investments in a currency they already distrust. In fact, considering the historic and contemporary roles the US and the IMF have had in deliberately destabilising and undermining international economies/currencies, you'd be naive to remove first world governments from the list of suspects. The incentive is even higher for them than normal thieves -- not only do they already have an established system for laundering stolen money, but they don't even need to remove the money to profit, they just need to steal it and render it inaccessible. The credibility of Bitcoin as an extranational, anonymous currency has been dealt a serious blow and, if you consider bitcoin a threat to the current institutions, then that has a value far greater than the few hundred million that they'd wind up with in pocket. I'm not throwing around any conspiracy theories here because there's no evidence for it so far, but I don't think there's anyone foolish enough to pretend that the US/UK/etc governments haven't already been in this ethical sphere of operations for decades. The first question was whether they have the werewithall to operate on this level technologically (confirmed by Snowden), and the second is whether they consider bitcoin a threat.
>I don't think there's anyone foolish enough to pretend that the US/UK/etc governments haven't already been in this ethical sphere of operations for decades.
I wanted to add the possibility of law enforcement from various countries tracing the alleged perpetrators. This is actually the most worrisome scenario, because a large portion of this would be unrecoverable from the law enforcement, due to the immense confusion stemming from authorities not knowing who has jurisdiction and the laws surrounding crypto-currencies.
This might be an acceptable situation for the customers but would be bad for the customers as over 6% of BTC would be almost permanently removed from circulation.
Those two messages are not incompatible. It could be pseudonymous enough to buy drugs with it safely because the resources required to actually unravel identities is so much greater than the value of catching the drug purchaser (this assumes there is any value of catching the purchaser over the seller for purposes of argument).
At the same time, the value of solving large thefts like this makes expending substantial resources to solve it much more reasonable.
It's like stealing someone's iPhone with a ski mask on while a camera catches you vs. robbing a bank with a ski mask on with a camera catching you. Both thefts begin with the same amount of evidence, but the latter is infinitely more likely to have resources devoted to it.
So far, the Silk Road busts have nothing to do with Bitcoin. Everyone should assume that all BTC transactions are trivially traced, forever. Just make sure you aren't tying any identity you care about to dangerous transactions. That's the only (and of course difficult) trick.
If a drug buyer in a BTC transaction got the coins anonymously (say, sent a self-destructing robot to drop off cash in exchange for BTC), then that part is fine. They can go use those coins anonymously. If they ship drugs to their house, well... that alone sort of undoes it all.
The drug sellers that were caught from Silk Road were caught due to things like making a huge amount of trips to post offices, getting the attention of postal workers. That may be a parallel construction, but it seems legitimate enough. Buy drugs from large seller, look at the postmarks for patterns. Then go gumshoeing around and wait 'til you see the same car or people going to the same post offices over and over and over. You can probably pull this attack off without even having government capabilities.
But tracing bitcoins through the blockchain is largely a computational problem. Compute only gets cheaper. Identifying a robber in a ski mask is in a different problem domain.
I had never really thought about the consequences of a public blockchain and the decreasing cost of analyzing that blockchain.
I seem to recall a news story about how people who spied against US in the 40's and 50's were caught later in the 70's and 80's because the intercepted cipher texts had been kept for decades until technology was able to break and decrypt them. Looking at the blockchain reminds me of that feat. Of course, that could have also been a poorly written thriller I'm remembering instead...
So, if I am induced into sending bitcoins into an address, and subsequently find out that I'm defrauded (e.g., if I were a gox customer), can I trace the fraudster?
If people manage to identify people behind the blockchains, I strongly suppose that law enforcements, depending on countries where the theift physically is, can force the thieft to give it back without any modifications to existing laws.
I think we can catch him when he is going to want to laundry his bitcoins.