EU proposal to clamp down on Bitcoin curb terrorism funding
mobile.reuters.com
mobile.reuters.com
The headline suggests the EU has already decided to clamp down on Bitcoin, but it is far from clear to me that it will even be discussed. All we know is that some unnamed officials want to talk about it (together with transfers of precious metals, etc).
http://www.coindesk.com/uk-treasury-digital-currencies-low-m...
HM Treasury link to the National Risk Assessment carried out by the Home Office: https://www.scribd.com/doc/290214176/UK-NRA-October-2015-Fin...
To be fair, the banking sector is also orders of magnitude larger
Seriously:
>9.29 The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the UK this risk could rise. Digital currencies are currently not a method by which terrorists raise or move money out of the UK (though they remain a viable method for doing so).
http://www.transparencyinternational.eu/focus_areas/eu-finan...
edit: HN posting limit is extremely annoying, providing no way for a sustained discussion within multiple threads.
Next you'll say those aren't true headlines, a la no-true-scotsman.
Everyone involved got their bonuses. No one was responsible. No one paid back. I don't think anyone involved cried over any fines the company had to pay.
I wonder if some of the bitcoin gambling sites have really been operated by people trying to obscure the history of their bitcoin. If they can control how fast their coin moves through the site, they have some more assurance of how many addresses they are mixed with.
"Such tumblers do a very poor job of hiding transactions, especially when dealing with a thousand or a hundred thousand bitcoins. The simplest approach is to simply look for common flow patterns."
- http://www.forbes.com/sites/valleyvoices/2015/01/15/how-pros...
All the tumblers seem inept when the only detectable tumblers are inept. You don't see the competent or succesful tumblers.
Edit: How is this not relevant? Why is this downvoted?
No, because they don't work, and even if they did successfully split up $1,000+ transactions, you can still analyse the public ledger to figure out where it all came from.
Edit: the proponents of such services also ignore the fact that anyone could be behind the tumbling services, governments included.
Mixing multiple transactions from multiple people do not reveal what came from where - you only know sending addresses, receiving addresses and amounts - but no links between which senders are tied to which recievers. Instead of having a bunch of individual historical lines for each "coin" and each person there's a big web of unknown addresses, with only a few known original senders and maybe a few known recievers. Coinjoin lets strangers securely pool together their coins and get the same amount of coins out to several new addresses of yours, except that now nobody knows which addresses belong together and which coins belongs to which sender.
Tumbling is highly effective if done properly. You need many inputs other than just your own. Then you take the outputs and you don't combine them. You can spend them via psuedo transactions with scripts, use them to store coins, tumble them some more, sell them for cash. Since all inputs are combined there is no real way to no which outputs are from who inputted them if you're smart, disciplined, and it's done properly.
I think you think that someone sends $1000 btc to a new addres, then $500 btc to address 1, $500 to address 2, does this a few times and then sends all the coins to address 56, which then holds $1000. This would be possible to trace but would be time consuming to do.
The method I mention above would safely unlink any coins in the final addresses from the $1000 you started with.
I know some people like Monero (crypto note ring signature based, not Satoshi base) but as far as using bitcoin base code, Dash (formerly darkcoin) has the best coin join like solution.
It's a decentralized, passive (done before any real transaction), denominated mixing with up to 16 rounds. Obtaining less than a 1% chance of unmasking a SINGLE transaction in their model would cost millions of $.
I don't bitcoin is going anywhere but the flexibility some of these altcoins have is amazing for development. Dash (digital+cash) btw, wants to fix every problem with bitcoin.
They have anonimity, incentivized full nodes which share the block reward, instant transactions (5 of 6 confirmations within a few seconds) and more recently a model to fund development of the currency directly on the blockchain. Developers propose projects which are voted on and the blockchain itself sets aside the budget.
Note the existence of alt coins with increased anonymity, such as ZeroCoin [2]
[1] https://en.bitcoin.it/wiki/Bitcoin_Laundry [2] https://en.wikipedia.org/wiki/Zerocoin
I think people look at bitcoin and hear "crypto" and immediately think opaque and unbreakable. Neither are true, but first impressions matter a lot.
The usual mitigation for this is to use common denominations for all inputs and outputs.
Money laundering is about moving money from illicit to licit activities. Terrorism funding is exactly the opposite.
So, yeah, money laundering needs to work both ways.
You're absolutely correct. The whole thing reeks of security theater. Those people need money for logistics -- food, clothes, lodging and so on while they plan their crimes. I don't believe that there is anything safer than cash for such purposes. Even gold would be to suspicious. I'd imagine you'd want as few people to be in the know of the activity before it happens.
I mean, in a way, maybe this is what this story is all about: a great big advertisement saying "Come use this completely anonymous payment system," with a sly nudge and a wink because bitcoin's nothing of the sort.
Just imagine: a plot is discovered, payment details made via bitcoin stumbled upon - and now you have a long list of every transaction those people have ever made using Bitcoin!
(for the inevitable bitcoin cult members wanting to chime in about "tumbling" or "fog" services, aka bitcoin money launderers, 1. they're still traceable and 2. there's not enough money going through them to successfully launder a four-digit amount, let alone anything greater.)
The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public ledger".
>The process is called tumbling, and it's primarily how bitcoin tax evaders use it now to get around the "public" ledger.
I very briefly addressed this at the bottom of my comment.
In short order:
- Tumbling is traceable: throw a beefy server at the list of transactions, and since you know how much money arrived in someone's possession on a given date, you can now trace it backwards by crunching the numbers. Analysing long lists of transactions like this is something computers are really good at.
- But that doesn't matter, because tumbling sites can't work: they don't have enough capital in them to successfully launder more than a few play dollars at a time.
For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC
The only way to trace these is to compromise the exchange servers, get account information, and subpoena transactions from the banks. Very difficult to do given the international nature of these exchanges and banks.
I was specifically addressing tumbling services. I'm guessing that you accept those services are easy to compromise (heck, for all we know, various governments might operate the current ones) which is why you bring up currency conversion.
>For example: 20 BTC -> $4000 -> 25000 yuan -> 4 new addresses @ 5, 10, 2, & 8 BTC
Let's turn this around: you have a list of transactions, you know when they took place, you know where the money ended up, and now you're tracing the line backwards, knowing that at some point, there will be a connection (or connections) to other transactions at least as big as this one; why do you think this is so hard to analyse?
>The only way to trace these is to compromise the exchange servers, get bank account information, and get transactions from the banks. Very difficult to do given the international nature of these exchanges.
Not really, given how little is known about some exchanges' operators.
Why do you insist it isn't.
1) bitcoin to cash or cash to bitcoin is pretty hard to trace unless you catch the actual handover.
2) As for the 'connections'. Anyone who knows what they are doing would spin up a wallet per transaction making connections non existant.
Of course mistakes can and will be made, at which point using bitcoin can become a bigger liability than cash/banks because everything is public. But given perfect usage, it is extremely difficult to ascertain any information.
You could trace it if the person getting the outputs was dumb enough to recombine them or spend them in all the same way. I suspect most people who tumble store the coins in those addresses and only spend small amounts later.
Tumbling has been used by people being tracked and has been effective at them not being caught. Read the bitcoin forums.
I hope you realize that you haven't actually described a process for tracing Bitcoin transactions. You can't just take an arbitrary problem, say "throw a computer at it", and consider it solved.
I don't mean to be abrasive, but you are clearly ignorant of the state of affairs of Bitcoin anonymity systems. Look up coinjoin, for starters. When you have highly-connected (in the graph sense), properly conducted mixing systems, you can't just "trace the transactions".
Bitcoin is indeed untraceable, with care.
Are you sure about that? I believe most of the onion drug markets have their own tumblers running in the background, so sending money to them and then withdrawing it should get you mixed funds. I'd expect the scale of business of those sites to result in quite a large mixing pot.
Someone has yet to successfully explain how you differentiate coins once they enter a single wallet. Say you know with certainty who owns a given address. That person makes a transaction sending the coins to another wallet, and the owner of that wallet makes another transaction.
You do not know who controls the second and third wallets. It could be the original owner splitting their money up. It could be a legitimate business accepting payment for services.
There's no way just looking at the blockchain to tell the difference between 'tumbling' and other perfectly normal transactions, save for very easily defeated statistical analysis
So no, such mechanisms are not traceable by any reasonable metric.
You're right about the volume of plausibly tumble-able money being low, but it's at least in the five or six digits per day.
The initial reaction of my inner knee-jerk skeptic says this is another example of those in power, this time banksters, not letting a good crisis go to waste.
It's like the encryption hysteria. Look at this blatant propaganda from the BBC: http://www.bbc.com/news/technology-34842854
Some choice quotes:
"They are not using the big obvious systems at all," he tells the BBC.
They were using SMS.[1]
"They are all now using the OTR [Off the Record] protocol, which offers end-to-end encryption," he says.
"The arrests that are going on now have come from a trawl through metadata"
This is actually how they found the other would-be attackers:
European media outlets are reporting that the location of a raid conducted on a suspected safe house Wednesday morning was extracted from a cellphone, apparently belonging to one of the attackers, found in the trash outside the Bataclan concert hall massacre. Le Monde reported that investigators were able to access the data on the phone, including a detailed map of the concert hall and an SMS messaging saying “we’re off; we’re starting.” Police were also able to trace the phone’s movements.
The amount of bullshit and propaganda coming out is scary.
This is the website of one of the BBC's experts, for added hilarity[2].
[1] https://www.techdirt.com/articles/20151118/08474732854/after...
review 1: http://www.nytimes.com/2014/04/13/books/review/money-by-feli...
review 2: http://www.cato.org/publications/commentary/book-review-mone...
review 3: http://www.theguardian.com/books/2014/jul/08/money-the-unaut...
The fallacy here is, Bitcoin doesn't actually move money. It can only move ownership of money. If I want to finance terrorism, there must already be someone with e.g. $1M where I want it (in Islamic State), so that I can trade 3000 BTC with him/her.
They do ask for ID documents and perform AML checks, but then again so do all proper bitcoin exchanges with the exception of the shady btc-e from Russia or thereabouts.
But its not like bad guys are afraid of using fake IDs (as seen in Europe this last week) which brings the obvious question as to why they would bother with all that when they can just use cash and traditional banking.
The whole article is click bait of the highest order based on fud.
----
If the powers to be want to hit ISIS where it hurts how about destroying their oilfields, oil refining and transport capabilities. A few armed drones can do this on the cheap remotely. Make it clear that any oil extraction, processing or transport equipment in the area controlled and sympathetic to ISIS will be destroyed and grant these scum their wish if living in the middle ages.
Since the terrorists used cars for their attacks (there was even mention of a Volkswagen Polo involvement) I propose we ban cars for our collective safety.
I wonder, did the terrorists ever used cash, a debit or credit card ? Maybe we should ban this too then.
FYI The various known terrorists/terrorist organisations lists are a large part of Know Your Client (KYC) checks.
I mean, if the payment process was the problem, they should ban money.
How much funding did Breivik need?
We should outlaw encryption, even though the attack was planned with unencrypted off the shelf technology.
We should crack down on bitcoin, even though the attack wasn't funded with bitcoin.
Do lobbying groups just wait for this kind of thing to happen? It seems completely ridiculous to me.
Then again, I'm not afraid.
As morally abhorrent as most of us may find the practice of profiting on human suffering to be, we often forget that there are people out there whose morality is almost entirely incompatible with our own, or who lack any sense of morality whatsoever. For a variety of reasons, those same-species parasites are drawn to positions where they can manipulate overly credulous humans for their own gain.
These propaganda campaigns are roughed out ahead of time, like a Mad Lib, and the details are filled out after any relevant crisis occurs, with any inconvenient facts stretched out and re-tailored to fit the narrative structure.
It's not a conspiracy. Those people are not working together. They just coincidentally fired their bullets on the pull of the same trigger.
The terrorists didn't use Bitcoin? Well, in that case, imagine how much worse it could have been if they did use it! They didn't use encryption? How many more would have died if they did?
Since they already are criminals doesn't seem that any money laundering crackdown will make any difference, they will just extort somebody else to receive their money through all these regulation hoops they specialize in being thugs.
An ABBA Star's Campaign for a 100% Cash-Free Sweden http://www.bloomberg.com/bw/articles/2014-10-28/abbas-bj-rn-...
Also, we have seen, that there are enough corrupt banks and bankers around, so crime will go on ... (money laundering also does work today in company with banks).
Targeting religion is not quite fair, to be sure. It's the general war on rationality that is causing so much damage.
Remember the anarchists of the late 19th century? The Bolsheviks in Russia? The long Cold War? That was primarily fueled by atheistic progressivism, and killed more people than all the religious wars in history put together.
The violent extremists disagree with you. Abdelhamid Abaaoud, the organizer of the Paris attack, said his goal was to kill as many non-believers as possible for Allah.
ISIS kills believers of Allah in Syria and other places because it's trying to solidify it's power as a government.
ISIS is attempting to start an Islamic Caliphate, considers anyone standing the way of them do so as an apostate, and kills them as such.
The goal here isn't to stop what people think, but what they can do.
Extremists are not a problem, as long as none of them slip through our monitoring and control of them?
Of course the goal is to stop what people think - or would you like to make the same claim regarding racism?
Thought police states are how extremists are born.
http://www.dw.com/en/us-teenager-sentenced-to-prison-for-sup...
[1]http://people.exeter.ac.uk/watupman/undergrad/ron/methods%20...
And if they believe that they are going to catch the activity before the attack happens they are smoking crack.
They signal to noise ratio is just too high.
Plus they can always just use cash.
http://www.reuters.com/article/2015/11/19/us-france-shoootin...
Where is our community long term planning?
They (people that nobody voted for doing what they do) are engaged in this unrightful activity without no punishment in sight. This is wrong.
It's misinformation and particularly dangerous for people who need actually anonymous payments like dissidents living under oppressive regimes.
As of right now individuals can trade bitcoin through via personal bank transfers thanks to sites like this. I see this being squeezed to death eventually, which is a real shame.
Sincerely,
Your banking industry