New Digital Currency Spikes as Drug Dealers Get More Secrecy | Hacker News Reader

New Digital Currency Spikes as Drug Dealers Get More Secrecy

bloomberg.com

105 pointsuptown56 comments

An exciting sub-project within Monero is the possibility of using I2P[0] as a transport layer[1].

I2P is an onion-routing network overlay similar to Tor, but different in that:

- It focuses on internal services, rather than proxying out to the regular internet (though outproxies are available).

- Tor is designed primarily for TCP-based use-cases (proxying to the web). I2P natively carries both TCP and UDP.

- In I2P, every node is a router, unlike Tor where most nodes are just clients. Last time I checked, Tor had in the neighborhood of 6k routing nodes, and I2P had around 20k.

I2P is a fascinating project with a hard-working team that has been maintaining and growing the network for a decade. It's worth checking out.

[0] https://geti2p.net/

[1] https://forum.getmonero.org/1/news-announcements-and-editori...

Okay, not exactly true. I'm involved with the Monero project, and currently, the Kovri plugin (I2P Daemon in C++ as opposed to Java) is under development, and not in action yet. As of currently, connections are not run through I2P (though the plan is to integrate I2P communications in the wallet via Kovri soon™).

If anyone wants more info on the integration of I2P into the Monero daemon, feel free to come over to #monero-dev, #kovri-dev, or #kovri on Freenode, and we would be happy to answer any questions that you have.

My apologies! Didn't realize this integration hadn't been completed. I'll correct the original comment.

Just chiming in here: Kovri is still a work in progress, and there is still some work to be done before it can be used more broadly or as a replacement for the Java router: https://github.com/monero-project/kovri

Freenode is a heavily logged and censored network btw. I recently came to find a "bug" in the backend which activates a ghosted bot that lurks chans (secretly) and is activated to terminate and clear channels.

That advent of cryptocurrency such as Monero are a god-send to the underground. It is almost bread & butter. They serve their purpose of being a difficult-to-trace decentralized currency very well. Did any of you oldies imagine that in 2016, you would be able to have recreational drugs of your choice shipped to your doorway, anonymously? Paid for with a cryptographic medium of exchange?

Although, there exists a con: Cryptocurrency as a whole is gaining a "dirtier" reputation thanks in part to it's new-found use as a black market medium of exchange. People had a vision of Bitcoin being an easy to use, mainstream currency for the general population (pipe-dream in my opinion) It is clearly not going in that direction.

Governments can very easily outlaw Bitcoin if they so please at any moment. Any legitimate exchanges would be shut-down, no LocalBitcoin, no Bitcoin ATM's, no BitPay, no NewEgg and Overstock accepting Bitcoin payments, banks ceasing operating with Bitcoin copmanies (good luck converting to fiat)

More likely is that governments will allow Bitcoin 'traffic' to be funneled through exchanges, like Coinbase, that are FinCEN-compliant and responsive to law enforcement, while cracking down hard on peer-to-peer exchangers and anyone else who isn't diligent about collecting user data and responding to subpoenas.

IIRC, collecting information on customer's identities is a legal requirement of any money-transmitter with a nexus in the U.S., so any Monero exchanges are either going to need to collect user data (rendering the whole thing kind of pointless), blacklist all users in the U.S., or accept that they'll probably be relentlessly hounded by the feds.

So what's the next step in the arms race when people move to decentralized exchanges like Bitsquare?

Either Bitsquare makes good with federal law enforcement, it freezes out all U.S. persons and severs any possible nexus with the U.S. (which would seem to be impossible without defeating the whole point of the exchange), or the feds eventually figure out a legal mechanism for shutting it down.

"Did any of you oldies imagine that in 2016, you would be able to have recreational drugs of your choice shipped to your doorway, anonymously? Paid for with a cryptographic medium of exchange?"

Yes, we did:

http://www.activism.net/cypherpunk/crypto-anarchy.html

This reminds me of all the people currently mocking bitcoin and crypto-enthusiasts as "fundamentally flawed and impossible" when discussing replacing fiat currencies..

In 20-30 years those same people will be coming up with great insights like "I bet all those nerds never saw this coming!"

AlphaBay announced on Reddit last week. “We expect this to cause a spike in the price, so if you are an investor, now is the time to purchase Monero.”

Bloomberg publishing investing advice from a criminal enterprise

Well, they do publish from Goldman Sachs, so...

I wonder if they could be sued for that:-P

They also linked directly to a black market subreddit without a warning. I'm pretty sure I don't want to be asked by my HR as to why I was visiting an illegal drug marketplace forum.

Excuse my lack of economic sense, could this be a pump and dump?

It would not be out of character for the cryptocurrency scene. Quite the opposite.

On the one hand, yes, on the other.... If so then the market that made the announcement risks its reputation and its ability to function. But this sort of reputation leverage could be the people running the market making one last big hit of cash before leaving the game. Or it could be real.

Very hard to tell.

Looks like Monero was created to solve tangible problems in the Bitcoin experiment.

Remember the phrase "Bitcoin experiment." The initial Bitcoin proposal claimed that it's an experiment, and implied that it wasn't designed to scale to general-purpose commerce.

It implied that it was an experiment, but it never implied that it wasn't suitable for general purpose commercial usage. By all reasonable metrics, the experiment was and continues to be successful.

Yeah sure, or sell to people that need Monero later

Monero traded at around 45 cents for the better of two years, and had trended up to around 2 dollars, still a good investment before Bloomberg, Oasis and Alphabay found out about it.

It is $8 now, with market cap of around 100 million, but bitcoin had a marketcap greater than that when Silk Road was the only marketplace in town.

Dark net markets are much much bigger than when Silk Road was around, and two of them are adopting Monero

Price, meet math.

Well, perhaps, but unlike some altcoins, monero actually provides real utility over bitcoin. Ring signatures [1] make for better anonymity and fungibility of the currency.

[1] https://en.wikipedia.org/wiki/Monero_(cryptocurrency)#Privac...

Monero is currently ranked 6th in terms of market cap[1]. It seems to be the highest privacy focused crypto currency beating out dash.

Bitcoin still controls ~80% of the total crypto currency market cap.

[1] https://coinmarketcap.com/

Monero is #2 in volume, right behind bitcoin, turning over about 1/4 to 1/3 the volume of bitcoin on exchanges in the past 24 hours. Coming up fast!

I wonder if this could serve to make Bitcoin more palatable, via the anchoring effect -- Monero can be the currency for bad guys, as far as John Q. Public is concerned, and draw all that heat? Leaving Bitcoin seeming relatively benign in comparison?

Another article about this was posted at https://news.ycombinator.com/item?id=12389536.

does monero deals with privacy? last i checked Bitcoin solved the centralization of currency, not anonymity

Yes, how the amounts paid are kept anonymous is particularily interesting: https://people.xiph.org/~greg/confidential_values.txt

The involved parties are kept anonymous by enforced mixing, I think.

This link is confusing because it describes the proposal to add "Confidential Transactions" to Bitcoin. Some concepts are related/similar to Monero's but it's not the same.

Maybe you could point us to a similar (succinct) description of the involved cryptography? This one e.g. https://eprint.iacr.org/2015/1098.pdf ?

To some extent, yes. Ring signatures effectively make transactions more difficult to trace. Large exchanges of value will likely be much easier to trace given their rarity over time.

Values can't be known, after the RingCT hard fork. See: https://lab.getmonero.org/pubs/MRL-0005.pdf

A lot of people are only interested in crypto-currencies for use in the black markets. While probably a majority here are more interested in them from a computer science or investing perspective.

I wonder how many people are interested in them for their ostensive purpose, which was to have a non-centralized currency for regular, every-day transactions.

It seems that they're mostly currently being used for speculative investments (not a particularly good use for a currency) or for black market transactions.

I'm interested in them from the perspective of eliminating morality police that charge predatory rates to 'risky' sectors of the economy. I see them as providing a more level playing field, though I do feel that competition among escrow providers with clear terms of service for both parties is an element missing from the equation.

> I'm interested in them from the perspective of eliminating morality police that charge predatory rates to 'risky' sectors of the economy.

Can you give some examples? I'm not sure what you mean.

If you make porn/erotica then a lot of payment processors want nothing to do with you.

Same with marijuana. I live in a US state that's legalized it, and every shop requires cash payment because no payment processor will talk to them.

As I understand it, that's less about morality and more about fraud risk.

For porn yes, for MJ it's about federal laws and banks wanting to obey them

And the federal laws are a result of the morally driven prohibition movement. They aren't founded on well reasoned logic, just the desire to control others.

That becomes pretty circular and more political/philosophical than this conversation needs to be. From a business perspective, online porn is high fraud which makes CC's a difficult thing to underwrite and MJ banking in general is risky because banks need to stay under the government's good graces. This is the business environment regardless of your moral opinion

I disagree, pointing to risk management as the root cause makes it circular. I certainly don't expect private enterprise to right the state's wrongs, but I don't think it hurts the conversation to point out the true root cause. It has been my experience that HN welcomes a little more thought beyond the utilitarian argument of what makes the trains run on time.

I just want an easy and quick way to transfer money.

You can get a Visa card backed with Monero from bitwa.la or use Monero anywhere BTC is accepted via xmr.to

I'll only be interested in Monero when the black hats are demanding it to uncrypt my drive.

Hehe, I wonder if that will cause a big spike in victims. Slightly related "fun" fact, there's a botnet mining Monero for some time now.

As I recall, it's been mining Monero for over 2 years. Reports of it in malware go back to 2014!

Does anyone know if there's a vehicle to short Monero?

You can do it on an exchange called Poloniex. Just remember, the market can remain irrational longer than you can remain solvent. Good luck!

Margin trading is risky in a regulated market and doubly so in the cryptocurrency marketplace. I would advise against it, but as another sibling comment mentions, Poloniex would be your best bet.

Be careful though, as Bitfinex, another popular margin trading website, was hacked and lost $60 mm a few months ago. Polo has also been hacked before, although they incurred a much smaller loss due to their hack.

When you margin trade through your brokerage, you don't have to worry about the firm shutting down and/or the US government not repaying your money. With these websites, there's a very real chance it'll disappear overnight.

Ring Sigs are coming to bitcoin too.

Really? I haven't heard about this. I'd love a link if you have one.

I'm curious as to the OP's source as well. I found a recent investigatory paper at https://github.com/AdamISZ/ConfidentialTransactionsDoc/blob/... but nothing official.

Note that Confidential Transactions (CT) are a different technology. While ring signatures hides sender/receiver identity, CT hides transaction amounts.

Confusingly, plain CT actually uses ring sigs as part of the crypto, but not the kind that hides sender / receiver, rather as part of the commitment scheme.

Not really unless you know some inside info. Most probably you refer to Confidential Transactions, which RingCT of Monero was based on. The privacy advantage of RingCT over plain CT is that you can even hide the transaction amounts of IO.

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