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Comment by nickff | Hacker News Reader

ZCash looks like a promising tool to prevent civil forfeiture and legalized theft.

It is interesting how the same (or similar) technologies that have made cash rare, and allowed tracking of transactions and spending, may subsequently enable radical anonymity.

P.S. I hope to see an investment market based on anonymous cryptocurrency one day; it would allow many people who currently lack access to investment markets or funding to prosper.

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"ZCash looks like a promising tool to prevent civil forfeiture and legalized theft."

How does it prevent civil forfeiture specifically? Can you elaborate?

Not familiar with Zcash specifically, but it should work the same as Bitcoin. You cannot initiate a transaction without the (password protected) private key of the wallet containing BTC. If the victim of civil forfeiture refuses to provide the password and private key there is nothing that can be done to acquire the money. This is good because it changes the game from the "government takes your money and you have to sue to get it back" to "government has to prosecute to get your money in the first place".

It doesn't prevent some vague yet menacing government agent from breaking your kneecaps in order to get the password, but no security system has been able to plug that hole yet.

Yes, I see your point. Thanks for the clarification.

For anyone who's interested about the practice of "civil forfeiture" in the U.S. and why its so concerning. This is decent introductory read:

https://priceonomics.com/how-police-officers-seize-cash-from...

Some attempts to plug that hole: https://en.wikipedia.org/wiki/Deniable_encryption

So there's an idea: a wallet format that lets you decrypt with any of one or more passphrases, with each passphrase giving a different set of addresses.

This is already in wide use by Trezor users. A user can have an arbitrary number of decoy wallets unlocked by the same root private key, but different passphrases.

Trezor firmware supports Monero. No zcash as of yet.

If you carried your money electronically, the police would have nothing physical to seize. The most common form of civil forfeiture is when the police seize money or other items of value from someone transporting or holding them.

More significantly, if you have an anonymous ZCash account, the state has very little idea of how much money you have, where it is, or how you've used it; this means they don't know whether you have anything they want, or how to get it.

Isn't that beside the point? If you have all this money and they only suspect you have it, give you some court order for the money, then even if they can't get hands on the money neither can you. All they have to do is watch you, as a person, and your interaction with systems. That sort of thing is only getting more easy.

Furthermore with the push for "Online identity" they could just seize all your data storage and your various account information sets. Maybe your Ident never touched any of your personal hardware, or maybe you opened access to your hardware and pumped so many Idents through your confident they wont be able to figure out which is yours. But they can still out wait you.

I mean MAYBE with smart contracts will get us out of that.

> If you carried your money electronically, the police would have nothing physical to seize.

This type of attack probably won't work on Zcash, but that statement seems to be wrong these days:

http://www.npr.org/sections/alltechconsidered/2016/07/02/483...

How does it defeat the $5 wrench?

Given that the previous comment is referring to state actors, you have the courts to defeat the 5$ wrench.

For more direct criminal elements, you can make it difficult enough that its not worth them going through the effort to use the 5$ wrench and wait while you have to fetch the key. Beyond that, you're no worse off than you were versus carrying cash. The only thing electronic cards might have advantage over this is many provide fraud protection which will refund/void fraudulent charges.

Ok, so you're in court, and the courts just gonna be like, 'ok, we'll just ignore our orders to make you pay because it's crypto currency'?

I don't think you understand what happens when you defy court orders...

Also, mostly this will be used for tax issues, where guess what, the burden is on you to prove that your income was only X, so the more crypto shit you have the easier it is for the prosecution to say you have millions in crypto currency.

You really think ZCash is the first company to think of hiding assets from the gov't?

The point seems to be that the court would actually have to order you to release the funds, as opposed to the current case where law enforcement can seize physical funds without a court order, putting the burden on you to get it back if the seizure wasn't justified.

The court reference you replied to is saying that the court system protects you from having a state actor use force to take your property before you've had your day in court.

ETA: That said, I don't think you need anonymity for this, so it would apply to any currency you can use as cash and secure with a password. I guess the anonymity just makes it more like physical cash in that nobody can track how much or where you spend/receive it. For tax purposes, it would be no different from cash in terms of ability to work under the table and be called on it or accused of it by the IRS.

How do they actually know that you have millions though?

Imagine the opposite scenario. The government thinks you have millions, but you genuinely do NOT have that money. How do you prove to the government that you are innocent and don't actually have the money.

You can't. You, an innocent person, are indistinguishable from a person who actually DOES have millions hidden away in crytocurrency.

Well, this only holds so far as you live like someone who doesn't have millions hidden away. It would be difficult to turn this hidden currency into an appreciable lifestyle improvement in a way that wouldn't be observable and result in an audit that could prove that your observed expenditures exceed your claimed resources. At best, you could make a bunch of minor improvements that aren't easily observed.

Your question was how do you defeat the 5$ wrench, not how do you tell them tax-man to f himself.

If state actors use the 5$ wrench, that's illegal and consequently you have the defense of the courts to counter that behavior. Civil forfeiture is dependent on being able to "prosecute" your stuff, rather than you. So if they can't seize it, they have to go after you directly, which puts the burden of proof on the prosecution to demonstrate that the money is unlawfully possessed. The fundamental principle of the US court system is "innocent until proven guilty", so you don't have to prove what your income is, they have to prove it. You only need to counter their claims.

> Civil forfeiture is dependent on being able to "prosecute" your stuff, rather than you. So if they can't seize it, they have to go after you directly.

The US certainly has had cases prosecuting "stuff" where said stuff is cryptocurrency. See "United States v. 178.95842915 Bitcoins" [0], which appears to be a civil forfeiture case [1][2].

[0] https://www.usmarshals.gov/assets/2016/bitcoinauction/index....

[1] https://www.pacermonitor.com/public/case/10752506/United_Sta...

[2] https://docs.justia.com/cases/federal/district-courts/washin...

To prosecute your stuff, they still have to confirm its existence. You don't have to prove it doesn't exist.

It depends on what you mean by 'the $5 wrench', but anonymous cryptocurrency would allow the victim to deny or misstate their account balance. It would not protect a victim being slowly tortured to death (a situation for which I cannot imagine a protection), but would protect the victim in situations where the attacker had limited means.

He's most likely referring to this XKCD comic: https://xkcd.com/538/

Multisignature wallets mean that you can beat the credentials out of a person and still not be able to access the coins. You would have to figure out who else had keys and beat then too. Raising the difficulty a non-trivial level.

For the wallet to be useful, the person you are beating will either know who else needs to be beaten, can be compelled to withdraw their funds under duress, or in the case of a centralized counterparty, like a bank, can be trivially compelled by a government bearing a lawful order, to sign off on a money transfer.

If none of those means of getting you to pay work out, they can always leave you to enjoy your internet money in jail.

The issue is that they have no idea how much money you 'actually' have.

If someone threatens you with a wrench, you simply do what they ask you to do and provide a password to your "account" that conveniently doesnt have much money in it.

"yes officer! I have done exactly what you asked me to do. Here is all the electronic money that I own. "

Ok, but how does that protect ME from that $5 wrench?

You can setup a hardware wallet with plausible deniability[1]

[1] https://www.reddit.com/r/TREZOR/comments/2e8a9i/can_someone_...

And then they beat me with the wrench anyway for wasting their time. But I suppose the money's ok, which I'll need for hospital bills.

If they were going to beat you anyway, another layer of encryption was not going to help.

In respect of protection against civil forfeiture, how is it different from a regular bank account?

The government can very easily take money out of your bank account. Happened to me one time when the Texas Comptroller made a paperwork error. Even after they fixed it and refunded my money, Wells Fargo charged me $150 for "legal fees". That was a lot of fun.

Your problem is that you used Wells Fargo instead of a credit union.

After that event I switched to a credit union. Good decision.

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