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Comment by CompelTechnic | Hacker News Reader

If he uses a brain wallet, it would be even more secure. The ONLY possible way to seize the bitcoins would require him to comply. Another interesting bit is the fact that this might make him a billionaire by the time he's released from prison- just from the appreciation of bitcoin's value.

I have another curiosity about the FBI's intent to seize his bitcoins- is it fair to seize all of them? If half of these bitcoins were earned while bitcoins were only worth 1/10 of current value, should only 10% of that half be seized? This might be arguable in court.

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If he had done the deal in a foreign currency, in gold, or for modern art, they'd still seize all of that, regardless of its current value. Bitcoins are no different, even if you're considering them a proxy for real dollars.

Bitcoins are different in that they weigh nothing and you can keep the fact you have them secret and plausibly deniable until they develop FMRI techniques to retrieve passwords or the location where you geocached memory cards with the wallet data.

...how is that different from paper money or gold? Burying your money is a pretty ancient trick...

because burying 80 million dollars would take a few hours and a lot of space...and probably a few big black barrels or something.

burying bitcoin can be done with a flowerpot.

It's very difficult to leave the country with $80m in paper bills or bullion. You can hide bitcoin in your head and nobody can tell it's there.

Bitcoins are no different, even if you're considering them a proxy for real dollars.

As mentioned in the article, even after acquiring the wallet file, the FBI is still unable to perform transactions with that BTC. There's no bank they can order to transfer it into their account, no briefcase full of cash they can deposit, etc. As I understand it, the only way they're able to deprive Ulbricht of them is by not letting him keep a copy of the file. With the "brain wallet" strategy (not sure how viable that really is), they wouldn't even have been able to get this far.

I would think it's a pretty safe assumption he already had multiple copies of the wallet/private keys stored before he got arrested.

Just from a redundancy standpoint you don't want one copy of your wallet in one location as it could get corrupted or destroyed in a disaster.

Which is a brilliant strategy in itself as the FBI can't introduce it as evidence with out providing him a copy.

What if he'd done the deal in USD, and then invested the proceeds in BTC?

If you steal money and invest it, should you be allowed to retain the capital gains?

And honestly, when it comes to America and drugs, I'm pretty sure that they have the legal authority to seize and sell the router at the coffee shop computer they traced him to once.

edit: humorous typo.

>If you steal money and invest it, should you be allowed to retain the capital gains?

There are MANY examples of this, so yes. However, it usually applies to the wealthy, so they most probably have better legal representation.

DPR is among the wealthy...or, was. He seems to have failed to build up a network of support that a wealthy criminal would need to defend that wealth. He must have been too busy running his empire to watch Breaking Bad and The Sopranos, to learn about how all this stuff works.

> I have another curiosity about the FBI's intent to seize his bitcoins- is it fair to seize all of them? If half of these bitcoins were earned while bitcoins were only worth 1/10 of current value, should only 10% of that half be seized? This might be arguable in court.

I'm fairly sure there must be precedent for this. It's not like Bitcoin is the only currency that undergoes inflation...

"It's not like Bitcoin is the only currency that undergoes inflation..."

You mean "deflation"? ;)

The nice thing about BTCs (aside from anonymity) is that you can always subdivide to tiny increments.

Inflation is when the price of something increase. So, yes, Bitcoin undergoes inflation and not deflation.

Bitcoin is a deflationary currency, which means it INCREASES in value.

If you don't trust me (or my Finance degree), then google and read the paper of the Bitcoin creator, where he/she/they outlined the economics benefits of Bitcoin. Sorry, can't link to the paper myself.

No, inflation is right. Bitcoin is currently inflating in both value and supply.

No, bitcoin is appreciating in price relative to other currencies because the supply has a hard upper bound. In periods of inflation, currencies depreciate in value compared to gold or "baskets" of goods.

bitcoin is appreciating in price relative to other currencies

That's what inflating in value means. Not all inflation is of the general level of prices of goods; you can have asset price inflation, or cost inflation, or in this case, Bitcoin value inflation.

because the supply has a hard upper bound

It's appreciating because demand is increasing faster than supply. The future limit may be driving that demand, but it's certainly not the whole reason, since not all currencies with such an upper bound are this successful.

>That's what inflating in value means.

You're using "inflation" to mean exactly the opposite of what economists usually use the term "inflation" to mean. Bitcoin is experiencing deflation because the value of each bitcoin is increasing.

No, I'm just not talking about inflation of the same thing.

When people - including economists - just say inflation, that's just an abbreviation for "inflation [of the general level of prices]", out if they're Austrian, "inflation [of the money supply]".

But even if this type of inflation is more commonly discussed, that doesn't mean it's the only, and economists also talk about types (e.g. asset value inflation).

Now, notice I didn't write that Bitcoin is an "inflationary currency", but that it's inflating in value. That's because the former term refers to the first kind of inflation I wrote above, when I'm talking about another.

Why did I use an unconventional type of inflation? Is because while it's technically true that the general level of prices in Bitcoins is deflating, I don't think that's very relevant when almost no product sets its prices in that currency, nor will any economy thus experience any deflation due to it.

At least for now, Bitcoin is more like an asset than a currency, therefore it makes sense to speak of its value inflating, just like we do for other assets.

I think you are confused about the term "inflation". When there is an inflation, the value of that item/money goes down. Or in other words, you have to pay more to get the same amount of goods. This is clearly not the case with Bitcoins.

What I think you really meant to say was: "increasing in both value and supply". And that would be right.

When there is an inflation, the value of that item/money goes down.

So when Anna Schwartz wrote her paper "Asset Price Inflation and Monetary Policy" where she talks about the "assets whose prices have escalated", she actually means the value of the assets went down? I think you've just invented new economic theory.

An asset price inflation is an escalation of their prices, much like a Bitcoin value inflation is an escalation of its value.

What I think you really meant to say was: "increasing

Why do you think the word "inflation" was chosen in the first place? What does it mean to inflating something?

At the normal, and expected rate, minus the bitcoins that are being lost.

Here's the correct answer: Bitcoin is BOTH inflating and deflating.

The money supply of bitcoins is inflationary because bitcoins are still being made.

The purchasing power of bitcoins is deflationary because its buying power has historically increased (making other goods decrease in their bitcoin price over time.)

Since the deflationary element has predominated in the years since its creation however, it is more sensible to call it "deflationary" in the whole.

The current valuation is irrelivant. Federal seizure laws allow the government to seize any property, money or bitcoins included, that were used in or generated from some illegal activity.

If my illegal activity generates 1 bitcoin which, 2.5 years later is worth 10 bitcoins, all 10 bitcoins can be seized since they all originated from the original seizable piece of property.

Were this not the case and only the orignial result of an illegal transaction could be seized those running illegal operations would be able to profit from their crimes by simply converting one type of property into another that could increase in value. For example, if you sold 20,000,000 in drugs and purchased 20,000,000 in stock, it does not make sense that, once your property is seized, you can keep the increase in value between when you broke the law and when you got caught. This would make crime much more profitable which is the opposite goal of the seizure laws.

So if I have both legal and illegal income, I should use the legal income on stock and the illegal income on my mortgage? Interesting side-effect.

I doubt paying into a mortgage is a cast-iron method of money laundering.

You're right. The comment that you should buy stock with legal income and pay back a mortgage with the illegal income misses the point completely. Buying stock was just one example of how transfering illegaly acquired funds into something that increases in value does not protect your initial investment. Anything you do with illegal income would be seizable property.

Paying into a mortgage as the same effect. As you pay back a mortgage you acquire equity in the property. The government would then be able to seize your equity in the house, meaning they could sell the property and after paying back the remainder of the mortgage keep the difference.

That's not the point I was making. Let's say I put 1 million dollars into stock, and it grows to 1.1 million. At the same time I have a mortgage on a .7 million dollar house, with total payments of 1 million.

In this case I much prefer them to take the house, because it's significantly less valuable.

I wasn't suggesting any kind of money laundering.

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