The FBI's Giant Bitcoin Wallet

SonicSpike writes with a story about the huge amount of bitcoins owned by the FBI. "In September, the FBI shut down the Silk Road online drug marketplace, and it started seizing bitcoins belonging to the Dread Pirate Roberts — the operator of the illicit online marketplace, who they say is an American man named Ross Ulbricht. The seizure sparked an ongoing public discussion about the future of Bitcoin, the world's most popular digital currency, but it had an unforeseen side-effect: It made the FBI the holder of the world's biggest Bitcoin wallet. The FBI now controls more than 144,000 bitcoins that reside at a bitcoin address that consolidates much of the seized Silk Road bitcoins. Those 144,000 bitcoins are worth close to $100 million at Tuesday's exchange rates. Another address, containing Silk Road funds seized earlier by the FBI, contains nearly 30,000 bitcoins ($20 million)."

Comments

Can it be invalidated?

[Kaenneth]

If the majority of miners wanted to, they could invalidate the FBI wallet, correct?

Re:Can it be invalidated?

[gatkinso]

If so that would make all bitcoins worthless I would think.

Re:Can it be invalidated?

[ackthpt]

If so that would make all bitcoins worthless I would think.

Yep, the value of the Bitcoin, like the value of the Dollar, is in its security - if it were easy to make Dollars with your laserjet printer the market would flood with them and the Dollar value would plummet - this is beside the point of counterfeiting being illegal, if nearly everyone was doing it it would be a very difficult law to enforce.

Re:Can it be invalidated?

[Anonymous Coward]

Why would you want such a system? So the big mining pools can invalidate all the bitcoins of rivals?

Re:Can it be invalidated?

[ASDFnz]

Sort of...

If 51% of miners got together they could in theory stop the FBI from using that wallet (it is actually an address, not a wallet but that is another story).

They would have to continue to do so though, and once they stop the FBI could then use the funds. One of the tennents of bitcoin is that it is very hard (if not near imposable) to confiscate/block/invalidate etc someone else's funds.

Re:Can it be invalidated?

[Anonymous Coward]

Yup, we just might have to blacklist those coins. Stolen property and all..

Re:Can it be invalidated?

[Anonymous Coward]

If the majority of miners wanted to, they could invalidate the FBI wallet, correct?

If someone cracks the private key associated with the bitcoin address where the bitcoins are current located, he could pretend to be FBI and transfer the bitcoins. As soon as the miners see that transaction, that block chain is longer than the current chain and the miners would help validating the transfer.

If someone instead cracke the key of the previous address, they could try to double spend the bitcoins, but then they would have to not only crack the key and transfer the botcoins, they would also have to mine a block containing that transaction, just to be on par with the current block chain. At that point the miner will have to decided which of the two block chains of equal length the want to trust the most. I would assume, they would trust the old one more, so the double-spender would likely have to transfer the bitcoins again and mine a block containing that transfer to make his block chain the longest... But after that the miner would trust that block chain to be the real one and help keeping that alive.

If some of the bitcoins have parse thought one of your address, you could also try to double-spend. You "only" have to make sure your block chain is longer than the existing one, so you would have to mine a lot of blocks...

Re:Can it be invalidated?

[Anonymous Coward]

If the majority of the USD owners wanted to, they could exchange it to EUR or something, that would instantly make it lose its value. Similary, bitcoin users could be moving to bitcoin 2.0.

Re:Can it be invalidated?

[Dahamma]

Wait, Silk Road users are going to sue the government to get back the bitcoins they received for selling illegal drugs? Yeah, that'll work, I'm sure the US government would happily give confiscated cash back to drug dealers when threatened with a *lawsuit*...

Re:Can it be invalidated?

[Anonymous Coward]

Hmmm...

And for the government morons reading this, that is a JOKE. J. O. K. E. Not being seriously contemplated. Just kidding! <grin>

Re:Can it be invalidated?

[mysidia]

If the majority of miners wanted to, they could invalidate the FBI wallet, correct?

Yes. A code update to treat as invalid, any spend transaction with that wallet as a source.

Re:Can it be invalidated?

[Anonymous Coward]

The drug sellers might not, but the people who deposited coins at Silkroad might. Unless they already bought something, they did not do anything illegal yet, and there was also legal stuff available for sell at Silkroad, so there is no proof that they intended to do illegal things. So the FBI simply stole their money without justification and thus they are very likely entitled to get it back and would have reason to sue.

Re:Can it be invalidated?

[ancientt]

Well maybe not. On the other hand I believe it was possible to buy a variety of things that aren't illegal on the Silk Road. I listen to a podcast where the commentators were talking about the twinkies they bought that way. There might be journalists who were using Silk Road to buy legal things and had their bitcoins seized. The argument could be made that it is like buying strawberries at a flea market where some sellers are engaging in illegal activity and the buyers of strawberries have a legitimate right to have their seized assets returned.

I'm really not sure how the legalities would play out, but I would like to see the legal system set some precedents on what constitutes legal property since Congress has suggested that bitcoin is at least sort of property.

Re:Can it be invalidated?

[Anonymous Coward]

1) So, somebody's gonna (be stupid enough to) stand up and say aloud - remember, this will be very public and very permanent, just like any other court case: "Yes, I, Andrew Nicholas Onymous, have registered on Silk Road and deposited money there (weren't going to do anything fishy, honest). Here are my credentials so FBI can check that I'm saying the truth!"

I'm not even speaking about smart move of giving the FBI direction to dig in, consider what a pretty mark it will leave for anyone doing background checks. A highschool photo with a joint in the frame can kill a potential career, think what a direct confession like "Yeah, I spent money on the underground drugs market, but cops ain't got nuff on me" will do?

2) It's all empty musings, anyways, as I believe there were some standard procedures to try and get your stuff back after it was grabbed together with evidence and proceeds from crime.

Re:Can it be invalidated?

[Anonymous Coward]

Well, there are people who don't mind if other people think of them as drug purchasers as long as it can not be proven by the prosecutors. As likely as it is that they intended to buy drugs from the deposited money there was still legal merchandise available there.

Actually it should be expected that some people really did not intend to buy drugs. And it should be expected that these people will of course demand their coins back. Not demanding them back would cause suspicion as well if they are identified at a later point (e.g. by tracing funds through the blockchain back to the source which might have been a exchange).

Re:Can it be invalidated?

[Bing Tsher E]

How did the FBI confiscate someone else's funds, then?

Re:Can it be invalidated?

[JWSmythe]

So, invalidate and reissue on the behalf of Ulbricht, and any other bitcoins that were confiscated. That would actually be nice. The ultimate in theft prevention.

Imagine, if someone steals your (real world) wallet. You invalidate all the cash in it, and issue new cash.

Unfortunately, I can see the *huge* number of reasons why it's a bad idea. The first being, I do a high dollar transaction. I get the physical product. I complain that it never arrived, and 51% agree that I'm a good guy. Now the seller is out the funds, and the product.

So does this plan go for only funds seized in high profile cases? If the feds didn't say they seized the funds publicly, would they get to keep the them, and screw the accused? Who do you believe for deciding, the holder of the bitcoins, or the media?

Re:Can it be invalidated?

[camperdave]

Counterfeiting is a different animal than invalidating Bitcoins. With counterfeiting, you are flooding the market with worthless duplicates or fakes, thus throwing the authenticity of what you hold into question. With Bitcoin invalidation, a third party simply declares your bitcoins worthless. It's like when the money changed from Pounds to Euros. The currency may be authentic, but it is unable to be exchanged. The scary bit is that if someone can invalidate the FBI's wallet, they can invalidate yours just as easily.

Re:Can it be invalidated?

[paxprobellum]

They took physical possession of the wallet.

Re:Can it be invalidated?

[camperdave]

How did the FBI confiscate someone else's funds, then?

They confiscated the computers with the crypto keys, probably.

Re:Can it be invalidated?

[mrchaotica]

LOL, you've never heard of civil forfeiture, have you?

Re:Can it be invalidated?

[Anonymous Coward]

The drug sellers might not, but the people who deposited coins at Silkroad might. Unless they already bought something, they did not do anything illegal yet, and there was also legal stuff available for sell at Silkroad, so there is no proof that they intended to do illegal things. So the FBI simply stole their money without justification and thus they are very likely entitled to get it back and would have reason to sue.

I like the theory, but you're assuming that the government follows the law, when in fact the government ignores the law to make money. They violate the civil rights of hundreds of millions of Americans to funnel billions of dollars to cronies at Dell and Booze Allen Hamilton to build gigantic surveillance data centers. They're not going to give up $100 million just because it belongs to people who didn't break any laws.

Re:Can it be invalidated?

[Anonymous Coward]

Right, I really never heard of this. Bad for you (and probably the people who lost money on SR). I did not think that such shameful law would exist, but what do I know, I don't live in the US but some place else where there is still some justice in the judicial system.

Re:Can it be invalidated?

[Anonymous Coward]

Unfortunately, I can see the *huge* number of reasons why it's a bad idea. The first being, I do a high dollar transaction. I get the physical product. I complain that it never arrived, and 51% agree that I'm a good guy. Now the seller is out the funds, and the product.

I think that's exactly what would happen if Paypal controlled 51% of Bitcoin.

Re:Can it be invalidated?

[thebigmacd]

"Money" never changed from Pounds to Euros.
http://en.wikipedia.org/wiki/Pound_sterling

Re:Can it be invalidated?

[sg_oneill]

The drug sellers might not, but the people who deposited coins at Silkroad might. Unless they already bought something, they did not do anything illegal yet, and there was also legal stuff available for sell at Silkroad, so there is no proof that they intended to do illegal things. So the FBI simply stole their money without justification and thus they are very likely entitled to get it back and would have reason to sue.

I'm sure the FBI will be quite accomodating to people wanting their buttcoins back. All they will need to do is just let the FBI know their name, details and the outline of the transactions involved and it'll be fine, just you see.

Re:Can it be invalidated?

[Anonymous Coward]

Mining is much more centralized than most people realize. They've already fixed blockchain splits by "fiat", so it's quite possible the big mining collectives could start offering services like transaction validation or theft protection.

Re:Can it be invalidated?

[Anonymous Coward]

That is why a John Doe class action lawsuit covering all possible claimants was suggested. You can appear in court anonymously under some circumstances and as a class. The most famous case you know about (for US folks) involves a anonymous plaintiff (Jane Row vs. Henry Wade).

Re:Can it be invalidated?

[Anonymous Coward]

Irish pounds...

Re:Can it be invalidated?

[Anonymous Coward]

What the bigmacd said;;

But also; You should note that the serious reserve currency in the Euro, the Deutchmark, is still completely exchangable. You go to a bank in Germany and they will still give you the same exchange rate for a DM as they did at the beginning.

That's a pretty clear statement from the Germans that "quantative easing" is for AngloSaxies and that if you want to invest then their currency is stable.

With Bitcoin, you could refuse to take the FBI's money, but all it takes is for one other person with an appropriate way of laundering them for the FBI (one at a time in a Tumbler, for example) to take some and pretty soon you will find yourself on the losing side. You will be paying more for bitcoin than them (since your supply is more limited) and so your side of the market will be less attractive to others who will be happy to accept potentially mixed coins.

Re:Can it be invalidated?

[Anonymous Coward]

...so how about a code update, published by the US government, to treat as bitcoins numbers that are actually not bitcoins? Then they'd just need to find some way to force everyone in the US to run their programs.

Re:Can it be invalidated?

[buchner.johannes]

Doesn't it mean that if the original owners still have a backup of the crypto keys laying around somewhere, they could still move the money away?

Re:Can it be invalidated?

[Bazman]

Irish pounds were actually "Punts" [http://en.wikipedia.org/wiki/Irish_pound] - named to rhyme with the irish word for "banker".

Re:Can it be invalidated?

[Anonymous Coward]

You're missing the point, if they're invalidated they cannot be sent to anyone even if they're willing to accept the transaction.

Re:Can it be invalidated?

[DrXym]

Assuming the feds had the unencrypted wallet, I expect the first thing they would do is transfer all the funds out of the original wallet to their own to prevent that happening. Even if the person maintained a backup, the first thing that would happen when they synced is that all the coins would disappear out of it.

Re:Can it be invalidated?

[Anonymous Coward]

Doesn't it mean that if the original owners still have a backup of the crypto keys laying around somewhere, they could still move the money away?

If FBI know what they are doing, they would transfer the funds to a different address as soon as they got hold of the private key of the previous address. If the funds have already been transferred to an address where only FBI has the private key, then that backup is not worth anything.

But has FBI been careful enough to use secret sharing for the secret key? Or is there a risk that some individual working for FBI could steal those bitcoins without leaving a trace of their identity?

Re:Can it be invalidated?

[_Shad0w_]

I feel like pointing out that the "AngloSaxies" are by definition Germanic. The name is even derived from a combination of Angle and Saxon.

Re:Can it be invalidated?

[Anonymous Coward]

I can't seem to repeat this often enough.

Bitcoins are a scam.

Re:Can it be invalidated?

[Seumas]

The point of Silk Road was private transactions. They tried to propagandize the idea t hat it's "only for illegal drugs" to justify their actions, when what they were really angry about was simply cracking down on purportedly untraceable money. That people are going around repeating the drug thing suggests their effort worked.

Re:Can it be invalidated?

[StripedCow]

In fact, that's exactly how I think the government will, in the future, invalidate bitcoins (and keep control of currency).

They will put up a website where you can "validate" your bitcoins. The ones which the government doesn't like will get banned (because who wants to have "dirty" money?) and devalued.

Re:Can it be invalidated?

[Anonymous Coward]

The government does not acknowledge the existence of bitcoins. So why would they transfer them to a different address?

Re:Can it be invalidated?

[Anonymous Coward]

Except in Ireland...

Re:Can it be invalidated?

[TheRaven64]

The government does acknowledge the existence of bitcoins. They're just not sure quite how to classify them. They don't have most of the properties of a currency, but they do have some. They have most of the properties of a security, but not all. They have a lot of the properties of a scam, but not all.

Re:Can it be invalidated?

[xelah]

Notice that this would work just as well with dollar notes. This isn't done, even though governments have far more control over them than bitcoins.

Re:Can it be invalidated?

[StripedCow]

This isn't done, because governments have far more control over them than bitcoins.

Fixed that for you :)

Re:Can it be invalidated?

[jonbryce]

And Cyprus pounds, as well as Italian Lira - Lira is Italian for Pound, and both were originally based on a pound (in weight) of silver pennies.

Re:Can it be invalidated?

[jonbryce]

They do acknowledge the existence of bitcoins, however it is not clear whether or not they consider them to be legal. Regardless, when they bust a drug dealer, they will sieze all the assets, and they will include legal assets such as cars and dollar bills as well as illegal assets such as inventory of drugs. It doesn't matter at this point whether bitcoin is a legal or illegal asset.

Re:Can it be invalidated?

[Anonymous Coward]

So, invalidate and reissue on the behalf of Ulbricht, and any other bitcoins that were confiscated. That would actually be nice. The ultimate in theft prevention.

I think you will find that in the general population outside of the slashdot ecosystem, most people actually prefer the FBI to have that cash, rather than a megalomanic attempted murderer.

Geez this place has gone down the drain, everyone is now actually advocating giving funds back to the criminals. Control your underbelly a bit and think with your brain for once, bunch of freaking social rejects.

Re:Can it be invalidated?

[gatkinso]

>> The scary bit is that if someone can invalidate the FBI's wallet, they can invalidate yours just as easily.

Translation: bitcoins are worthless if they can be invalidated by third parties.

Re:Can it be invalidated?

[TheCarp]

Sure, it would only undermine the entire concept of bitcoin, and defeat the very reason that btc was made distributed like it is in the first place. However, if enough thought it was a good idea, they could all start running some new code that treats some addresses as special.

This is highly unlikely and would be highly undesirable. The FBI has some bitcoins, good for them, they are just as protected by the system; and no more so; than anyone else. The way it was always intended to be.

I mean nearly the entire point was to make this sort of action nearly impossible to pull off even with the threat of force as no one individual or group can make such a change. Having that community decide to subvert that would hardly be a good idea.

Re:Can it be invalidated?

[Half-pint HAL]

Except that "punt" is an Irish word, as in the language, so has an "oo" sound. (As did "pound" originally, incidentally -- it's English that has changed. Notice the pornunciation of "you" -- that's the original sound of OU.)

Re:Can it be invalidated?

[Talderas]

On the other hand, demanding your coins back may in fact provide sufficient probable cause to issue a warrant to search your home.

Re:Can it be invalidated?

[Half-pint HAL]

Almost... the full term was "libra pondo": pound weight. "Lira" is from "libra pondo", but it's the "libra" part, not the "pondo" part, so it's not really Italian for pound.

Re:Can it be invalidated?

[u38cg]

Begorrah, to be sure now, is that a fact?

Re:Can it be invalidated?

[Yebyen]

Why? They already have the largest actual wallet of real bitcoins in their possession. What reason would they have to undermine that?

Re:Can it be invalidated?

[Sez Zero]

How did the FBI confiscate someone else's funds, then?

They didn't take the money, they just took the data (and presumably the devices that data was on).

I wonder if you could pull a Walter White-style magnet attack... what happens if BTC wallet and keys is lost? Do the bitcoins just die?

Re:Can it be invalidated?

[LWATCDR]

Sure. Just set the value of all bitcoins to 0. Just imagine the fun that would be.
"Sorry but a lot of us decided to take your money away from you because we do not like you."

Re:Can it be invalidated?

[tompaulco]

Yup, this is just like if some big bank got caught laundering drug money (which actually did happen) and the FBI confiscated all the money deposited in the bank, including yours, even though it was not related to the drug money and was not going to be used for that purpose.

Re:Can it be invalidated?

[mic0e]

If every single miner refuses to process transactions from/to that address, the bitcoins would indeed be frozen in place.
If, however, only one miner decided to process the transaction, it would be confirmed as soon as that miner solves a block. As the number of miners who refuse to confirm the transaction appraoches 100%, the confirmation time would thus approach to inifinity.
However, miners who refuse to process the transaction wouldn't get the transaction fee that the FBI decided to pay, so in the end greed will win.

Re:Can it be invalidated?

[mic0e]

How would that work? IMHO, exactly 100% of miners would need to get together.

Re:Can it be invalidated?

[Anonymous Coward]

Why would 51% of bitcoin owners agree to grab money back from someone who most would agree was a criminal and potentially a murderer?

Re:Can it be invalidated?

[iluvcapra]

"Money" never changed from Pounds to Euros.

Caveat: GBPs have, for brief periods in the last 30 years, been pegged to ECUs and the German Mark.

Re:Can it be invalidated?

[Dahamma]

Well, like a black market "bank" with no FDIC registration or insurance named "Drug Money Laundering Bank" that openly advertised itself as a haven for illegal activities

Re:Can it be invalidated?

[MugenEJ8]

SoP for forensic storage have included shielded lockers for data equipment at least in the MCSO for the last 5 years. So no Breaking Bad antics for you.

However yes, if you destroyed the bitcoin data on the drives, they would be forever lost.

Re: Can it be invalidated?

[Anonymous Coward]

You going to say that for the restbof your life? Why would the FBI seize it if it were a scam.

Do you say this because there is no centralized government for bitcoin?

Re:Can it be invalidated?

[mpeskett]

Ownership is established by knowing the private key for the wallet/address. The FBI gained that key --whether by keylogger, wiretap, plea bargain or $5 wrench is unclear-- and transferred all the funds to an address under their exclusive control.

So from the point of view of the bitcoin protocol, the FBI were the proper owners (they knew the key) and therefore weren't obstructed from making that transfer. Likewise they wouldn't be obstructed from further use of the address they control unless a majority of miners collaborated to refuse to include their transactions in blocks *and* refuse to mine on top of any chain that included such a transaction in a block mined by somone else.

Which would, strictly speaking, be a breach of protocol - you're supposed to always mine on top of the longest chain. But nonetheless possible if they patched the mining software to selectively ignore particular addresses. But that would seem like a bad precedent to set and a bad capability to build into the network.

Re:Can it be invalidated?

[toddestan]

Surely one could examine the block chain and determine whether or not the government has transferred them to another account or not? Given the number of coins involved, seems like it would be pretty easy to figure out.

Re:Can it be invalidated?

[DanielRavenNest]

Yes, it's even labeled:

https://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX

And since it's a known address, people are pranking it by sending tiny amounts with messages attached.

I'm in ur blockchain

[fisted]

blocking.

easy come, easy go

[tverbeek]

Well, with the value of Bitcoin already rapidly declining, they may not have to worry about it for much longer.

Re:easy come, easy go

[drooling-dog]

This whole thing smells like a bubble right now. The value increases for mostly speculative reasons. Bitcoins could never be a viable mainstream currency, because the volume can't readily be increased to match rising demand from transactions involving them. That's the whole point of Bitcoin, isn't it? Money in essentially fixed supply that can't be "printed" at the whim of a central bank? That makes it a deflationary currency, and no one will exchange it for stuff today if the price of that stuff is likely to be dramatically lower next week. And if it's not a viable currency, what is the value based on? Scarcity by itself isn't enough.

Re:easy come, easy go

[Dahamma]

The tulips are dying, the tulips are dying!!

Re:easy come, easy go

[Cryacin]

The tulips are dying, the tulips are dying!!

Nah, they're safe as houses.

Re:easy come, easy go

[pantaril]

That's the whole point of Bitcoin, isn't it?

Another "whole point" of bitcoin? I wonder how many whole points bitcoin has. I regulary read on slashdot that the whole point of bitcoin is that it cannot be regulated, that it is currency, that it is annonymous/untracable, that it can be used to avoid taxes... all of this is of course false (it is not unregulated, it is not annonymous and untracable) . Bitcoin has no single purpose, it could be currency (but the volatility prevent this at the moment), or long term store of value (like gold), or payment network or many other things. Bitcoin can be all of that or some of that. Thinking that bitcoin has just single purpose is silly.

Re:easy come, easy go

[tompaulco]

I can't see how an inflationary currency is any better. Basically the best thing you can do is, as soon as you receive a dollar, spend it. Otherwise, as soon as you've held your dollar for more than zero time, it is no longer worth what it was when you earned it.
So the problem with bitcoin is no one would spend one today knowing they could get it for cheaper tomorrow. And the opposite is true with gov't backed currency. Nobody would hold onto a currency knowing it will not have a s much buying power tomorrow as it does today.
A fixed number of items is not traditionally thought of as deflationary, though. Think of gold. Nobody calls it deflationary. People used to tie their currency to it. Like gold, the "value" of bitcoin is tied 1:1 to the size of the market for it.

Re:easy come, easy go

[Anonymous Coward]

no one will exchange it for stuff today if the price of that stuff is likely to be dramatically lower next week

How would you modify your theory to explain the people exchanging it for stuff right now?

Re:easy come, easy go

[j-beda]

One of the strengths of a (slightly) inflationary currency is that there is an incentive to invest it in productive activities - ie starting a business. This also creates opportunities for lending the money out for others to use at interest and pooling monies in banks to use for lending, and things like that. Putting your money under the mattress for later use is not so good for the economy. Spending it or getting it into a bank so others can spend it and provide liquidity to the whole system is what is necessary for a robust economy.

At least, that is part of the picture.

Re:easy come, easy go

[tompaulco]

That would be true if the ROI was better than the inflation rate, which it isn't for just about anything you can find offered by a bank ( especially after you figure in taxes on your interest). Still better than hiding it in your mattress. For most people, the only way to keep their dollar worth a dollar is to invest in the stock market or a business. However, for no risk at all, they could go and buy something tangible right now, and be better off than waiting until tomorrow to buy it (on average).

Re:easy come, easy go

[j-beda]

That would be true if the ROI was better than the inflation rate, which it isn't for just about anything you can find offered by a bank ( especially after you figure in taxes on your interest). Still better than hiding it in your mattress. For most people, the only way to keep their dollar worth a dollar is to invest in the stock market or a business. However, for no risk at all, they could go and buy something tangible right now, and be better off than waiting until tomorrow to buy it (on average).

"That" is still true even with a lower ROI, since the "that" that my post was about was the idea that slight inflation provides an incentive to invest, and in fact buying something right now is a form of investing. My point is still that currency is a device designed to ease trade and production, thus currencies that have built-in incentives to use them (or at least make them available for others to use) are "better" than ones without such incentives. The system works better if the money moves around.

Note to self...

[Anonymous Coward]

If accumulating bitcoins, create contingency plan:
1) Encrypt and back up wallet periodically, in a different building than original
2) Create a contingency wallet at a remote location/server
3) In the case of trouble give all bitcoins from backup to contingency

As usual, some criminals seem bright, but aren't actually bright.

Re:Note to self...

[AK Marc]

I am not exactly sure how it works, but if you have 3 copies, all someone needs is one to take them all. They find one copy, then move them to their wallet, and the two "backup" copies of yours are then invalid. So the more backup/contingency you have, the less safe you are from theft (though more safe from losing them in a Welsh landfill).

Re:Note to self...

[michelcolman]

The idea is that you transfer the coins before the feds can get to them. As they are taking your computers out of the building, someone in the other building transfers the coins to the contingency wallet (which can consist of a piece of paper stored pretty much anywhere). The feds are left with an empty wallet and no way of getting to the funds.

Are you sure about that?

[Anonymous Coward]

"but it had an *unforeseen side-effect*: It made the FBI the holder of the world's biggest Bitcoin wallet."

I'm sure that was an accident..

Been fucked enough, America?

[Anonymous Coward]

Obamy!

Re:Been fucked enough, America?

[Anonymous Coward]

And? The president by virtue of being the president has security details and the only approved mobile transportation requires secret service supervision and authorization. Unfortunately, because we've had assassination attempts and such in the past, the secret service approves air force one, marine one, and transport one and then organizes with local police. This isn't an 'Obamy!' thing, go back to posting on facebook you geriatric fool, oh and check your inbox, you've got a few Fox News FWD: emails.

Oh so fucking what.

[Anonymous Coward]

I really really miss the old Slashdot, which was about science, mathematics and engineering rather than capitalism.

Re:Oh so fucking what.

[johnsnails]

You must be old here

Re:Oh so fucking what.

[Anonymous Coward]

by the way being old is a quality, you gain wisdom and knowledge
only very young and very old don't changes their idea for complete different reason...

young padawan lol

Delete it.

[Anonymous Coward]

Delete the wallet.

Re:Delete it.

[Anonymous Coward]

I'll be the first to admin I don't know much about bitcoin, but wouldn't that permanently destroy those coins. Would the total of 21 million bitcoins dwindle to zero over enough time as coins are lost?

CAPTCHA: NON ZERO --- these things seem more on topic that I would assume randomness to be.

Re:Delete it.

[Anonymous Coward]

Delete the wallet.

Doing so wouldn't actually destroy the bitcoins. Bitcoins are NOT in wallets. They're on bitcoin addresses. All a wallet really is, is a collection of public keys (bitcoin addresses) and their corresponding private keys. The bitcoin address (the public key) is known, so if someone could create the matching private key, they could transfer the bitcoins.

Not saying it would be easy to create that private key or anything like that (NOT AT ALL!), but if you had that private key, you could transfer the bitcoins even without that exact wallet. You would have both the public key (we all already have that) with the bitcoins and the matching private key for that public key and that's pretty much all you need to make a wallet.

That's actually true for every bitcoin address with some bitcoins on it, so if someone wants to try something like that, it would be even more cool, if they made a private key matching one of Satoshi Nakamotos initial bitcoin addresses. Imagine what would happen, if those bitcoins were suddenly transferred. People would think Satoshi were back and I'm pretty sure that's one of the signs of the apocalypse.

Re:Delete it.

[petermgreen]

An address isn't actually a public key, it's the hash of a public key. So what you actually need to find to spend the bitcoins is an ECDSA keypair where the public key hashes to the address. I presume they did it this way to make addresses shorter (at the cost of making transactions in the blockchain longer).

But the principle remains, it's not "impossible" to go from a bitcoin address to a set of keys that can be used to spend coins from that addresses but it is "computationally infeasible" given current public knowledge of the crypto primitives involved and current or reasonablly forseable computing power.

Re:Delete it.

[Anonymous Coward]

An address isn't actually a public key, it's the hash of a public key.

Ah, thank you. I sit corrected.

Re:Delete it.

[michelcolman]

The bitcoin system doesn't require any particular number of bitcoins. In fact there's no such thing as "a" bitcoin, there's just a network that keeps track of how much everyone has. Bitcoins can currently be subdivided up to 8 decimal places (one bitcoin is 10^8 satoshis) but it just takes a software update to create even smaller units. So even if there's just one tenth of a bitcoin left, fractions of that can still be used just as easily. If you "destroy" bitcoins (by destroying the keys needed to use them), the remaining bitcoins just become worth more.

The only reason why so many bitcoins are created, is as a method of distributing the initial coins. People have to use (some might call it "waste") processing power to be rewarded with new bitcoins, and anyone can mine them. Once enough coins are in circulation, we just keep using those (or what's left of them) like we use ordinary money. Except nobody can create any more.

Control.

[Anonymous Coward]

Its about control. Its time people opened their eyes saw that we're living in a open air panopticon devoid of genuine freedom.

Re:Control.

[Anonymous Coward]

Its about control. Its time people opened their eyes saw that we're living in a open air panopticon devoid of genuine freedom.

Had to look that one up..

Panopticon is a type of institutional building designed by the English philosopher and social theorist Jeremy Bentham in the late 18th century. The concept of the design is to allow a single watchman to observe (-opticon) all (pan-) inmates of an institution without them being able to tell whether they are being watched or not. Although it is physically impossible for the single watchman to observe all cells at once, the fact that the inmates cannot know when they are being watched means that all inmates must act as though they are watched at all times, effectively controlling their own behavior constantly. The name is also a reference to Panoptes from Greek mythology; he was a giant with a hundred eyes and thus was known to be a very effective watchman. http://en.wikipedia.org/wiki/Panopticon

Re:Control.

[tgd]

Freedom is now, has always been and always will be, an illusion given to the masses to keep them pacified.

Why do you think you've lost something?

Re:Control.

[Anonymous Coward]

Freedom cannot be given to someone. It is something you can give up.

Freedom is earned by its exercise, by the retention of your own built-in authority to choose your own course through life. This does not mean that someone can't take it away--to continue retention of your freedom, you must actively seek to retain it, and often, you must fight for it.

When the school bully pushed you around and asked for your lunch money, did you willingly hand it over, or did you sock him one, knowing that you would probably get hit back? Now, governments are larger and scarier, but the concept remains.

The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.

Auction question?

[elmer at web-axis]

Because so many countries are declaring that bitcoin isn't a currency and should be viewed as an asset (thus falling under capital gains) does a police seizure of bitcoin mean that they will end up at a police auction?

Re: Auction question?

[Anonymous Coward]

An FBI seizure is not a police seizure and the FBI doesn't hold police auctions

Re: Auction question?

[Anonymous Coward]

But was it FBI or DEA who seized his assets?

I'm asking, because after passing Internet rumor mill every "big arrest in USA" becomes "FBI", just like every "government spying" becomes "NSA" whether it was "CIA", "FBI" or "local police dept got their hands on portable cell tower" in the original story.

Re: Auction question?

[khallow]

An FBI seizure is not a police seizure and the FBI doesn't hold police auctions

Just because the FBI doesn't auction it, doesn't mean that it doesn't get auctioned. Googling around, I found two different cases of assets that were seized by the FBI and auctioned off by the US Marshals.

He did for a good reason

[Anonymous Coward]

He did it for T'blave!

T'Blave!

Bitcoin post = win

[savuporo]

Let me try a random headline generator with the word Bitcoin substituted in, see how many land on Slashdot

Could binge bitoin mining burgle the middle class?
Will the bitcoin steal the identity of the conservative party?
Is the nanny state destroying the bitcoin?
Could dumbing-down bitcoin tax england?
Is cancer stealing the bitcoins of your children?

Re:Bitcoin post = win

[Anonymous Coward]

How about "is Bitcoin dumbing down /. article submissions?"

Re:Bitcoin post = win

[Anonymous Coward]

Damnit, I would click on all of those.

Re:Bitcoin post = win

[mpeskett]

Or to borrow some actual slashdot headlines...

Formhault C has a huge bitcoin debris ring
Scientists print bitcoin
Police pull over more drivers for bitcoin tests
Apple pushes developers to bitcoin
NASA schedules space walks to fix bitcoin pumps
Bitcoin exchange value halves after... wait, I did this one wrong
Unreleased 1963 bitcoin on sale
Want to fight allergies? Get bitcoin

Dammit, it still works, I would read every single one of these.

Steal that Wallet

[Jherek Carnelian]

Please, please, please, somebody steal those wallets. What are the chances they haven't been secured correctly? All it takes is some bureaucratic error resulting in bad opsec and some thieves with big balls of steel and we'll have the bitcoin story of the year.

Re:Steal that Wallet

[bob_super]

Right, because we need the government to find news ways to lose another $100M.

Re:Steal that Wallet

[Shoten]

Please, please, please, somebody steal those wallets. What are the chances they haven't been secured correctly? All it takes is some bureaucratic error resulting in bad opsec and some thieves with big balls of steel and we'll have the bitcoin story of the year.

Actually, I bet something like this is happening as we speak:

John Travolta (made up to look slightly different, as a blonde with a bit of a goatee): "Hey, Stan. How've you been?"
Hugh Jackman: "Oh, SHIT! Not this crap again..."

Must be an old article

[viperidaenz]

144,000 bitcoins is only $82M, since they're only $574.17 at the moment.
They should have run this story on the 1st of dec, when they were going for $1203

Re:Must be an old article

[Anonymous Coward]

This morning's low price was $455, giving a net value of $65M.

Ugh...

[bennomatic]

Cue the paranoid right wing "Obama wants to take your Bitcoins" brigade.

Re:Ugh...

[PolygamousRanchKid]

Cue the paranoid right wing "Obama wants to take your Bitcoins" brigade.

Nonsense! Obama said quite clearly: "If you like your Bitcoin, you can keep it."

I suspect that the FBI will use these Bitcoins in undercover operations, to lure out criminals who will only accept Bitcoins.

Re:Ugh...

[grizdog]

Not sure if you are joking, but wouldn't this be counter productive? Couldn't a tech-savvy crook look at the blockchain and see these bitcoins once were owned by Ulbricht, and run away?

Re:Ugh...

[Anonymous Coward]

I suspect that the FBI will use these Bitcoins in undercover operations, to lure out criminals who will only accept Bitcoins.

Don't think so - a smart criminal would easily check if sender's bitcoins are "tainted" by association with this address.

It's not like those are the _only_ Bitcoins in FBI's possession - if you'd read the Silkroad's case report, they caught a few sellers by making purchases from Silkroad before they got to DPR. They probably just get an expense approved and buy some coins from MtGox or whichever if they need to.

Re:Ugh...

[AK Marc]

So poison every coin ever owned by Ulbricht? Sounds a little scorched earth. And criminals are too greedy for that to work anyway. They'll take the quick score, even if it's risky, otherwise they wouldn't have turned to a life of crime.

Re:Ugh...

[operagost]

On the contrary; everyone knows that Obama, leader of the most powerful nation in the world, didn't even know what bitcoin was until October 2013. He's really on top of it now, I'm sure.

Re:Ugh...

[Anonymous Coward]

Couldn't a tech-savvy crook look at the blockchain and see these bitcoins once were owned by Ulbricht, and run away?

The FBI would use a coin mixer to anonymize their bitcoins.

Soon to be rebranded

[wonkey_monkey]

Federal Bitcoin Industries.

Not to be pedantic but.......

[AbRASiON]

They are "worth" nothing. The bitcoins however are currently valued at X amount.
Mind you, I'm not implying cash is "worth" anything either.

On topic, the Winklevoss Bros are predicting up to $40,000 per coin
http://www.theregister.co.uk/2013/12/17/winklevoss_predicts_400bn_bull_market_for_bitcoin/
Who knows what will happen? I just wish I'd made some money from it myself :/

Re:Not to be pedantic but.......

[QilessQi]

On topic, the Winklevoss Bros are predicting up to $40,000 per coin

Doctor: You know the leech comes to us on the highest authority?
Edmund: Yes. I know that. Dr. Hoffmann of Stuttgart, isn't it?
Doctor: That's right, the great Hoffmann.
Edmund: Owner of the largest leech farm of Europe.

Re:Not to be pedantic but.......

[Anonymous Coward]

the dumbest motherfuckers to ever graduate Harvard are predicting up to $40,000 per coin

Well damn, time to sell!

What the feds plan to do:

[alphonse23]

http://www.forbes.com/sites/kashmirhill/2013/10/04/fbi-silk-road-bitcoin-seizure/ The feds plan to eventually sell them back into circulation -- if that's what they mean by liquidate. Though I think they should just throw/burn the private key away, and let those coins join the mass of other coins that were lost by early adopters.

Re:What the feds plan to do:

[Anonymous Coward]

I think they should just throw/burn the private key away, and let those coins join the mass of other coins that were lost by early adopters.

That'd be stupid. Keeping it away would have the same effect (getting the coins out of circulation) while allowing them to use the bitcoins in the future if they so desire. Or maybe they'll give the bitcoins to the CIA, who could start paying terrorists (I mean, freedom fighters) with bitcoins instead of dollars.

Re:What the feds plan to do:

[Anonymous Psychopath]

I think they should just throw/burn the private key away, and let those coins join the mass of other coins that were lost by early adopters.

That'd be stupid. Keeping it away would have the same effect (getting the coins out of circulation) while allowing them to use the bitcoins in the future if they so desire. Or maybe they'll give the bitcoins to the CIA, who could start paying terrorists (I mean, freedom fighters) with bitcoins instead of dollars.

Or dump them en masse on the exchanges, sit back, and watch Bitcoin destroy itself.

Re:What the feds plan to do:

[Anonymous Coward]

Bitcoin users:

It will be the sixth time we have rebuilt it, and we have become exceedingly efficient at it.

Bubble? Not necessarily ....

[King_TJ]

Not saying you're wrong... but simply saying it's complicated enough that I sure wouldn't write it off yet.

Bitcoin may have a fixed limit, but there are literally dozens of other cryptocoins out there vying for attention and viability. Some appear to be little more than bad ripoffs of existing code used for an earlier coin, and likely pre-mined by the author in the hopes of making a quick buck off of them. Others (like litecoin) seem to be following in lock-step with the rises and falls of bitcoin in the marketplace, although at a much lower value per coin.

I think it's very short-sighted to believe bitcoin would ever be used by itself as a form of digital currency. It's worth a high enough value already (and continues to trend upwards) that it's very inconvenient to use to pay for smaller items or more inexpensive services. (Nobody likes to work with numbers multiple digits to the right of the decimal place.) The litecoin proponents often use the analogy of it being "silver to bitcoin's gold". Who knows ... but it's certain that when using U.S. currency, simply having $100 bills to pay for smaller items is impractical. (Many shops caution you with signs in the window that they don't make change for bills larger than $20.)

I'm not sure if bitcoin would run into the perceived "volume required exceeds coins in existence" issues, causing deflation, if it wound up only used for very large transactions, alongside multiple other altcoin options? As long as coin exchanges exist and other cryptocoins are in active use, there would be ways to convert bitcoin into other coins anyway -- further eliminating the concerns of it becoming a deflationary currency.

Heck, there's really nothing saying bitcoin will be around in the long haul either! It's essentially a version 1.0 attempt at all of this stuff.... I could easily see bitcoin deprecated in the marketplace, with people instructed to convert it to some newer, better cryptocoin alternative before a certain "drop dead" date when it would become worthless.

Re: Bubble? Not necessarily ....

[um... Lucas]

Youre right, it is a 1.0 attempt at a peer to peer currency. But it'll be next to inpossible to go back to the drawing board on it. Too much vested interest. Think all those people who have spent tens of millions (most likely) on mining equipment will endorse even a slight change to the algorithm that renders their equipment useless? Not likely. And that's just at the simest level. Then there's more fundamental things like block generation rate ( which is the time for a transaction to get into the block chain), even if 90% of people thought it should be changed, it's not a democratic process - so long as the important people thought otherwise, nothing would happen.

Point out enough of this on the bitcoin boards and you're told "if you don't like it make your own" but then if you make your own, at best it's called a cheap knockoff with a couple parameters changed, at worst it get attacked by bitcoin miners in the name of "defending bitcoin"

Re:Bubble? Not necessarily ....

[Anonymous Coward]

Nobody likes to work with numbers multiple digits to the right of the decimal place.

So move the decimal place and call it something else. Bitcents or something. (Not catchy, I know; purely illustrative.)

Many shops caution you with signs in the window that they don't make change for bills larger than $20.

That's just to deter robbery.

Re:Bubble? Not necessarily ....

[Jah-Wren Ryel]

Nobody likes to work with numbers multiple digits to the right of the decimal place.

So move the decimal place and call it something else. Bitcents or something. (Not catchy, I know; purely illustrative.)

They are called satoshis.
1 BTC == 100,000,000 satoshis

There are also intermediate denominations like mBTC (micro bitcoin).
1 BTC == 1,000 mBTC

http://bitcoin.stackexchange.com/questions/114/what-is-a-satoshi

Re: Bubble? Not necessarily ....

[Anonymous Coward]

Bitcoin mining asics will work with almost any SHA256 based cryptocurrency. You change your mining pool url and "cgminer" can't tell the difference.

Re:Bubble? Not necessarily ....

[Anonymous Coward]

BitCoin has one attribute that none of the other alt-coins has .... a multi peta-hash network of computers used ensure the integrity of all transactions. A network that exceeds the power of the top 500 super computers combined.
That is a real world, physical attribute for BTC that people forget when they say it is 'backed by nothing'. Wrong ... it is backed by the most powerful, distributed, purpose built network ever built. None of the competing alt-coins comes close. LiteCoin is the nearest, and on that basis alone, the only other virtual currency likely to survive in any long term.
The odds of another virtual coin gaining the mind share need to get a hardware investment to match BitCoin is probably Zero.

That network is what prevents the corruption of the BitCoin rules - unlike the Federal Reserve Notes used by the USA (commonly and wrongly called US Dollars) which are corruptible by design.

Re:Bubble? Not necessarily ....

[Anonymous Coward]

The odds of another virtual coin gaining the mind share need to get a hardware investment to match BitCoin is probably Zero.

Which means any real competitor need to be designed to use hardware so much more efficiently, that it doesn't need the same sort of hardware investment. There are people who say it cannot be done, but they base their arguments on the assumption that it is designed the same way as bitcoin. Replace the proof of work approach with a byzantine agreement protocol, and you can totally beat bitcoin in computing efficiency. You need to rethink large pieces of the design to make it work, but that's what it takes to beat bitcoin.

Re:Bubble? Not necessarily ....

[michelcolman]

That would be millibitcoin, not micro. Micro means a millionth.

Re:Bubble? Not necessarily ....

[pantaril]

I think it's very short-sighted to believe bitcoin would ever be used by itself as a form of digital currency. It's worth a high enough value already (and continues to trend upwards) that it's very inconvenient to use to pay for smaller items or more inexpensive services. (Nobody likes to work with numbers multiple digits to the right of the decimal place.)

That issue is already being solved by lots of merchants/wallets and other services switching to milibitcoins denomination by default.

Re:Bubble? Not necessarily ....

[gatkinso]

How are all of the mining rigs actually backing bitcoins?

Re:Bubble? Not necessarily ....

[Anonymous Coward]

The cryptographcially verify the transactions in a distributed fashion. The 'mining', that is, getting the new bitcoin when you make the new block, is actually a side effect of cryptographically securing the network.

Re:Bubble? Not necessarily ....

[NoImNotNineVolt]

It's sad that these all these computers are burning electricity for such a useless purpose. If cryptocurrency comes with such onerous computational requirements, is it really an efficient use of our limited resources to promote it? Aren't we squandering an amazing amount of computing power by having these calculations wasted on transaction handling instead of simulated protein folding or some other genuinely productive endeavor? If you think about it, a computational network that exceeds the power of the top 500 super computers combined should not be required to run a distributed version of paypal. In that sense, this really is like tulips. Whether it's wasting prime agricultural land on growing flowers or wasting electricity on computing arbitrary hashes, it just seems that if people stepped back and saw the big picture, they'd see the folly of such activities.

Re: Bubble? Not necessarily ....

[um... Lucas]

Yes, ASIC's can hash SHA256. But suppose a flaw is found in SHA256 - not a crushing flaw that renders it useless, but something theoretical enough that researchers are worried. My bet is that Bitcoin would stay put on SHA256 because of the huge investment in custom hardware to do the work.

I've been following Bitcoin for a long time now (comparatively to many, at least). And i think the move to ASIC is the worst thing that could have ever happened to it. Each day that goes by, bitcoin becomes even less "peer to peer" than it was before. As a fan of the peer to peer currency idea, I think that's a net negative.

Re:Bubble? Not necessarily ....

[Anonymous Coward]

Everyone knows Dogecoin is the true successor.

wow
such value
moneylike

Re: Bubble? Not necessarily ....

[u38cg]

Bitcoin is just a piece of digital property, no different from an MP3 you've bought. The only difference is it is unique, fungible, and transferable. With no intrinsic value, it is only worth what others in the marketplace will trade it for at the margin.

Re:Bubble? Not necessarily ....

[iluvcapra]

The mining rigs are what process the transactions. "Mining" is the act of taking a block of transaction messages, verifying that they're moving money that actually exists, signing them, and then appending them to the distributed ledger. The network pays the miners to do this by creating new BTCs, and people making transactions also pay for it by including processing fees in their transactions.

You aren't being pedantic

[Chuck Chunder]

Indeed, a pedant would be right, you are just inventing a distinction where there is none.

Sting Operations

[PPH]

I'd expect the FBI to use its collection of Bitcoin to engage in a number of sting operations. Buy contraband using their Btc and break up the next Silk Road. I'm sure they are getting set up with their own mining operation which would give them an up to date view of the block chain.

Re:Sting Operations

[hodet]

Not likely. They would need to tumble those coins.

Re:Sting Operations

[petermgreen]

If they planned to do that then they were dumb to collect them into a single address like that.

This means...

[PopeRatzo]

The FBI can buy the first round.

How much is that in drugs?

[csumpi]

Let's just say this silk road profit was made before the recent spike in bitcoin price, and divide it by ten, that's still $10 million. This is after he probably spent a whole lot on operations and lifestyle, and whatever he had stashed elsewhere.

I have no idea how profitable the drug dealing business is, nor the pricing of drugs, but that sounds like a shitload of product sold.

You must need a warehouse with employees to ship all that stuff. And how much jailtime do you get when they catch you with that many coins in your pocket, from selling drugs?

Re:How much is that in drugs?

[wvmarle]

From the stories I read about it, I get the impression that Silk Road acted more like eBay, a platform allowing independent vendors sell their product. So the operator of the Silk Road only took a certain percentage of the deals, they didn't handle the drugs and other products directly. That doesn't mean it was a small operation overall, of course.

For most of 2013, the bitcoin traded at around USD 120 each. So 144k BTC would be worth over 17 mln USD. And that's after cost. Not likely he had many staff or so, just had to rent a handful of servers and maintain a web site. So maybe 2 mln in cost, including living expenses and so. Let's be generous. And that's assuming he kept all profits in BTC, not selling much of it and storing that cash elsewhere.

Now if that 19 mln is a 10% share of the turnover of these trades (no idea how much it really was - this seems to be the typical cost of selling on eBay), it means a total turnover of some USD 190 mln. No matter what, a lot was traded here.

criminal != smart

[raymorris]

"a smart criminal would"

I've known a few criminals. Never seen a smart one.
All of them fail to understand the very simple fact that you might get away with it today and you might get away with it tomorrow, but you WILL get busted at some point .

Re:criminal != smart

[Nidi62]

"a smart criminal would"

I've known a few criminals. Never seen a smart one.

Don't know many bank CEOs, huh?

Re:criminal != smart

[soundguy]

I've known a few criminals. Never seen a smart one.

...and you never will. Smart criminals don't get caught. Prisons are filled with the stupid ones.

Re:criminal != smart

[gump59]

I've known a few criminals. Never seen a smart one.

...and you never will. Smart criminals don't get caught. Prisons are filled with the stupid ones.

Really? So ..... you think that people like Frank Abagnale Jr., Ted Kaczynski and Kevin Mitnick are stupid? Wow, your IQ must be off the charts then.

Now what I want for Christmas...

[Applehu Akbar]

"The FBI now controls more than 144,000 bitcoins that reside at a bitcoin address that consolidates much of the seized Silk Road bitcoins. Those 144,000 bitcoins are worth close to $100 million"

...is for the Bitcoin bubble to pop!

Sounds like EBay

[Anonymous Coward]

If a buyer does not like the product, or wants to simply scam you, they complain and EBay refunds their money. Irregardless if it is legit or not

Civil forfeiture

[k2r]

So they can take away whatever they want without proving you guilty in due process just because? Wow.
This is about the most ridiculous and frightening thing I read in a while and I would have expected it to happen in China (sorry, my predjudices) and not in the US. Wow, again.

Re:Civil forfeiture

[Seumas]

Yep. It has been happening at least since the early 90s. Where do you think most/all of those police-department lambourghinis and mustangs and zrocs came from? They seize people's shit, keep what they want, auction off the rest and pocket the money. You can get incredible deals at police auctions, but I refuse to ever buy anything, myself, because I find it disgusting.

Re:Civil forfeiture

[Anonymous Coward]

And they might steal it back from you because it's stolen property ;).

Hopefully it's just an anomaly and not widespread otherwise it might get really hard to figure out whether you're living in one of those fucked up dictatorships or not.

Someone can take your stuff for arbitrary stupid reasons? Check.
Someone can put you in jail with no trial for arbitrary stupid reasons? Check.
Someone can torture and/or kill you for no good reason and get away with it? Check.
Otherwise life is OK to crap for most people? Check.

What a joke: they're worthless

[Anonymous Coward]

There is not enough liquidity in the entire world-wide bitcoin market for the FBI to be able to exchange even a small fraction of those. The $100M value is absurd. If they tried to convert them to a more usable currency the exchange rate would plummet and they would become nearly worthless.

Re:What a joke: they're worthless

[Anonymous Coward]

Not bad...throw in the NSA and healthcare.gov and you've got the perfect government conspiracy for Slashdot.

Re:What a joke: they're worthless

[CreatureComfort]

Says the idiot AC with no research skills.

From Bitcoin Charts
Bitcoins sent last 24h 1,303,510.08 BTC
Bitcoins sent avg. per hour 54,312.92 BTC

So the FBI's 174,000 coins would equate to less than 13% of the current daily volume, or in other words wold satisfy the full current demand for, oh, about 3 whole hours.

Re:What a joke: they're worthless

[Anonymous Coward]

If you're going to call somebody an idiot with no research skills, you'd better be damn sure you don't mess up.

And you did, you idiot.

This is _all transactions_ volume - not exchanges volume. Here's exchange volume for last 24h per blockchain.info:

Trade Volume $33,768,084.04 USD
Trade Volume 55,581.14 BTC

IOW, ~3 days of covering all orders (and ruining the exchange rate in process). Or 3-4 weeks of carefull sales if they want to get anything like the price mentioned.

Re:What a joke: they're worthless

[LWATCDR]

If they dumped them the market would crash. An increase of available bitcoins for sale of 13% would cause a massive crash.

Sounds Scary

[Anonymous Coward]

I'm sure the government aren't worried though. They're used to losing money much faster than this.

Destroy?

[Anonymous Coward]

That's only 40 days worth of mining. It would certainly lower market rates but such an action would have practically zero chance of destroying Bitcoin.

Why would they want to do that?

[Anonymous Coward]

Does the American government burn money that comes from drugs?

So what happens if they damage the wallet?

[Anonymous Coward]

Assuming the wallet is just a hard disk with various 1's and 0's on it...what happens if it "accidentally" gets damaged whilst in the FBI's posession ?

Imagine instead of a Bitcoin wallet this was a physical object such as a painting and it was damaged/destroyed, what happens then ? Do the FBI have to pay the guy the full market value ? Or is an apology enough ? Is it up to the owner of the Bitcoins to insure them against damage ?

Does any of this change at all if he is "guilty" of a crime compared to being found "innocent" ? Suddenly sticking a screwdriver through the hard disk makes 100 million extra reasons to ensure he is not set free...

All you bit coins belong to the FBI

[Anonymous Coward]

Considering how it seems bit coins main purpose is buying drugs and other things illegal isn't this how bit coins will eventually end? FBI (or other Law enforcement) will hold all the coins?

Posting to undo moderation

[Kiwikwi]

Posting to undo moderation.

Cool

[operagost]

Now they can buy a few billion more rounds of ammunition!

wrong

[slashmydots]

There are multiple exchanges that have more bitcoins overall and larger individual wallets.

Re:Zrocs

[DocSavage64109]

What are Zrocs? A quick google search pulled up sneakers, but I have a hard time imagining police officers going around in seized sneakers.

RE: massive hardware requirements

[King_TJ]

No, I don't think it's "sad" at all. You've got to remember a few key things here:

1. This is more than just "wasting an amazing amount of computing power on transaction handling". This is the start of a revolution in payments and currency. I don't think it's really fathomable that you could create a universal, decentralized yet reliable digital payment system like this via a commercial entity (such as PayPal) trying to market it. You need something much bigger to make it viable; something on this scale of adoption.

2. Over half of the total number of bitcoins allowed to exist have been mined already. By the time they're all mined, where will we be with everything? I suspect the big "arms race" to mine as much as possible up to that point will serve to advance the computing technology as far and as rapidly as possible. So by the time mining is done for the sake of generating new coins -- we'll have far more energy efficient machines, at lower up-front costs, able to do the job. The amount of hardware that remains online to process the transactions will likely drop back off too, as the only profit to be found in doing it at that point is whatever you can charge as transaction fees for helping the existing coins get moved around.

Re: massive hardware requirements

[NoImNotNineVolt]

In many ways, computational capacity is our most valuable resource. Today, a truly staggering amount of this resource is being allocated to... bitcoin. Not curing cancer. Not figuring out how to get off this rock. Mining BTC.

I'm not suggesting that paypal or some other commercial entity ought to have brought a decentralized currency to market. I only brought them up because they too facilitate lots of financial transactions of a digital variety. While I understand that their service is nothing like what is offered by bitcoin in many ways, in the end, the practical effect is the same. Money goes from person A to person B. Paypal accomplishes this with but a tiny fraction of the computational power that bitcoin requires (even for transaction processing). In that sense, paypal's service is incredibly more efficient than that available through bitcoin. Of course, there are trade-offs (decentralization, pseudonymity, etc.), but I'm talking specifically about efficiency. Is decentralization and pseudonymity in digital financial transactions really worth this much computational cost? I think this is a legitimate question, and I expect a full range of different answers. After all, some people value decentralization and pseudonymity a lot more than others do. Some people value efficient utilization of our most valuable resource more than others. It's subjective, but it's a conversation worth having.

Regarding the surge in interest in bitcoin and the resulting advances in computing hardware, I'm not sure if I buy into that. It's not like we're seeing new semiconductor fabrication technologies coming out of this. No breakthroughs in semiconductor physics either. Really, we haven't even seen anything new in terms of computer engineering. There's really not much value in a bunch of guys implementing SHA256 in logic gates, since nothing truly new is being created. The algorithm is understood, and it's really no feat to go from there to an ASIC. When the mining craze dies down, it's not like these ASICs will be repurposed for something else; they're called application-specific integrated circuits for a reason.

Re: massive hardware requirements

[King_TJ]

Fair enough.... But I'm not sure anyone's ready to utilize this processor power for something else (like curing cancer or getting us to colonize another planet)? Projects like Folding@Home created a lot of buzz and sounded amazing on paper, until you talk to researchers about it and find out there are very few computational problems they need to solve which could best be handled in a distributed computing nature.

I think some of this goes back to the old sayings like, "You can't bake a cake any faster by adding more chefs in the kitchen.", and "You can't birth a baby in 1 month instead of 9 by putting 9 pregnant women on the task."

I don't really see how the computing power focused on bitcoin "stole it away" from some other more worthy project? Everyone I know doing mining purchased brand new hardware for the purpose, or simply re-used existing machines for the task (deciding they'd rather make some money with high end video cards than doing nothing with them except playing video games occasionally with them).