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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)."
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.
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?
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?
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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.
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.
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.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
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.
Indeed, a pedant would be right, you are just inventing a distinction where there is none.
Boffoonery - downloadable Comedy Benefit for Bletchley Park
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.
Have gnu, will travel.
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.
B) Eliminate all the stupid users. This is frowned upon by society.
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.
Koans and fables for the software engineer
How did the FBI confiscate someone else's funds, then?
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.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
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?
Serious? Seriousness is well above my pay grade.
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.
When our name is on the back of your car, we're behind you all the way!
They took physical possession of the wallet.
How did the FBI confiscate someone else's funds, then?
They confiscated the computers with the crypto keys, probably.
When our name is on the back of your car, we're behind you all the way!
LOL, you've never heard of civil forfeiture, have you?
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
"Money" never changed from Pounds to Euros.
http://en.wikipedia.org/wiki/Pound_sterling
"a smart criminal would"
I've known a few criminals. Never seen a smart one.
Don't know many bank CEOs, huh?
The only thing necessary for evil to triumph is for it to be pitted against a slightly greater evil
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.
Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
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.
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.
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.
Irish pounds were actually "Punts" [http://en.wikipedia.org/wiki/Irish_pound] - named to rhyme with the irish word for "banker".
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.
I am TheRaven on Soylent News
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.
"I opened my eyes, and everything went dark again"
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.
Got them moderator blues I blieve I walk out the do', With these mod-points I been gettin', I 'most never post no mo'
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.
If you are not allowed to question your government then the government has answered your question.
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.
Chuuch. Preach. Tabernacle.