What's going to happen to Bitcoins made through fraud?

  • Thread starter Posy McPostface
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I'm wondering what is happening to all these bitcoins drug cartels made along with hackers? Do they just convert their bitcoins to gold or some other valuable commodity and then to cash and then launder via traditional methods?

Any ideas?
 

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  • #2
Bystander
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"Fungible" is "fungible."
 
  • #3
gleem
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Isn't bitcoin the perfect laundering instrument by itself?
 
  • #4
Tosh5457
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Most likely. Although every transaction is public, it may be very hard to trace to whom a wallet belongs and to trace transactions from BTC to USD. If they want to do it properly, they'll even exchange their bitcoins for other cryptocurrencies and then those to USD.
 
  • #7
russ_watters
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I'm wondering what is happening to all these bitcoins drug cartels made along with hackers?
This doesn't sound like a thing. Where did you hear it?
 
  • #8
DavidSnider
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I'm wondering what is happening to all these bitcoins drug cartels made along with hackers? Do they just convert their bitcoins to gold or some other valuable commodity and then to cash and then launder via traditional methods?
Any ideas?

Large amounts of Silk Road bitcoins were confiscated by the government and then auctioned off.
 
  • #9
paulo84
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I'm wondering how long it's going to take for the bubble to burst...
 
  • #10
russ_watters
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I'm wondering how long it's going to take for the bubble to burst...
Me too. It's amazing to watch, but I almost feel sorry for the people who are going to be left without a chair when the music stops. I know people who still have boxes and boxes of Beanie Babies in their basements.
 
  • #11
DavidSnider
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BitCoin isn't beanie babies or tulips though. There's a fixed finite amount of them and they require tremendous amount of energy to unlock.

I agree that speculation is the primary driver of the price of them, but this blockchain technology isn't just about money.
For example: You could mathematically prove a document existed at a certain date by creating a hash for it and then getting that hash into the blockchain.

So bitcoin doesn't have to be just money, it can be used as a decentralized trust network. Now what a piece of that trust network is worth... it's hard to say.
 
  • #12
russ_watters
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BitCoin isn't beanie babies or tulips though. There's a fixed finite amount of them and they require tremendous amount of energy to unlock.
What does that have to do with anything? They have value because they have to be mined? Scarcity only matters if the scarce thing has value (real or perceived). And Beanie Babies had artificial scarcity until the bubble burst. That's what fads are: artificial scarcity driving up the price of a thing that has no real value -- until people realize it has no value. I'm sure many Bitcoin "investors" know this and are hoping to time the market or something, but again, it saddens me a little to see those who don't understand risking and losing a lot.
I agree that speculation is the primary driver of the price of them, but this blockchain technology isn't just about money.
For example: You could mathematically prove a document existed at a certain date by creating a hash for it and then getting that hash into the blockchain.
Agreed, but off topic; this is about bitcoin, which is about the money.
 
  • #13
Nugatory
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So bitcoin doesn't have to be just money, it can be used as a decentralized trust network. Now what a piece of that trust network is worth... it's hard to say.
I agree with you about the broader usefulness and applicability of the blockchain technology - for example, I am aware of at least one startup that is hoping to use it for unforgeable provenances and chains of title.

However bitcoin and the other cryptocurrencies are indeed "just money" that happens to be implemented using this technology. Bitcoin itself cannot be used as a decentralized trust network, owning bitcoin doesn't give you a stake in anything except the coin itself, and its value is pretty much unrelated other possible uses of the blockchain technology. Thus, it is quite possible for bitcoin to go the way of Beanie Babies and tulip bulbs even if other blockchain applications prove to be valuable.
 
  • #14
Posty McPostface
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source?

This doesn't sound like a thing. Where did you hear it?

It was just a general sentiment from reading about where bitcoin derives its profitability from. See.

20160716_irc535.png

It seems like no secret that bitcoin is a gold mine for hackers to test their tools and sell weapons of their trade, along with offering services like DDoS'ing websites, upvoting websites, etc.
 

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  • #15
russ_watters
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It was just a general sentiment from reading about where bitcoin derives its profitability from. See.

View attachment 218140
It seems like no secret that bitcoin is a gold mine for hackers to test their tools and sell weapons of their trade, along with offering services like DDoS'ing websites, upvoting websites, etc.
Being a "gold mine" for illegal users is a euphemism; for the most part they are users, not miners.
 
  • #16
Posty McPostface
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Being a "gold mine" for illegal users is a euphemism; for the most part they are users, not miners.

Well, most people made money from bitcoin through mining it. I'm pretty sure the majority of bitcoins are in the hands of a few people. If that we'rent the case we would see wider adoption of bitcoin from banks and other lending agencies.

But, your point seems to be of whether bitcoin has any utility to people in general. Is that correct?

As it stands, I don't think so. The cryptography can be cracked by quantum computers in the near future, is not perfectly anonymous, is limited by some inherent features of how transactions are processed, how more bitcoins are going to be mined in the future, etc.

What I suspect will happen is people will come to their senses and go about using the blockchain technology when a better alternative than bitcoin arises, and there are some already out there currently.
 
  • #18
russ_watters
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Well, most people made money from bitcoin through mining it. I'm pretty sure the majority of bitcoins are in the hands of a few people. If that we'rent the case we would see wider adoption of bitcoin from banks and other lending agencies.
I don't think any of that is true.

For one thing, 80% of the bitcoins that can be mined have already been mined, and of the current 16.8 million, only 800,000 were mined in 2017, yet the price rose by a factor of 15(!). That means unless the original miners are still holding most of those 16 million coins (unlikely given the 150 million transactions per year), the vast majority of that increase in value is by owners other than the original miners.
But, your point seems to be of whether bitcoin has any utility to people in general. Is that correct?
Yes. From the start [of discussion on PF] my position on Bitcoin is that it has a bi-polar/self-contradictory nature. It's fad/investment value directly contradicts its usefulness as a currency. Currencies are supposed to be stable. The volatility means that it is more of a fad than a useful currency.

Think about it as a vendor who accepts it. It's volatility means:
1. You shouldn't hold any/should transfer it to stable currency immediately after receiving any.
2. You have to update your prices minute-by-minute.

How is that useful? It's just a cumbersome proxy for real money!
What I suspect will happen is people will come to their senses and go about using the blockchain technology when a better alternative than bitcoin arises, and there are some already out there currently.
That's a possibility.
 
  • #19
Posty McPostface
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For one thing, 80% of the bitcoins that can be mined have already been mined, and of the current 16.8 million, only 800,000 were mined in 2017, yet the price rose by a factor of 15(!). That means unless the original miners are still holding most of those 16 million coins (unlikely given the 150 million transactions per year), the vast majority of that increase in value is by owners other than the original miners.

Well, the rise in value certainly coincided with the rise in transactions given that a bitcoin is now worth 15260.00 USD today. That has been just the nature of the fad. I don't think anyone who saw through bitcoin's potential early enough would have sold early either. But, then again people do behave irrationally. Point being bitcoin itself.

How is that useful? It's just a cumbersome proxy for real money!
Well, there's the issue of what counts as 'real money'. Ever since the fiat system, then anything can count as money as long as it is durable, holds value over time, and is easy to handle. I'm not saying that bitcoin is the new information age derivative of 'gold'; but, that's what it looks like to me, just that there are going to be better alternatives, and I'm not sure if bitcoin can adapt to those changes or whether another digital currency with better features will overtake it in the future.
 
  • #20
russ_watters
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Well, the rise in value certainly coincided with the rise in transactions given that a bitcoin is now worth 15260.00 USD today.
No, it hasn't. Look, you appear to be guessing/making this stuff up as you go along. You need to stop this. I might not have included the links, but I haven't been guessing: you can easily find this data with a quick google. The transactions per day is up maybe 50% per day from the beginning of the year. The value growth is utterly unrelated to the utilization or mining:
https://blockchain.info/charts/n-transactions?timespan=2years
Well, there's the issue of what counts as 'real money'.
Real money counts as real money. Bitcoin is an unestablished upstart. It has none of the important properties of real/useful currency:
...anything can count as money as long as it is durable, holds value over time, and is easy to handle.
Right: Bitcoin is none of those things.
 
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  • #21
Vanadium 50
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No, it hasn't. Look, you appear to be guessing/making this stuff up as you go along. You need to stop this.

Yes.

It has none of the important properties of real/useful currency:

It's certainly too slow to be a payment system (unless you pay up to $50/transaction to jump the queue), and ironically it's jump in price make it not a stable source of value. Indeed, I would argue that the inventors of Bitcoin were too worried about inflation and now they have a deflation problem: nobody will use the currency today so long as they think it will be worth more tomorrow.

That said, I am going to slightly disagree with you about having none of the properties of a real/useful currency. There are four classic properties of money:
  • A Medium of Exchange
  • A Measure of Value or Unit of Account or Means of Valuation
  • Stable store of Value
  • Standard of Deferred Payment.
I would argue that it satisfies the first, and only the first, quality. In the US, finding a place that takes bitcoin is roughly on par with finding a place that takes the loonie. And, like the loonie, I can convert it, although it will take an amount of time long compared to a typical transaction. So it's not really worse than that. On the other three, it falls on its face.
 
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  • #23
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From that article:

one post on Reddit read: "I just re-financed my house to get in. I'm freaking out."

I am trying to find a polite way to say "that was phenomenally stupid".
 
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  • #24
Nugatory
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This would be a really good time (although in fact there are no bad times) for people to be reading Charles Mackay's book "Extraordinary popular delusions and the madness of crowds".
 
  • #27
Nugatory
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I'm having trouble making sense of that article.
Me too... and it also severely lacks internal consistency. On the one hand, the author argues that cybercurrencies aren't in a bubble because they aren't following a particular price curve; but on the other he's arguing that debt instruments are in a bubble while ignoring the fact that they're not following that curve either.

And in any case the price curve premise is wrong; many bubbles have burst and then been followed by a price recovery, and the inflation is not always free of corrections.
 
  • #31
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BTC is at 9200 USD. Spend 'em if you got 'em.
 
  • #32
BWV
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Perhaps worth mentioning that Isaac Newton first made a lot of money in the South Sea Bubble, cashed out, watched it go up more then put all his winnings and then some in and got wiped out. The moral is intelligence offers no protection against the psychology of bubbles.
 
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