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DOJ Hasn't Actually Found Silk Road Founder's Bitcoin Yet

timothy posted 1 year,19 days | from the what-are-the-odds dept.

Bitcoin 294

Techdirt has an interesting followup on the arrest and indictment of Silk Road founder Ross Ulbricht, in connection to which the FBI seized 26,000 or so Bitcoins. From the Techdirt piece: "However, in the criminal complaint against Ulbricht, it suggested that his commissions were in the range of $80 million -- or about 600,000 Bitcoins. You might notice the disconnect between the 26,000 Bitcoins seized and the supposed 600,000 Ulbright made. It now comes out that those 26,000 Bitcoins aren't even Ulbricht's. Instead, they're actually from Silk Road's users. In other words, these were Bitcoins stored with user accounts on Silk Road. Ulbricht's actual wallet is separate from that, and was apparently encrypted, so it would appear that the FBI does not have them, nor does it have any way of getting at them just yet. And given that some courts have argued you can't be forced to give up your encryption, as it's a 5th Amendment violation, those Bitcoins could remain hidden -- though, I could see the court ordering him to pay the dollar equivalent in restitution (though still not sure that would force him to decrypt the Bitcoins)." The article also notes that the FBI's own Bitcoin wallet has been identified, leading to some snarky micropayment messages headed their direction.

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Power of attorney transfer them from his wallet? (0)

Anonymous Coward | 1 year,19 days | (#45048593)

Could he have another individual in another country transfer his bitcoins away from where the FBI could get at them, if the FBI eventually got access to his wallet?

Re:Power of attorney transfer them from his wallet (1)

paulsnx2 (453081) | 1 year,19 days | (#45048629)

If he has secured his private keys, then nobody can touch his Bitcoins. Not the NSA, FBI, CIA...

If he has the key in some obvious place, well, he is toast. But if it has been this long, I'd guess he secured is stuff.

Re: Power of attorney transfer them from his walle (0)

Anonymous Coward | 1 year,19 days | (#45049341)

They had him under surveillance for a long time. They have any passwords he would use on a regular basis - including any for keepass or similar password wallets.

Re:Power of attorney transfer them from his wallet (3, Interesting)

jamesh (87723) | 1 year,19 days | (#45049343)

If he has secured his private keys, then nobody can touch his Bitcoins. Not the NSA, FBI, CIA...

I've heard people say that the NSA can decrypt various things that are thought to be impossible (in reasonable time). Even if that were true, I doubt they are going show their hand and remove all doubt over something as trivial as this, so i think you are correct.

While he still has access to his bitcoins, they can argue that they should be allowed to force him to give up his keys. If he no longer has access to his bitcoins then they can't, so there is an advantage to him putting them somewhere where he can't get them. He'd need to find someone he can trust though...

Re:Power of attorney transfer them from his wallet (1)

radarskiy (2874255) | 1 year,19 days | (#45049001)

If he spends the bitcoins, then the signing chains are unlikely to get very long before someone is willing to roll over for the feds, they they just need to follow the chains upstream. They should also be able to follow chains from the customers downstream.

If he doesn't spend them, then from his perspective they're as good as seized anyway.

Money for his defense (2)

cold fjord (826450) | 1 year,19 days | (#45048597)

He might need some of that hoard to pay for his defense. I don't know that going cheap on this will be in his interest.

Re:Money for his defense (5, Insightful)

hsmith (818216) | 1 year,19 days | (#45048621)

But that is part of the game. You gut someones means and prosecute them so they can't defend themselves. That is the game the government plays.

Re:Money for his defense (5, Insightful)

girlintraining (1395911) | 1 year,19 days | (#45048723)

But that is part of the game. You gut someones means and prosecute them so they can't defend themselves. That is the game the government plays.

Only with people dumb enough to not prepare ahead of time for this. This guy was 'new money'. He didn't know how to manage his assets, how to invest, how to setup multiple accounts, and didn't have the good sense to bond a lawyer ahead of time and give them limited power of attorney so they could coordinate his estate while he was in jail. See, this is what 'old money' does, and it means they get to hire entire bus loads of attorneys to show up at court, and the government can't do dick about it because they were bought and paid for ahead of time and are being funded out of accounts they can't seize or have access to because the money's been cleaned and separated from his personal accounts through shell corporations, etc.

Don't talk about how to play the game... this guy wasn't a player, he was a loser. He was setup from day one, by his own stupidity, to lose. If I was running a website like that, the very first thing I'd have done after getting ahead financially is separate out as much money as I could for future legal troubles, and hire accountants and lawyers so when the day came to save my sorry ass, all I'd have to do is just sit in jail and wait while Plan Bravo executed all on its own to spring me.

But, since the man was basically a walking cliche instead of a proper criminal or businessman or even passably decent nerd, I feel compelled to quote off his namesake:

"Do you hear that, Fezzik? That is the sound of ultimate suffering. My heart made that sound when the six-fingered man killed my father. The Man in Black makes it now."

Re:Money for his defense (2)

David_Hart (1184661) | 1 year,19 days | (#45048751)

Don't talk about how to play the game... this guy wasn't a player, he was a loser. He was setup from day one, by his own stupidity, to lose. If I was running a website like that, the very first thing I'd have done after getting ahead financially is separate out as much money as I could for future legal troubles, and hire accountants and lawyers so when the day came to save my sorry ass, all I'd have to do is just sit in jail and wait while Plan Bravo executed all on its own to spring me.

So, what you're saying is that Walter White did it right in Breaking Bad when he hired Saul with a rather large retainer.

Re:Money for his defense (0, Troll)

girlintraining (1395911) | 1 year,19 days | (#45049065)

So, what you're saying is that Walter White did it right in Breaking Bad when he hired Saul with a rather large retainer.

I'd have to actually turn on a TV to be able to answer that. I'm dimly aware there's some bald guy with a beard on some TV show called 'Breaking Bad' that everyone goes on about on Facebook, and that it has something to do with drugs. But beyond that, I couldn't tell you anything about the show. The only things on TV I watch are Mythbusters, Shark Week when it rolls around, How Things Work, Engineering Marvels, and similar. I used to watch the History channel, back when it actually had stuff about history on it. Now it seems to be as much about History as the Food channel is about food. I think I could probably watch it for the better part of a day before figuring out how to boil water. -_-

Snark aside though... if this 'Walter White' guy is mass producing drugs for a TV show, the odds are very, very good that the producers have given a highly slanted perspective on how drugs are actually made and distributed, because the day to day is actually quite boring for the people involved... and they don't make as much money as you seem to think either. The drug cartels are, just like regular supra-corporate entities, screwing over their workers and wealth and power tends to be concentrated at the top. It is unlikely a single man producing his own drugs, regardless of the type of drug, could manage production, packaging, distribution, etc., and not attract the attention of these entities. And they don't react like normal businesses do to a newcomer to the market; They tend to show up and either kill you where you stand, or offer you a deal where you basically work for them for next to nothing... or they kill you where you stand.

And all of this ignores law enforcement activity and the peripheral risks, which I'm sure are glorified and hollywooded up in the above-referenced series... but in actuality, there aren't catchy one liners, and dark meetings in alleyways or restaurants with tattooed latino guys with guns, or white guys in suits like in Batman. Conversation and plot is severely lacking in real life... it all revolves around people dying, people not wanting to die, and both sides doing whatever seems best to achieve those respective aims. The conversation, when it happens, tends to be short, to the point, and not particularly noteworthy or quotable. Something to the effect of "You mother fuck--(bang)gggrhhnnggggrrrhhhhh... *gurgle* wrrrrrrr... *wheeze* *gurgle* whyyyyyy? *gurgle* *splat*" Like I said, not particularly quotable.

Re:Money for his defense (0)

Anonymous Coward | 1 year,19 days | (#45049319)

That was kind of the point of the show. Not sure why you decided to criticize something you haven't even watched.

Re:Money for his defense (0)

Anonymous Coward | 1 year,19 days | (#45048889)

In other words, this guy is no Kim Dotcom!!

Re:Money for his defense (0)

Anonymous Coward | 1 year,19 days | (#45048913)

Smart crooks won't do stuff like Silk Road.

There are plenty of other ways to make money illegally AND get away with it. Check out Wachovia, Bank of America, HSBC, Standard Chartered etc - money laundering: http://www.bloomberg.com/news/2013-03-31/money-laundering-banks-still-get-a-pass-from-u-s-.html [bloomberg.com] . Or MF Global - outright theft - https://en.wikipedia.org/wiki/MF_Global#October_2011:_MF_Global_transfers_client_account_funds_to_its_own_account [wikipedia.org]

Then there are the usual ways to make lots of money unethically but legally.

Re:Money for his defense (2, Funny)

Anonymous Coward | 1 year,19 days | (#45048989)

When I was at the Fed, we'd just print all the money we wanted. Never had any trouble getting away with it either.

Re:Money for his defense (1)

Anonymous Coward | 1 year,19 days | (#45049265)

Yawn. You 99percenters are getting tiresome. You've accomplished nothing with your pathetic hipster occupation and are reduced to living on credit and rehashing the same old BANKHURRZ R EV!L line over and over again like a broken record. It sounds like junkie talk to me.

Re:Money for his defense (1)

Frosty Piss (770223) | 1 year,19 days | (#45049103)

Isn't that exactly what "Dot Com" did?

Re:Money for his defense (2, Interesting)

Anonymous Coward | 1 year,19 days | (#45049111)

Will be interesting to see which lawyer will step up and take cases on behalf of Europeans and other countries where purchasing pot is legal and demand the return of their clients funds as no laws where broken by their clients.

  Going to be a great cutting edge tech case for some lawyer to raise their profile.

  There is also the potential for people who opened an account, loaded up bitcoins, but never made a transaction for illegal products (though intent might get murky) however there are/were legal products that could be purchased on SilkRoad so could still get away with it....

  Thoughts about USA based law enforcement overstepping their jurisdictional grounds for non usa citizens?

  Going to be interesting to see what happens once the FBI returns the bitcoins to the market to dispose of the assets.

Re:Money for his defense (0)

Anonymous Coward | 1 year,19 days | (#45049257)

But that is part of the game. You gut someones means and prosecute them so they can't defend themselves. That is the game the government plays.

True, this is how the often innocent little man gets strong-armed into compromising their ideology and pleading guilty. The government doesn't actually have bottomless pockets, though. A D.A. won't be one for long if the case he's running eats millions of dollars and they still lose. If a defendant has access to millions and is willing to spend, they can also similarly tie up the governement in legal costs... I'd estimate with about $12 million a defendent can cost the government twice that and have a decent chance of buying their freedom by running up the government's legal bills, even if they are guilty as Hell.

I sure wish someone would fix this problem... even the chances of an innocent man of humble means of being found not guilty.

Re:Money for his defense (1)

bill_mcgonigle (4333) | 1 year,19 days | (#45048641)

If the affidavit is accurate, he's going to have a hard time dodging the charges. Spending all his money on defense might not be the best option.

Re:Money for his defense (2)

philip.paradis (2580427) | 1 year,19 days | (#45049047)

He'll probably just let the process play out with his public defender, aiming for the lowest legal penalty possible, and promptly leave the country for a non-extraditing locale at the first opportunity. Then he'll able to recover his funds and go about his life, more or less as he wishes. There's virtually no chance of those funds being recovered by the authorities; I'd be very surprised to learn that the BTC in question are still in the wallet in question even now. Setting up contingency plans for transfers and further action, based anywhere on the planet, are simply too simple a concept to have been overlooked.

Re:Money for his defense (1)

mysidia (191772) | 1 year,19 days | (#45048733)

You're not allowed to use gains the government claims are ill-gotten, in order to fund your defense.

Once they claim certain dollars are proceeds of illegal activity, they freeze the assets, and they will be held in trust, or held by police, until the charges are settled.

That means those bitcoins will be unavailable to use for his defense, even if they are his, and he does decrypt them.

Re:Money for his defense (4, Informative)

philip.paradis (2580427) | 1 year,19 days | (#45048865)

I believe you lack adequate information on how Bitcoin works. If he or someone he trusts and gave instructions to beforehand has access to another copy of the wallet, it's just as good as the original, and the coins may be transferred elsewhere and converted to other currencies, etc via the normal exchanges. I'll be surprised if the prosecuting authorities manage to figure out how to track that; they certainly won't be able to stop it. If by some chance they manage to gain access to the encrypted keys that protect the wallet in their possession, it almost certainly won't be of any value (to them) by then.

Re:Money for his defense (2)

dcollins117 (1267462) | 1 year,19 days | (#45049207)

Once they claim certain dollars are proceeds of illegal activity, they freeze the assets, and they will be held in trust, or held by police, until the charges are settled.

The FBI can't get their hands on this money because Bitcoin is a decentralized currency. They have nothing to "freeze" or "hold on" to. That's the whole point of Bitcoin, actually.

Re:Money for his defense (0)

Anonymous Coward | 1 year,19 days | (#45049323)

Bitcoins consists of bits in some computer memory. Like a hard disc or a flash drive etc.

This memory can be sized. And destroyed.

When last backup is destroyed, the bitcoins are detroyed.

Re:Money for his defense (4, Insightful)

MrEricSir (398214) | 1 year,19 days | (#45048887)

He might need some of that hoard to pay for his defense. I don't know that going cheap on this will be in his interest.

According to Wired he's using a public defender. [wired.com]

Remember, Ulbricht was living in a shared apartment and working out of a library. If his defense is that he's not the guy running Silk Road, it would be suspicious for a man in his situation to suddenly have an expensive defense team.

Re:Money for his defense (2)

Mystakaphoros (2664209) | 1 year,19 days | (#45049091)

He might need some of that hoard to pay for his defense. I don't know that going cheap on this will be in his interest.

According to Wired he's using a public defender. [wired.com]

Remember, Ulbricht was living in a shared apartment and working out of a library. If his defense is that he's not the guy running Silk Road, it would be suspicious for a man in his situation to suddenly have an expensive defense team.

Maybe he could start a Kickstarter to fund... well, not his defense, because that's not a creative work, so to speak, but a DOCUMENTARY about his defense, including people who could just check by to see if he was dead yet.

If he has to sell 600K bitcoins all at once (1, Insightful)

Anonymous Coward | 1 year,19 days | (#45048599)

He might be selling each bitcoin at $5 apiece, since there isn't that much liquidity.

The Future (0)

Anonymous Coward | 1 year,19 days | (#45048617)

Restitution? (1)

AA1 (842917) | 1 year,19 days | (#45048639)

To whom? Who has he harmed that deserves restitution simply by doing something the government does not like?

Re:Restitution? (2, Interesting)

Anonymous Coward | 1 year,19 days | (#45048675)

You think all the roofies and heroin bought on silk road were consumed by the buyer?

Re:Restitution? (1)

Anonymous Coward | 1 year,19 days | (#45048761)

To whom? Who has he harmed that deserves restitution simply by doing something the government does not like?

The person he hired a hitman to kill?

Re:Restitution? (1)

AA1 (842917) | 1 year,19 days | (#45048847)

Well since the "hitman" was an undercover agent, and the target was not actually tortured and killed, I'll repeat myself. Who was actually, personally harmed as a direct result of his actions?

Re:Restitution? (1)

HJED (1304957) | 1 year,19 days | (#45048923)

Do you have a citation for that, I haven't seen that in any of the news I've read on this.

Re:Restitution? (1)

AA1 (842917) | 1 year,19 days | (#45048949)

Sure, here [venturebeat.com] .

Re:Restitution? (0)

Anonymous Coward | 1 year,19 days | (#45049125)

Citation [wikipedia.org]

Re:Restitution? (0)

Anonymous Coward | 1 year,19 days | (#45048995)

Well since the "hitman" was an undercover agent, and the target was not actually tortured and killed, I'll repeat myself. Who was actually, personally harmed as a direct result of his actions?

Do you seriously believe this non-sense? He intended to have someone killed. Fortunately, the feds do a good job of stopping these wackos.

Re:Restitution? (1)

ShanghaiBill (739463) | 1 year,19 days | (#45049025)

He intended to have someone killed.

Do you understand what "restitution" is? It is compensation for actual harm. If he intended to kill someone, but didn't actually harm anyone, then no restitution is needed.

Re:Restitution? (2)

dugancent (2616577) | 1 year,19 days | (#45049023)

It's attempted murder, and both parties can be charged, if one party wasn't an agent. It doesn't matter if the person was harmed or not.

Re:Restitution? (1)

Pseudonym Authority (1591027) | 1 year,19 days | (#45049037)

Oh, it's just attempted murder then. Well since he failed, he shouldn't be punished.

Re:Restitution? (2)

AA1 (842917) | 1 year,19 days | (#45049059)

Who said he shouldn't be punished? Of course he should be punished, and he will be. Restitution, however, is a financial payment from the criminal to the victim to compensate them for harm caused them during the commission of a crime. Nobody was actually harmed, therefore nobody is entitled to restitution.

Re: Restitution? (0)

Anonymous Coward | 1 year,19 days | (#45049279)

They make prisoners pay for their incarceration in some states, why not make Ulbricht pay for his prosecution, assuming it's successful. After all, criminal prosecution is a burden on us all. We should be able to extract monetary damages from the guilty. Of course it would be easier to invoke RICO and confiscate all assets derived from such a conspiratorial enterprise constructed to avoid taxation, import/export laws and FDA regulation, not to mention the Boy Scout's motto.

My bet is that he winds up with the Uighrs in Gitmo.

Oblig, (0)

Anonymous Coward | 1 year,19 days | (#45049117)

Attempted murder? Now honestly, did they ever give anyone a Nobel prize for "attempted chemistry?"

Disappearing Bitcoins (5, Interesting)

ndogg (158021) | 1 year,19 days | (#45048643)

This brings up an interesting thought. Since the total number of Bitcoins is fixed, and if these coins seem to now be irrecoverable, what happens to the currency when it disappears into encrypted black holes like this?

Re:Disappearing Bitcoins (5, Informative)

ThatAblaze (1723456) | 1 year,19 days | (#45048677)

That's easy: The value of each bitcoin in circulation increases.

Re:Disappearing Bitcoins (1)

ndogg (158021) | 1 year,19 days | (#45048727)

That seems obvious, but what are users going to do if all of it disappears behind these encrypted black holes?

Re:Disappearing Bitcoins (1)

True Vox (841523) | 1 year,19 days | (#45048781)

Well, the coins they already have will increase in value, and they'll continue to use smaller & smaller decimals of BTC. It's currently divisible out to 8(?) places, AFAIK, but I believe that fact doesn't prevent it from going even smaller as long as it's coded in.

Re:Disappearing Bitcoins (1)

Richy_T (111409) | 1 year,19 days | (#45048831)

There's not much chance of *all* of it disappearing it that way and the currency is infinitely divisible if required. There will always be enough.

Re:Disappearing Bitcoins (0, Troll)

girlintraining (1395911) | 1 year,19 days | (#45048955)

There's not much chance of *all* of it disappearing it that way and the currency is infinitely divisible if required. There will always be enough.

Yeah... because we've never had problems with adding a crapton of floating point and extra decimal places to math with computers before. (rolls eyes) Please. Some of the greatest financial scams of our time were based on rounding and floating point errors. The idea that the currency can be "infinitely divisible" is not a selling point, it's a structural weakness.

Re:Disappearing Bitcoins (0)

Anonymous Coward | 1 year,19 days | (#45049043)

Because there's NO way to represent a floating point number with infinite precision on a computer, right?

Re:Disappearing Bitcoins (2)

Pseudonym Authority (1591027) | 1 year,19 days | (#45049079)

Yeah... because we've never had problems with adding a crapton of floating point and extra decimal places to math with computers before. (rolls eyes)

Congratulations on another wonderful display of ignorance! A Grade-A+++ girlintraining post! This isn't a weather simulator where the numbers are going to be raised to the hundredth power, it's basic, linear algebra here.

Some of the greatest financial scams of our time were based on rounding and floating point errors.

Really? Name one that didn't just collect tiny pieces at a time but actually used floating point errors. Besides that, since the ledger is public and the protocol (and Bitcoin is technically a protocol, not a piece of software, if you even know what that means) standardized, then it would be handled uniformly and that won't be an issue.

The idea that the currency can be "infinitely divisible" is not a selling point, it's a structural weakness.

Explain. And don't just shit out a wall of text that evades the subject like you usually do.

Re:Disappearing Bitcoins (0)

Anonymous Coward | 1 year,19 days | (#45049097)

Fool, troll, or both?

Re:Disappearing Bitcoins (2)

whoever57 (658626) | 1 year,19 days | (#45048807)

That's easy: The value of each bitcoin in circulation increases.

Only if people know that the bitcoins are irrevocably lost.

Re:Disappearing Bitcoins (1)

Entropy98 (1340659) | 1 year,19 days | (#45048843)

That's easy: The value of each bitcoin in circulation increases.

Only if people know that the bitcoins are irrevocably lost.

If the government prints tons of new money the value of it goes down, even if they don't tell anyone. Wouldn't this work in reverse?

Re:Disappearing Bitcoins (4, Insightful)

Anonymous Coward | 1 year,19 days | (#45048909)

People do not have to know it is irrevocably lost, people do not even have to know that any of this happened. This is the most basic concept in economics.

Re:Disappearing Bitcoins (0)

Anonymous Coward | 1 year,19 days | (#45048987)

Same as what happens when you throw a dollar in the toilet

The FBI doesn't need his money though (2, Insightful)

Anonymous Coward | 1 year,19 days | (#45048657)

They'll get along fine with him in prison, and by the time he gets out, the Bitcoins will be a dead fantasy.

Re:The FBI doesn't need his money though (0)

Anonymous Coward | 1 year,19 days | (#45048689)

Or, they'll be worth even more of a fortune.

Imagine having 'assets' that *nobody* can take away from you at any time?

Re:The FBI doesn't need his money though (0)

Anonymous Coward | 1 year,19 days | (#45048783)

The charges in the affidavit would probably give him a life sentence, all told, if the government chose to throw the book at him. If he takes a plea bargain, perhaps one that includes snitching on any other associates in the scene, maybe not.

Re:The FBI doesn't need his money though (0)

Anonymous Coward | 1 year,19 days | (#45048899)

The charges in the affidavit would probably give him a life sentence, all told, if the government chose to throw the book at him. If he takes a plea bargain, perhaps one that includes snitching on any other associates in the scene, maybe not.

As Ken at Popehat [popehat.com] has pointed out, while DPR is looking at a serious sentence, it's not really a+b+c+d... 10 to 20 or 30, maybe.

Re:The FBI doesn't need his money though (1)

fustakrakich (1673220) | 1 year,19 days | (#45049015)

The FBI doesn't need his money? Heh, maybe not, but have you ever heard of a pirate leaving a found treasure chest unopened? They might not need it, but they sure want it. Let's see if they can't make it magically appear.

Lost forever? (3, Interesting)

wvmarle (1070040) | 1 year,19 days | (#45048673)

Now imagine that this Ulbright ends up in jail, or dies, the keys to this encrypted wallet are lost, and with it these 600,000 bitcoin are lost. I think this is a pretty realistic scenario.

Now what consequence would this be for the bitcoin as a currency, when a significant chunk of its coins are taken our of the equation? It's about 5% of the current total number of almost 12 million bitcoin in existence (and 3% of the theoretical maximum of 21 mln). And bitcoin can not be recreated or added to, like a regular currency.

Another thing of note, is that apparently a single bitcoin user managed to amass 5% of the total number of that currency in existence. Those numbers potentially give that person massive market power: dumping them all on the market in one go would cause the value of bitcoin to crash. Smaller quantities have that potential already.

Re:Lost forever? (2)

khallow (566160) | 1 year,19 days | (#45048719)

Those numbers potentially give that person massive market power: dumping them all on the market in one go would cause the value of bitcoin to crash.

So what? The power to temporarily depress the value of goods or services is something a lot of people possess. But they don't use it because they aren't dumb and don't want to lose a lot of money.

Re:Lost forever? (3, Informative)

girlintraining (1395911) | 1 year,19 days | (#45049003)

Now imagine that this Ulbright ends up in jail, or dies, the keys to this encrypted wallet are lost, and with it these 600,000 bitcoin are lost. I think this is a pretty realistic scenario.

No, he has the bitcoin equivalent of 600,000; Not 600,000 actual coins. The coins themselves are divisible.. so he has a crapton of fractions of coins, adding up to a total of 600,000.

Now what consequence would this be for the bitcoin as a currency, when a significant chunk of its coins are taken our of the equation? It's about 5% of the current total number of almost 12 million bitcoin in existence (and 3% of the theoretical maximum of 21 mln)

Umm, bad news: As of this submission, there were 11,800,375 [blockexplorer.com] coins created so far. The "theoretical maximum" is 21 million coins, yes, but you forgot each coin is divisible by https://en.bitcoin.it/wiki/Myths#21_million_coins_isn.27t_enough.3B_doesn.27t_scale [slashdot.org]

">100,000,000. So in actuality, there are 2,099,999,997,690,000 units of currency that can be traded without modification to the current protocol. What most people don't understand about bitcoin is that even if a few coins here and there fall out of circulation, or even more than a few, so long as there are a sufficient number of atomic currency units available for trade, the system will function perfectly. Trading in bitcoins is more like trading in company stock than in actual currency -- they can be divided, aggregated, etc., etc. A bitcoin is, at the protocol level, just a token for a massive transactional log called the 'block chain'. It doesn't matter how many bitcoins are generated, or how many fall out of circulation, as long as enough remain in circulation to cover the transactions since the last block in the chain was created.

Another thing of note, is that apparently a single bitcoin user managed to amass 5% of the total number of that currency in existence. Those numbers potentially give that person massive market power: dumping them all on the market in one go would cause the value of bitcoin to crash. Smaller quantities have that potential already.

That person is now no longer a person, but a government. Just a minor footnote. Now, all that said, here's the thing about bitcoins... should we ever run out of them for whatever reason, we can always 'reset the clock' as it were -- start a new seed, a new block zero, and start building a new block chain from there. This isn't like IPv4 address space exhaustion; We just plug in a new seed and viola, Bitcoin Mark II.

Eeeh... all that said, I don't trade in bitcoins and I think the entire business is silly but if we're going to talk turkey, we should at least be accurate in our assessments.

But, but, but... (-1, Troll)

Nutria (679911) | 1 year,19 days | (#45048693)

everyone knows the NSA knows all, sees all, decrypts all. Certainly the FBI already has the keys to the bitcoins.

(That's what the Privacy Chicken Littles have been bleating about for the past 5 months, isn't it?)

Re:But, but, but... (2)

WaywardGeek (1480513) | 1 year,19 days | (#45048863)

No, that's not what people have been saying at all. No one is saying that the NSA can create SHA-1 collisions at will, or decrypt AES at will. Geeks on slashdot should be able to succeed in protecting data they really want hidden, such as a bitcoin wallet. It sounds like this guy did just that. No reasonable interpretation of the 5th amendment would allow the government to force him to give up his passwords.

The "Privacy Chicken Littles" have been complaining about the NSA tracking their locations, analyzing their social network connections, reading their emails, and generally sticking their electronic surveillance in every orifice. Personally, I'd have much less of a problem with this if they fessed up to what they're doing to spy on us. It's secret police that really scare me.

Minor details! (5, Interesting)

girlintraining (1395911) | 1 year,19 days | (#45048697)

in the criminal complaint against Ulbricht, it suggested that his commissions were in the range of $80 million -- or about 600,000 Bitcoins.

Yes, and given how badly he managed his assets, I doubt even a fraction of this will be recovered. He was not a very good businessman, his servers weren't very well secured... in fact the only thing in the "had lots of" category with this guy was ego. I mean really... "Dread Pirate Roberts"? And have you seen some of the things he wrote on this website of his? "I'll take as much of your money as I want because this is my ship. If you don't like it, fuck off." -- It's actually included in the criminal indictment against him, along with a laundry list of, shall we say, personality shortcomings of his leading to other elements of the criminal underground coming by to explain all meanings of the word "respect" to him, and then him blowing tons and tons of money either paying these people off, or trying (pathetically) to put hits out on them.

If there's one charge I could add to the indictment, it would be criminal stupidity.

It now comes out that those 26,000 Bitcoins aren't even Ulbricht's. Instead, they're actually from Silk Road's users. In other words, these were Bitcoins stored with user accounts on Silk Road.

Technically, they were for purchases pending. Silk road worked by letting you transfer coins into a silk road proxy account. It ran every submission through its "tumbler" to randomize which coins were actually used for which transactions. So what was seized was basically the day's take out of the register, as it were.

Ulbricht's actual wallet is separate from that, and was apparently encrypted, so it would appear that...

That he'll be charged as a terrorist and sequested in a room somewhere to be beaten with a metal pipe or waterboarded until he gives up the password. Has anyone heard from him lately?

And given that some courts have argued you can't be forced to give up your encryption, as it's a 5th Amendment violation...

We'll just create a new court especially to prosecute terrorists like him extrajudicially. Oh wait... we already did.

The article also notes that the FBI's own Bitcoin wallet has been identified, leading to some snarky micropayment messages headed their direction.

Taunting the police has historically worked out quite well for criminals. Dude, you aren't anonymous. You basically just signed your own search warrant.

Re:Minor details! (1)

Nutria (679911) | 1 year,19 days | (#45048729)

to be beaten with a metal pipe

A $5 wrench [xkcd.com] , you wannabe.

or waterboarded until he gives up the password.

At Gitmo, natch.

Re:Minor details! (1)

Robotron23 (832528) | 1 year,19 days | (#45049053)

That he'll be charged as a terrorist and sequested in a room somewhere to be beaten with a metal pipe or waterboarded until he gives up the password. Has anyone heard from him lately?

Ulbricht appeared in court on Friday, and after a request from his legal team has a bail hearing scheduled for October 9th [bbc.co.uk] .

Not a nice guy. (1)

Frosty Piss (770223) | 1 year,19 days | (#45049133)

From The Tellegraph ...

By chance one of those agents, posing as a major drug smuggler, was contacted by Dread Pirate Roberts, who asked him to torture and execute someone who had stolen Bitcoins from the site.

The agent sent fake pictures of a man being tortured, and of a dead body, and was paid $80,000.
Apparently encouraged, Dread Pirate Roberts then asked another drug dealer to kill a Silk Road user in Canada called "FriendlyChemist" who was threatening to release details about the site.
He wrote: "I would like to put a bounty on his head if it's not too much trouble for you. Necessities like this do happen from time to time for a person in my position. I wouldn't mind if he was executed."

He then said $150,000 seemed too much, adding: "Don't want to be a pain here but the price seems high. Not long ago I had a clean hit done for $80,000. Are the prices you quoted the best you can do? I would like this done asap ... it doesn't have to be clean."

Re:Minor details! (1)

SuricouRaven (1897204) | 1 year,19 days | (#45049307)

I don't think the government would want to recover them - if they were to sieze them, what would they do then? They can't spend or sell the coins, because doing so would be giving an implicit endorsement to bitcoin as a valid currency.

wasnt it 3.6 million? (-1)

Osgeld (1900440) | 1 year,19 days | (#45048713)

yep

http://yro.slashdot.org/story/13/10/02/167220/silk-road-shut-down-founder-arrested-36-million-worth-of-bitcoin-seized [slashdot.org]

3 days later its 80 million, amazing how stable this bullshit bitcoin garbage is

Re:wasnt it 3.6 million? (1)

compro01 (777531) | 1 year,19 days | (#45048765)

Read the story.

$3.6 million was the money in transit between buyers and sellers. SR offered a mixing system for payments between buyers and sellers to make tracing who bought from who more difficult. It was the money in the mixer when they seized the server.

$80 million is the estimate of the guy's personal fortune.

Re:wasnt it 3.6 million? (0)

Anonymous Coward | 1 year,19 days | (#45048793)

Congratulations on not even managing to read the summary.

Re:wasnt it 3.6 million? (0)

Anonymous Coward | 1 year,19 days | (#45048815)

It's not that bitcoin is unstable bullshit (which it might be) but that you fail at reading comprehension.

The 3.6 million is from the 26,000 bitcoins taken from user accounts on his servers for purchases pending.

The 80 million is from the 600,000 bitcoins that are in his personal wallet.

Re:wasnt it 3.6 million? (1)

Richy_T (111409) | 1 year,19 days | (#45048853)

The price has been fairly stable over that period. It fell a bit on the news but has mostly recovered.

A Possible Cause of Deflation (1)

cervesaebraciator (2352888) | 1 year,19 days | (#45048737)

Could seizure by authorities unable to crack encryption have some even slight deflationary effects on Bitcoins?

Re:A Possible Cause of Deflation (1)

mysidia (191772) | 1 year,19 days | (#45048803)

Could seizure by authorities unable to crack encryption have some even slight deflationary effects on Bitcoins?

There is likely not enough trade in bitcoins or economic activity, for much deflation to occur. It was only some small portion of the total bitcoins available that are taken out of circulation by the seizure.

It is not as if the guy was offering all those BTCs on the open market previously; coins that are being hoarded, don't really cause deflation when they vanish.

Re:A Possible Cause of Deflation (1)

cervesaebraciator (2352888) | 1 year,19 days | (#45049005)

Good point. I didn't realize hoarding was so bad in BTC. Your comment sent me off on a tangent to this article [theatlantic.com] and it appears you're quite correct on that account. Even so, my question was intended as mostly hypothetical (hence the "some even slight"). It seems that if there's only a slight amount in circulation, the deflationary effects of any of the circulating currency being removed from the market (via seizure by authorities unable to crack the encryption) would have an amplified effect.

Authorities do not act against the banks in a major way for fear of the effects it might have on the market should one of the banks fail in consequence. If an authority wishes to seize private assets, however, they needn't worry about the deflationary effects of seizing currency since they'll easily come up with ways of getting that back into circulation. I'm just pondering whether encrypted and inaccessible-to-authorities-currency might not in some conceivable future be its own miniature too-big-too-fail.

Re:A Possible Cause of Deflation (0)

Anonymous Coward | 1 year,19 days | (#45048827)

I do hope authorities get a seizure at some point for their wrongdoings.

Re:A Possible Cause of Deflation (1)

Richy_T (111409) | 1 year,19 days | (#45048857)

I don't think you understand deflation.

Re:A Possible Cause of Deflation (1)

cervesaebraciator (2352888) | 1 year,19 days | (#45048975)

There's a far greater chance that I don't understand Bitcoin. I have in mind a scenario where the authorities seize fairly large quantities of the currency and permanently remove it from circulation on account of their inability to crack the encryption. Permanently removing any currency, from greenbacks to gold, would have a deflationary effect since it would decrease the monetary supply relative to the supply of available goods and services. Put differently, the relative scarcity of the currency would mean that the price of goods and services in that currency would decrease. All this assumes, of course, that the currency in question could in fact be exchanged for goods and services.

My question chiefly regards what, if any, guards BTC has against such effects.

Re:A Possible Cause of Deflation (1)

TheRealMindChild (743925) | 1 year,19 days | (#45049113)

Put differently, the relative scarcity of the currency would mean that the price of goods and services in that currency would decrease Negative. Like gold, if a chunk went missing forever, the demand vs supply would increase, hence making existing supply more valuable.

Re:A Possible Cause of Deflation (1)

sourcerror (1718066) | 1 year,19 days | (#45049177)

Negative, both are the same thing. And it's called deflation.

Re:A Possible Cause of Deflation (0)

Anonymous Coward | 1 year,19 days | (#45049175)

If the TLAs are actively removing the "currency" by any means possible, would there still be a demand for the users to want to stay in that "currency"? Won't they want to cash out in earliest opportunity?

FBI Culpable In Fraud (0)

Anonymous Coward | 1 year,19 days | (#45048739)

"FBI's own Bitcoin wallet has been identified, leading to some snarky micropayment messages headed their direction."

Ah. Obama's "Super Duper Serfs" have failed the first test of "Super Duper" obviously.

Now, we have verifiable information and links of Obama to the DoJ's actions all to inflate the value of Obama's financial wealth at the expense of peoples world wide.

So simple.

How lovely.

Obama is now trash for the bin.

  None too soon.

Missing $80 million (0)

Anonymous Coward | 1 year,19 days | (#45048763)

He buried them in 50-gallon drums in the desert. Here are the coordinates:
+34 59 20.00, -106 36 52”

Re:Missing $80 million (0)

Anonymous Coward | 1 year,19 days | (#45048779)

Get there before the neo-Nazis show up

Re:Missing $80 million (0)

Anonymous Coward | 1 year,19 days | (#45049137)

Get there before the geo-Nazis show up

FTFY

interesting end for my travel on the silk road (2, Funny)

Cito (1725214) | 1 year,19 days | (#45048823)

I got my package I ordered in mail today :-) at my mailbox etc drop box

I had made a small hash order and then saw news of the shut down, where I live there is 2 unsecured hotspots a library, and a coffee shop I can reach with my beam antenna which I used those for silk road purchases.

I gave up thinking I wouldn't get my order since the site shut down 3 days after my order.

But the funny thing is I got home opened the blank package inside was my hash and a small funny message printed and cut out saying "so long and thanks for all the fish..."

Hehe, there is another "silk road" type site that went up but is more of a classifieds Craigslist type setup I saw advertised on the "hackBB" tor forum which is still up.

Re:interesting end for my travel on the silk road (3, Insightful)

Anonymous Coward | 1 year,19 days | (#45048961)

I don't get it... you go through all that trouble to purchase in a manner you feel is anon on silk road, but then you post about it on slashdot using your registered account? I don't know much about silk road or its transactions, but it sort of blows my mind that people would sent drugs through the mail, nevermind risk picking them up. Same people who don't mind their drugs having bits of feces on them from time to time I suppose.

Re:interesting end for my travel on the silk road (1)

l0n3s0m3phr34k (2613107) | 1 year,19 days | (#45049163)

well, maybe he's high off his hash he just got?

Re:interesting end for my travel on the silk road (4, Insightful)

Firethorn (177587) | 1 year,19 days | (#45049311)

I don't get it... you go through all that trouble to purchase in a manner you feel is anon on silk road, but then you post about it on slashdot using your registered account?

Given the nature of the internet, it can easily be argued that he's lying his ass off. Even if he isn't, 'small hash order' indicates he's a user, not a dealer, thus *on average* incredibly unlikely to be a worthy target for the 3+ agencies you'd need to coordinate with in order to track him down.

Off the top of my head - you'd need to get a warrant to get slashdot to disclose Cito's account and IP address information. Then you'd need to figure out WHERE in the world he is(presumably the USA). You have to hope that he was using home or at least work for his slashdot postings rather than using the same anonymous internet cafe. Once you've figured out where he is, you have to contact the appropriate state police agency to coordinate with, along with the postmaster general(assuming USPS was used as opposed to UPS/Fedex).

On Average it's just not worth it. They want dealers, not users.

Re:interesting end for my travel on the silk road (2)

DiSKiLLeR (17651) | 1 year,19 days | (#45048981)

Anddd you didn't post this anonymously.

Re:interesting end for my travel on the silk road (1)

myowntrueself (607117) | 1 year,19 days | (#45049141)

Anddd you didn't post this anonymously.

Because posting anonymously on /. protects privacy (from 3-letter US agencies).

Why is it assumed that they can't crack it? (1)

Anonymous Coward | 1 year,19 days | (#45048871)

For a random person with a relatively minor offense, I don't see the effort being worth it, but brute forcing this should be simple enough given the power that's available.

First thing I'd do is break his other passwords, those will give immediate clues to the sort of password style that is being dealt with... No symbols? Always starts with uppercase? Never more than two capitals? Hell, given his track record it's just as likely that half the passwords are reused.

So... given a reasonably accurate set of parameters, I bet the total possible set of passwords becomes very reasonable, even considering the double encryption that takes place with the wallet (SHA512 is used on the master key before AES IIRC) and technically doubling the CPU effort needed for brute forcing. If the NSA wanted it, a couple hours with his stuff and a few more hours of brute forcing would do it.

Regardless of how great the encryption itself is, key management is still the biggest weakness. Either he has to be able to remember it, which means it's either short or predictable in some fashion, or it has to be stored which means it's recoverable.

Re:Why is it assumed that they can't crack it? (0)

Anonymous Coward | 1 year,19 days | (#45049029)

Does it actually need to be cracked though?
If they know the wallet address then surely all they have to do is download the blockchain and scan through it to find what went into it and when. Isn't that the point of the block chain? To verify that payments are legit?

Re:Why is it assumed that they can't crack it? (0)

Anonymous Coward | 1 year,19 days | (#45049083)

For a serious store of Bitcoins like that I wouldn't be surprised if he'd committed the private key to memory and destroyed all physical copies (It's what I did). Lacking the technology to retrieve the key from a scan of his brain the only practical method available is torture.

Additionally, enforcement don't need the money to prosecute. It's not as if it's encrypted evidence.

Re:Why is it assumed that they can't crack it? (1)

AHuxley (892839) | 1 year,19 days | (#45049297)

Tracking the people around the networks, chats, forums seems to be the way in.
The years of good chat and having a valued 'name' gets ~malware ~spyware ~keyloggers in.

The case of the missing bitcoins (1)

TheloniousToady (3343045) | 1 year,19 days | (#45049013)

Once the government shutdown is over, I predict the FBI will find the missing bitcoins under the cushions of Ulbricht's couch. Or, maybe they'll find his bitcoin wallet in the pocket of his jeans in his mom's washing machine. (Mom never quite understood that thing he said about bitcoins being good for money laundering.)

Indictment (1)

ls671 (1122017) | 1 year,19 days | (#45049135)

Let's get serious here. These guys still operate with tiny pieces of paper hidden on a human messenger. This is slower than TCP-IP over pigeons:
https://tools.ietf.org/html/rfc1149 [ietf.org]
https://en.wikipedia.org/wiki/IP_over_Avian_Carriers [wikipedia.org]

As far as getting a serious indictment on those people through monitoring their Internet activities, well it isn't really worthed trying unless you can keep the costs of trying quite low.

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