Bitcoin Forum

According to a recent bill's draft:
"India has proposed a jail term of one to ten years for those who mine, hold or sell cryptocurrencies."

I was wondering how someone could say that 'A' is holding 'X' amount of bitcoins in his address 'Y'.
What if the person generated the wallet and learned the passphrase leaving behind no physical evidence of the ownership of the address. At that point, it would just be an address with a balance on the blockchain ledger.
Or if he just made the backup of private keys on a paper and destroyed it upon inspection (having a backup somewhere else). How is the government going to track down who's holding at what address? That's just stupid.

Similarly, they can't impose a ban on mining as it is just a computer software and blockchain protocol cannot be blocked by the government.

What do you think? Would the govt. be able to catch someone who violates this?

There is no way that any government could identify any wallet if they are not having any control over it, by banning bitcoin what they do is shutting all the exchanges and people will trade outside their jurisdiction and there is no way anyone would know who is having control over the coins and the users are smart enough to use a new wallet address every time if there is a serious consequence. The huge jail term suggested is to scare people to avoid taking those risks.

When it comes to mining the government can track down if the amount of electricity consumed is huge, unless it is registered for industrial purpose it is difficult to explain the huge electricity consumption.

Probably, but definitely not everyone. If you're smart and careful enough with your opsec, you should stay undetected. The people who has funds on exchanges on the otherhand, won't be too fortunate. This is one of the reasons why I advocate against unnecessarily announcing your affiliation with bitcoin and cryptocurrencies to the public(unless you're a public figure, hence you have no choice), as they might question you if such a law is to be imposed; and this is the perfect example why.

By being careless, yes they can. If you are careful, and never reveal it to anyone, and use tor in your spv (ie. Electrum) wallet, they can never tell.

Mining is quite easy to detect and block unless you go with something like tor for that as well.

As for keeping the seed words safe, you could steno-graph them. By, say, taking some book and mark the words with a little mark or such. Possibilities are endless in how to hide 12 words in plain sight.

Most likely those caught would be because they revealed it online, and have ties online that link your username to your real name.

It is not easy to make a brand new online virtual identity completely untied to the real you, but it is possible. I would recommend the use of something like Tails (http://tails.boum.org/) for starters. Boot that from a dvd, and when you finish turn the pc off and its all gone. No traces in that pc.

This is not just India, but any of the other 15 countries that "ban" bitcoin. Don't let your guard down even if the authorities are inept and corrupt.

But why should anyone discloses your BTC holding? I don't get your point, it's an issue because we wanted to get away from government's hand.

Blame the scammers and criminals and not bitcoin per se. If you are here in crypto, at least learn how to protect your assets.

As far as India's crypto ban, of course this is really sad, but what can we do? They think that crypto is a deterred and an arm by the criminals specially for money laundering.

Obviously, the prohibition wouldn't be generally enforceable. As you point out, it could be easily circumvented.

The point of the law, though, is about deterrence. Government officials probably understand fully well the law isn't wholesale enforceable. There will probably be some "low hanging fruit" cases where users openly violate the law -- transacting with undercover police, for example. They could publicly prosecute these cases, hand down harsh prison sentences -- and this would scare the hell out of people. It obviously won't kill Bitcoin in India but the black market will be a tiny shell of the former white/grey market.

Like the Chinese government, they may just want to force VASPs offshore and cut the market down in size.

At first I thought your post was based on rumor but oh, what did I see: https://www.coindesk.com/indian-panel-proposes-ban-and-jail-time-for-cryptocurrency-use
They really proposed jail for cryptocurrency use, that's shame. Can't understand what's wrong with it, then ban any VPN/Proxy provider, set jail on them too if you are so afraid but is that a deal? Don't they know that everytime you limit someone to use something, he/she finds another way which will be better and harder for you to detect.
Curious to know what will happen in practice.

It’s not that someone will track someone’s address. In order for everyone to stop using the cryptocurrency for the government, it’s just necessary to close all the exchange offices that carry out the withdrawal of funds. And that's it.If no one can withdraw money to Fiat, then naturally no one will use a cryptocurrency.

It is very difficult to completely ban off one side of the internet, for example, look at China's firewall as an example. Millions of people have VPNs to circumvent that. Think of this ban similar to China's one, with a lot of ways to avoid it, but with more serious consequences (1-10 years jail time.

Here's a quick example of avoiding the ban, and making sure it can't be tracked to you. Keep a DVD/external hard drive with your wallet on it, and when you want to access your wallet, boot of that hard drive. Keep your seed written down somewhere and hidden, and use a VPN, and tor for accessing your wallet, other methods also come to mind, for example, using a virtual machine.

This was a great post, helped me understand the ban fully, thanks!

Well, when the miners sold some fo their bitcoin they need to give the bank info, and the exchange could trace the addy where the bitcoins come and that could be the way that gov could know who are the miners.

If the miner never spends his bitcoins then he could stay anonymous, or maybe he could use a mixer service, but if India knows that you were using a mixer maybe they will send you more than 10 years to jail for money laundering.

Why would they find out the use of a mixer? You might as well just exchange it with monero or such and back using a decentralized exchange...

You mine to a pool, the pool doesn't know your real IP address if you use something like tor as router for your miners. It pays to your address which is controlled using an spv wallet also connected via tor. Once you decide to sell, move the exact amount to another address and send from this address once, and only ONCE, always via tor; preferably from pc running Tails (which bundles tor by default) or similar live linux image.

The government can't stop the people from using Bitcoin but with the scare tactics they were imposing then people will have a choice to go under or do it outside of the government jurisdiction.

The government can't track someone's addresses unless if he does post it everywhere to make a name and that's what famous people do.

There's a lot of ways to bypass any banning if people really want to do.

they can by making it as a law, and the effectiveness depends on how they enforce the law
the ban isn't as literal as you thought but means they will take action against anyone found breaking it
catching miners are not so hard, they can be found by their massive electricity consumptions
and with a search warrant, law enforcement can search for mining hardware and use it as evidence

If you are careless yes they can track you, but if you are en educated investors you know how to protect your assets, you know from the start that you are your own bank and you know you must protect it from hackers, government and from people you don't trust, this is decentralized there's no third party that will tell you that this guy holds this much Bitcoin.

Sure, you can track what address the bitcoins are originating from, and maybe even what exchange they came from, but how will you relate that to an ID of a person? I'm sure no one is stupid enough to link their ID on an exchange when they are buying bitcoins, especially with the ban on crypto. Any careful person would be easily able to avoid all of their tracks unless the Indian government is using a lot of manpower to find the random Joe holding 0.1 BTC.

Smart people will use vpns and DEXs.

How would they find a bitcoin user, and how would the government confirm it? Would they raid the person's house for 0.1 BTC?

Tor + VPN

Only works if the person is using the darknet, which not all bitcoin users do.

The Indian government have not done enough research on bitcoin and how it works. Maybe they think it's like a Paypal. No one in my area knows I am into bitcoin except the ones I told, and my bank doesn't even know I deal on bitcoin. They get to see credit alert on my account without ever telling the source because there is no trace. The government will soon realize they are chasing shadows.

This is a psychological game, and the Government, by taking this bitcoin banning attitude, will make people who use bitcoin afraid that they have been jailed for 10 years. Imagine that you are a very honest person and always respected and proud to respect the laws? would you break the laws? of course not! You would immediately sell bitcoins and start reporting who sells bitcoins or who would be using bitcoins after being banned. Governments play this psychological game because they know that most people will respect the law, even if that law harms them.

Well said, the mining firms can be easily tracked as the electricity consumption will be very high compared to the household usage. As mentioned if it isn't registered for industrial usage, then this is gonna harm the user with heavy fines.

These days governments too have made them updated to the technology and as a part they have begun to track the browsing details. When one is a cryptocurrency users, the internet itself gives suggestions on contents related to cryptocurrency. This might give a confirmation that this particular person is a user of cryptocurrency.

A couple of countries in North Africa has applied the same law about a year ago, and since then, there have been no reports about anyone being arrested or jailed for holding crypto even though no services/exchanges (except for BitPay) has banned these countries (that make it very easy for law enforcement to contact these exchanges and ask for user's details)... The reality is that there is no proper mechanism for this and the government clearly has not enough resources to apply this, especially not now after bitcoin being used by a lot of people. These laws are clearly made by people who don't know the nature of crypto, and also to target weakhearted citizens.

Technically, if bitcoin enthusiasts are using bitcoin the way it was intended to be used (that's through peer2peer transaction) they can't be tracked and possibly punished via jail term but since most enthusiast (including myself) operate using 3rd service providers like exchanges, wallet service providers etc they (the government) can easily track our every move considering the service providers have all it's customers private information which they most have gotten through KYC procedures.

This declaration by most country won't be followed up, there are just FUD used to decieve their citizens from participating in the bitcoin/blockchain technology.

I agree that the object is to deter adoption, and regular users won't face arrest. But there will likely be some high profile arrests like this one (https://cointelegraph.com/news/innovation-behind-bars-the-arrest-of-indias-first-bitcoin-atm-operators), which will scare users into submission.


Even if they choose the latter methods, OTC brokers can be targeted by law enforcement and P2P markets can be infiltrated. We've seen in the US how easily undercover police can set up sellers.

Just replace the robbers with the government
http://imgs.xkcd.com/comics/security.png


It goes down to how much the government wants this ban in effect. Can they do it? Yes! will they? ..probably not.

Let's fee for example, do you see a German on jeans happening? No. Do you see it being enforced in North Korea and punishable by death because you're wearing a symbol of American capitalism?

Can the government go after miners?
Yeah, and it's damn easy, especially after bitcoin miners.
A damn s17 pulls more power than a tv, a computer, a washing machine and a vacuum cleaner, and nobody is running those 24/7, pretty easy to track you down.

Now for the transactions and holding.
If you buy from an exchange, you're tracked.
If you buy p2p but you send money from a bank account to some random guy (that can be a police officer) you're tracked.
Buy from a shop....wait that won't be possible anymore.

So, what are you going to do with those coins? Why holding them? Just so that one day you can escape to some country with your wealth?

The government has an answer for this also, and it's called snitching.
Imagine they are going to offer 50% of the value of your coins to anybody who rats you out.
Having lived in a country where the communist went after the gold I can tell you two things will happen, people will either try to get rid of them or go nuts. Facing jail time and maybe worse, afraid of your neighbors, your relatives, under constant pressure 99% will crack.
And the rest will simply stay quiet and our of fear won't pronounce the word bitcoin anymore.

Yes, a ban can be enforced, it's just a matter on how much the government wants this and how much will the population take. If they will obey, it's done

The law will likely not work. Imagine if a government bans gold, how would that government know that people are holding gold in their homes? 
People don't normally obey laws that make no sense to them even in military government. They will be more careful when exchanging cryptocurrencies with fellow countrymen.

One of the best way to use cryptocurrencies in such environment would be to use them within general purpose applications that are hosted internationally... examples are using bitcoin/cryptocurrencies on apps like Telegram, whatapp, etc.  If the crypto feature end up being disabled for Indians, they could use decentralized multiple purpose applications or VPN with temp phone numbers.

Actually no, politicians are incredibly stupid. Someone will be blatantly making mistakes and be arrested, and they will make an example of him and how wise of them was to adopt that policy...

But yes you have to be very low profile, preferably avoid fellow Indians regarding that matter entirely. When you sell your bitcoins and when they deposit into your bank account they can fake the comment field with things like, service fee, or debt payment, for repair bill, handy work, etc.

As for electricity, yes, its possible to hide a miner or two, IF you have something that consumes a similar amount, such as an air conditioner you never actually use. But nothing even remotely resembling a farm.

Such bans were created by stupid regulators who worry that crypto will destroy the fiat money of India. I do not know how the government will determine the guilty under the new law, but I already feel that this story will have a scandal!

If you are careful enough, you will not be caught. You just have to hide it pretty well even to your neighbors and close friends and check your spending habits. Because if the government gets any tip from one of your neighbors or get a hint that you are spending more than you earn in fiat, that could warrant them to have you searched. Other than that, I agree that the law is very hard to implement.

News like this for me is no stranger because in my country until now all forms of cryptocurrency are still banned. and for a long time for this problem I always thought that government could not prevent someone from transacting using a cryptocurrency like bitcoin, ethereum or else. because for now there are so many ways to use cryptocurrency. even though the government is blocking the use of the internet for cryptocurrency, for now there are many ways to overcome this. so in my opinion the government will never be able to catch or track someone in transacting cryptocurrency

Unfortunately the IP address is trackable and at the same time we can change that too.
Most wallets like Zebpay that is prevalent in India actually take your ID cards and all , thus they actually share this information with their owners and what if they were threatened to show who was engaging?
Well the privacy policy that we tick does contain some phases like that .
Therefore if there is a wallet without requiring all this stuff maybe we can win.

Actually, they are right in that regard. Once people learn about it, ALL fiats will succumb. Why? The world has no deflationary fiat, they fear it, because they don't know better than what the Chicago school of economy teaches. If they learned about the Austrian school, they would understand how a deflationary economy is possible and stop opposing it.

Bitcoin separates State from currency, there is no turning back. They will no longer be able to manipulate the currency, no sudden devaluation to fit their ill conceived budget and make everyone poorer in the process. Politicians love to lie to make them safe face, and playing with people's wealth is one such away.

The deep truth of the matter, is that people will revolt at some point unless they either make their fiat deflationary, or legalize bitcoin. Countries around them will flourish while they sink, because of choices like this. "To protect their local currency", at the expense of everyone's wealth. This is the same kind of stupidity that brought us to (currently) the world's worst coin: Venezuelan bolivar (https://en.wikipedia.org/wiki/Venezuelan_bolivar) (Because Zimbabwe lost their fiat after doing the same for years).

Does India want to follow next? People there should be angry with their politicians, but i know how it is with corruption and power and how everything is a lie.

Now what do you think will happen once people learn that there is a world accepted currency out there that cannot be manipulated on a whim by politicians or financial institutions of any country, which happens to be gaining value constantly (because everyone else is devaluing their money on their backs)?

Let me tell you this, India won't be alone in the revolt. Your politicians are making you poorer, to protect their ill gotten wealth, and more than one will hypocritically be secretly buying bitcoin...

the thing about bans like this (which has not yet became law by the way and is still a "proposal") is not about whether people can go around it or even if the government can catch them, the real question is always about whether people are even going to try to go around the bans and do something that is "illegal".
you see, majority of people are not going to do something if it is considered by their government as illegal even if they wanted to and even if it wasn't really an illegal act. in other words if things like this go through, many will actually give up using bitcoin. they may hold what they have already bought because they still know the potential but they won't be involved any longer.

This is exactly why the authorities are pushing hard for the KYC implementation. Right now, a majority of the cryptocurrency users are anonymous. Once they feel that a certain threshold (say 90%) has gone through the KYC process, then it becomes easier for them to implement a blanket ban on crypto. I have seen a lot of posts here supporting KYC. But few people realize that the real aim of KYC is not to protect, but to persecute anyone who holds cryptocurrency in his wallet.

Things are different in India. I have been to that country, and it is one of the most corrupt regions in the world. Illegal immigrants from Bangladesh are able to get Indian ID cards and even passports for as little as $1,000. In case a ban is implemented there, then the cops will be very happy. Armed with the KYC data, they will detain any suspected individual who has a history of crypto trading. The laptops and mobiles will be seized and if any coins are found, then they will encash it themselves.

And that is why it is such a bad idea to go against the law in India. The American cops would look like angels in front of the Indian cops. A lot of people disappear after getting arrested by the cops, and no one has the courage to say anything against them. A few years back, I heard about an incident where a teenaged minor girl, who was kidnapped from Nepal for trafficking somehow escaped and ended up at a police station. The cops raped the girl for one week, before returning her to the same people who had kidnapped her.

Indian Bitcoin users should consider immigrating to some country, where human rights are valued. There is no other option.

It is going to be extremely hard for the government to pin down a man due to his Bitcoin holdings. This is the direct consequence of the anonymity feature of Bitcoin. Bitcoin portfolio does not bear any name, address, nor any personal information. One cannot therefore easily link a Bitcoin address to its supposed owner. The burden to prove beyond doubt the ownership is with the government. Good luck with that!

Maybe they can't prove that you are holding Bitcoin, but if they'd really want to, they could prove that you use it - whenever you'd send/receive Bitcoin, there will always be a risk that you will get deanonymized. Also, a ban would just kill all local merchant adoption - enterprenuers wouldn't want to risk jail just for supporting a payment method. So, goodbye the dream of buying groceries with Bitcoin, if Bitcoin is banned, you can only spend it on darknet markets. And if you'll try to sell your coins, you need to come up with a really good way to launder them first, which is also a crime.

People shouldn't confuse that the software works regardless of the laws with the reality of actually using it - a ban can have a huge impact on the latter.

I am also wondering how will they do that. People in India can still access their wallets, make transactions, trade cryptocurrencies and use it as a payment method without them getting in jail.

Obviously, people will stop accepting Bitcoin especially the merchants, shops or platforms in their country but in terms of exchanges, gambling sites, trading platforms outside their country, they can ban that but I don't think Bitcoin users will be stopped like that. There are still a lot of ways to use Bitcoin, not in their country but on the internet.

This post piqued my interest and I did a little research, and it seems like the countries in South Africa that have banned bitcoin are Ecuador, Columbia, and Bolivia. I looked up cases of people actually getting arrested for just using bitcoin, and I found no examples. The only people that were punished for the use of bitcoin was when the use of crypto was directly tied to other illegal activities.

Most people use centralized exchanges due to the ease of access, but if there where more promotions put into DEXs and P2P platforms, I reckon it'll be fairly split. This doesn't mean much though, because the people who own BTC right now can sell it and not get in trouble later on, right?

India is building a gate with no fence around it.  ::)  They will not have the expertise to spot "hidden" private keys that are stored in plain sight. There are many ways to hide things in plain sight... Steganography is the practice of concealing a file, message, image, or video within another file, message, image, or video.

You can even circle letters and numbers within a book or just store the encrypted private key in the cloud. So, they are trying to stop a dam wall from breaking with a spoon. I would collect Crypto currencies for years and then go on a luxury holiday in a Bitcoin friendly country and spend those bitcoins on a holiday of a life time. <Taking money out of the country and also all the tax income that my own country would have received.>  ;D

The adoption of such a law by the parliament is not really possible. This is a restriction of freedoms and rights of citizens.
To control this is not possible.
Indicative sanctions - will not help!

Those people who drafted this proposed bill are just stupid and they are using their traditional mindset and experience for the proposed ban. The law if passed can be a laughingstock because even in China right now I think the government has already accepted the fact that determining if someone has Bitcoin can be a big futile and inutile endeavor. It is impossible to enforce it not unless the government will be assigning a security escort to each and everyone. I am then hoping that they withdraw this bill and never allow themselves to be victimized by wrong notions and biases in this modern age of digitalization and information. This can set India so backward and future generations will be regretting of the lost opportunities allowed to slipped out of the hands of many good and innovative Indians.

The was never a problem with holding, trading, and mining of cryptocurrency. There has been enough discussion about them in this forum. Most of us know it is not possible to track or trace cryptocurrency by the government until someone goes to the authorities and tells them about it. But, it was nice to see that you made a topic about it on the forum. I do not think now anyone can miss it.

The main issue is converting cryptocurrencies to fiat. If the Ban comes into existence all exchanges will have to close. If they close then there will be only one way to cash out and that will be the illegal way. If caught that will bring a lot of humiliation and bad name to that individual in the society and mainstream media will be at its best.

Mining is a combination of software and hardware and to mining bitcoin now encompass huge computers that can easily identify. The software can even be traced by governments agency. If governments put a ban on cryptocurrency except someone can manipulate, it will be very difficult to do without being cut. The only thing I see by India government banning cryptocurrency and build their own government-approved digital currency is that they are going to regret it later because if developed countries are treating bitcoin with carefulness then i think it is going to be something of great values in future.

      It's not very easy but it can be proven especially if you're in mining business and it needs an  I T expert to search the computer and through interrogation of the alleged person and aside from these I think there's so many ways  of investigating this matters .

Being an Indian citizen, I am very worried nowadays. This proposed bill, if signed in to law is going to be disastrous. And it is very easy to get a search warrant in India. The cops may take away your laptop and mobile phone, and they will be able to prove that you own multiple cryptocurrencies. If you refuse to co-operate, then you can be charged with contempt of court.

So that's how the government can really implement the rules, if in anyhow this laws got approved it will automatically give the authorities to search things out especially those people who they suspecting that still continuing to do this practice and still working with cryptos, it's a sad truth that if rules got implemented there's no way for crypto lovers from that place to avoid such harassment.

There are a few loopholes. But none of them are 100% risk-free. If you want to reside in India, then I would suggest that you don't deal in cryptocurrency. The legal system here is fucked up. Someone who is accused of evading $100 in taxes may get a 5 year prison term, while a criminal who has been convicted of child rape may be out in 3 months. That's how the system works here. I am seriously considering immigrating to another country, in case they ban Bitcoin here.

You can use a VPN to move your coins. But in case you want to encash them, how you are going to do that? As long as the transaction is crypto-to-crypto, the authorities many not be able to trace back the coins to you. But once you convert the coins to fiat currency, this anonymity is lost. Selling the coins for physical cash is one of the options, but there are multiple risk factors with this method.

Mine, hold or sell cryptocurrencies are the right of every person, and the government has no right to prohibit them. What a petty thought, the Indian government experienced a setback in my opinion.

And this is the link to the topic https://bitcoinist.com/bitcoin-india-rumor-10-years-prison-hodling/

According to specification of Bitcoin, Bitcoins are a peer to peer based decentralized tokens which can be held and transact electronically only. Along with this specification bitcoins transactions are completed and stored on Blockchain with SHA256 algorithm, which requires higher electric power.

In such scenario no one have control over production and distribution of Bitcoins, so currupt government with lack of knowledge and lack of willing to accept change along with fear are taking such wrong steps of banning.

Actually no government have rights to make laws and bills on things which they cannot control, distribute, produce or monitor.

Even we hold bitcoin the government cannot prove it. Exactly, it is everyone’s right to own a crypto and cannot catch by the government. I am just thinking how a government can control or catch those who holds bitcoin.

The Government itself does not have deep understanding how Bitcoin operates as immutable and cannot be cracked down by any Government. Before anybody can be jailed, there must be a convincing evidence that indeed he/she does operate and hold Bitcoin wallet. There are many exchanges to buy and trade Bitcoin and other cryptocurrencies outside their jurisdiction. Don't use  paper backup in case of police search, don't store it locally on your computer and never use the system that holds your passpharse and mnemonics to login. Indian need to just be extra careful.

I am not an Indian citizen, but I have lived there long enough to have a good understanding of the system. Going against the law is very risky in India. The entire system is corrupt, and in case they catch you then be prepared to lose all of your life savings, reputation and current job (on top of a possible prison sentence). One thing I have noticed is that the punishment for white collar crime (such as tax evasion and concealment of income) is treated by the courts more severely when compared to blue collar crimes (rapes, murder, theft.etc). You may be able to get bail within 2-3 days if you commit rape, but if you do tax evasion then it is a non-bailable offense and you may undergo considerable prison time before you get parole.