2013-01-09 nzz.ch - Vorsicht vor Bitcoins / Beware of Bitcoins

[Akka]

Article in German on the NZZ (New Zurich Newspaper) one of the Major Newspapers in Switzerland, due to this and the FUD Character I'm Posting a (mix of machine and manual) translation of it:

The economic and financial crisis has resuscitated the interest in alternative currencies. This includes Bitcoins. Due to their relation to dealing in illicit drugs their are watched more and more suspicious.

The economic and financial crisis has enhanced the interest in alternative currencies. This includes Bitcoins. The digital cash is distributed on the internet since early 2009. Since its introdution it has faced varios scandals. This led to the fact that the virtual currency has always been considered suspicious, but it has survived. The course has risen recent months and it has left all the other currencies of the world behind. On Friday, 22 December, Fri 12:34 were required to purchase a unit of the artificial currency. In the beginning of the year not even full 4 Fr where needed.

Bitcoin may be a brilliant idea, a currency independent of governments and central banks in parallel to introduce other means of payment and use. However, it has one big problem, namely the anonymity. The fact that transactions can not be traced, seduces to all sorts of illegal activities. Thus, for example on the website "Silk Road" - it is not freely available, but only on private, encrypted networks - one can buy products that may be paid exclusively with Bitcoins. There, various goods are traded, among other prohibited drugs and intoxicants.

A study by Carnegie Mellon University shows that in the first half of this year, nearly 2 million dollars have been exchanced on the platform. The trading of marijuana led to peak sales. Finally, the drug has a market share of just under 14% of the popular products.

The analysis also revealed a remarkable correlation between the demand for illegal drugs and the performance of Bitcoins in comparison with regular currencies.the scientists from the American University explained pragmatically "The increasing demand for drugs on the "Silk Road" have assumed quasi-inflationary character and driven the price of the currency used there up". They think  the easiest thing to do to prevent illegal drug sales is to disrupt the trade of the virtual currency. For this reason, one must probably expect turbulence on this international market in the coming months.

Very surprisingly the the Author Christof Leisinger was a Financial consultant on a international Bank before becoming a Journalist.

Might have got a call from a former college to make an article on bitcoin?

Source: http://www.nzz.ch/finanzen/uebersicht/portfolio/vorsicht-vor-bitcoins-1.17918461

[Gabi]

prohibited drugs

The trading of marijuana led to peak sales

Too bad that it is not prohibited all over the Earth 

But ehi, i suppose Switzerland is the universe now. Something is prohibited there? It must be so in all the world too!

[Akka]

Also, I would like to know if there is something on to this?

They think  the easiest thing to do to prevent illegal drug sales is to disrupt the trade of the virtual currency. For this reason, one must probably expect turbulence on this international market in the coming months.

Or is this just FUD?

[phatsphere]

But ehi, i suppose Switzerland is the universe now. Something is prohibited there?

marijuana is decriminalized in Switzerland, and its cultivation is even allowed in some cantons (states).

[herzmeister]

about time, the last FUD article's been a while. 
 
but wow, if this one does one thing is it makes readers more than curious.

[molecular]

about time, the last FUD article's been a while. 

+1. I've been missing these... kind of.

“First they ignore you, then they laugh at you, then they fight you, then you win.”

I thought we were moving fast from 2 to 3 (can such FUD be counted as laughing at us?)

[herzmeister]

rather "fight", albeit it's a bit clumsy still.

they can do better than that, and they will

[Akka]

but wow, if this one does one thing is it makes readers more than curious.

Year, IMO this kind of articles does us more good than bad.

The people reading this and approve are the people that would be against Bitcoin anyway.

The majority of readers will be like "What the f*** is Bitcoin" Google it and some will get hooked.

The thing I didn't like was the part about the University and the proposal to go after exchanges.

[lonelyminer (Peter Šurda)]

Also, I would like to know if there is something on to this?

They think  the easiest thing to do to prevent illegal drug sales is to disrupt the trade of the virtual currency. For this reason, one must probably expect turbulence on this international market in the coming months.

Or is this just FUD?

I don't recall reading anything like this in Christin's paper, but I remember another paper about payment systems (unrelated to Bitcoin, a bit older) which made arguments like these.

Also, the article is kind of funny because its title is "Beware of Bitcoins", but it doesn't actually present any argument why one should be worried. It's not like someone's going to force you to come into contact with drugs if you become interested in Bitcoin. That's the domain of fiat cash: http://www.sciencedaily.com/releases/2007/01/070116093548.htm

[Akka]

Also, I would like to know if there is something on to this?

They think  the easiest thing to do to prevent illegal drug sales is to disrupt the trade of the virtual currency. For this reason, one must probably expect turbulence on this international market in the coming months.

Or is this just FUD?

I don't recall reading anything like this in Christin's paper, but I remember another paper about payment systems (unrelated to Bitcoin, a bit older) which made arguments like these.

Also, the article is kind of funny because its title is "Beware of Bitcoins", but it doesn't actually present any argument why one should be worried. It's not like someone's going to force you to come into contact with drugs if you become interested in Bitcoin. That's the domain of fiat cash: http://www.sciencedaily.com/releases/2007/01/070116093548.htm

Haha, well you can't beat a 100%. I wonder how many BTC show Silkroad "contamination".

I have found the related study: http://arxiv.org/pdf/1207.7139v1.pdf

Attacking the financial infrastructure. Another possible disruption strategy is to attack the financial infrastructure
supporting Silk Road. Bitcoin has shown, in the past, to be a very volatile currency. The June 2011
theft of a large number of Bitcoins from the Mt.Gox exchange [4] actually caused an abrupt collapse of the
currency. Certain users have been complaining in forums of the uncertainty on the prices they end up paying
due to the instability of Bitcoin and the various commissions they have to pay to purchase Bitcoins, and then
to purchase items on Silk Road [6].
Disrupting the Bitcoin network appears, compared to attacking the Tor network, to be a more actionable
possibility. In fact, in the aforementioned Gawker article [10] one of the Bitcoin developers argued that
Bitcoin was not providing the level of security Silk Road and other anonymous marketplace operators would
desire. More precisely, recent research [30] has shown that Bitcoin transactions are partially vulnerable to
traffic analysis. Indeed, the history of all transactions is publicly available and network analysis can allow
to map sets of public keys to individual users and transactions.
Since currency exchanges like Mt.Gox where users redeem Bitcoins for cash bind public keys to actual
identities, Bitcoin anonymity guarantees are weaker than most Silk Road users seem to assume, even though
additional intermediaries (tumblers) are in place. In particular, large Silk Road sellers withdrawing massive
amounts of Bitcoins at once may be relatively easily identified.

[thoughtfan]

However, it has one big problem, namely the anonymity.

I'm amused by the irony of such a statement coming out of Switzerland

[Dusty]

However, it has one big problem, namely the anonymity.

I'm amused by the irony of such a statement coming out of Switzerland

I LOLled...

[n8rwJeTt8TrrLKPa55eU]

However, it has one big problem, namely the anonymity.

I'm amused by the irony of such a statement coming out of Switzerland

Alas, one could also replace "amused" by "saddened"...

Liberty and privacy are being extinguished at an alarming rate even in former bulwarks such as Switzerland and the USA.  Thank God for Bitcoin, imagine how much more depressing the future (and present) would look without it.

[thoughtfan]

[Off topic]

From what I've gathered some things are still quite a lot more civil (literally in the legal sense) than for instance in the UK.

I've been given to believe it is half expected one 'cheats' on one's tax return in Switzerland and if caught, you get a slap on the wrist and told to pay up what you owe.  This is a world away from the current UK situation where not only is tax evasion criminalised but tax avoidance is demonised with 'naming and shaming' and public outrage going on for any person or corporation daring not to hand over to HMRC what joe pulblic's back-of-an-envelope calculations conclude they ought to be paying.
[/Off topic]

[TraderTimm]

I think the bankers are scared of bitcoin - that is, the ones who fully realize the potential. Not so much where we are in capitalization, but the underlying tenets of the system. I agree that if we didn't have bitcoin, I'd probably be a huge precious metal stacker right now.

Even PM's are coming under fire. Zerohedge had a story about there's an effort to collect records of sale at shops for coins and metals - with a particular eye towards gold purchases. I've got a bad feeling about that one.

[Herodes]

The title is so funny, 'beware of bitcoins'.

What I'm thinking of when I hear that is something like:

'beware of snakes'
'beware of alligators'.

Yes, surely bitcoins will jump up and bite you in the scrotum. Extremely dangerous!!!