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Author Topic: Organised crime  (Read 3395 times)
grondilu
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October 05, 2010, 03:32:19 AM
 #1

Should I care about organised crime using bitcoins ?

I don't.  Shame on me, I know.

On the contrary, the fact that organised crime will spend energy in using bitcoins ensures me that governments won't be able to control the bitcoin network.

Crime should be fought for what it is.  A murder is a murder.  A theft is a theft.  But when a criminal is using a car, he's just a person who is driving a car.  Fast cars are important for thieves, for they allow them to escape from police.  Still, I don't think it would be a good idea to forbid the use of fast cars.  It's the same old debate regarding the tool and its use.  A hammer can kill someone, if it is used in this intention.  Still, we don't ban hammers.

Therefore, I don't care if organised crime is using bitcoins.  I don't care at all.  There are other ways to fight criminals than tracking their expenses.
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The Madhatter
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October 05, 2010, 04:14:17 AM
 #2

Using Bitcoin itself doesn't create liability for a crime. Crime creates its own liabilities. Bitcoin is just the messenger (communication) of markers against labour. Or "claims of future labour". (Same thing.)

To claim that Bitcoin facilitates crime is a fallacy. The news media will certainly claim this if/when Bitcoin takes off.

Example: A criminal pays another criminal to kill someone for Bitcoins. The Bitcoins are just the communication of markers against labour not the crime itself. The payer and payee have created the liability for the crime.

Another example: An unsuspecting victim buys stolen goods from a criminal for Bitcoins. Bitcoin could be used to obfuscate the seller's location (possibly, if shipping wasn't involved) and make an investigator's job more difficult. This is not a crime. The crime is the theft itself. A thief can not give better title to the goods than the original owner has. The goods must be returned to the original owner.

We can probably agree that the previous two examples are crimes. (I'd hope, anyway.)

The following last example is why you'd need to define what you consider to be a crime: Someone uses Bitcoin to hide (called "laundering") the source of funds from a sale of prescription drugs (illegal). Again, this makes an investigator's job very tough. Is that a crime? I don't personally think it is. Various statutes claim it is. You may think it is. I say it is the right to financial privacy in action. You may argue that illegal proceeds do not deserve to be private. Where is the line drawn? Do we draw the line when every penny is spied on? (Happening now) I'd personally call "money laundering" a victimless noncrime. What about the sale of the drugs? In this case I'd say it was a breach of contract. Selling someone prescription drugs without a license or a prescription is a breach of contract.

It boils down to this: do not cause harm or loss to anyone. If this rule is violated, there is a crime. Bitcoin has nothing to do with your criminal actions. It is a means to an end -- the crime itself.
MoonShadow
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October 05, 2010, 04:58:00 AM
 #3

It's the same old debate regarding the tool and its use.  A hammer can kill someone, if it is used in this intention.  Still, we don't ban hammers.


Give it time.  Even a common tool such as a kitchen knife is heavily regulated in parts of Europe already.  Smokers didn't think that smoking in public would ever become verboten just 20 years ago.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
The Madhatter
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October 05, 2010, 05:07:10 AM
 #4

That old 'hammer and it uses' statement is so cliché. Haha! I totally didn't even see it. I must have glanced right over it. Tongue
jgarzik
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October 05, 2010, 05:21:16 AM
 #5


Like it or not, cutting off a criminal's money supply has been proven a highly effective method of targeting and neutralizing individual criminals.  Law enforcement will always want power over money, be it USD or EUR or Pecunix or bitcoin.

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The Madhatter
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October 05, 2010, 05:30:51 AM
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How do they cut off the supply of USD/EUR to a criminal? Revoke all all of the bank notes in existence? I'm confused. You must be referring to electronic transfers.

Most criminals are not that stupid. They demand bank notes. Bitcoins are more like bank notes. Law enforcement are forced to go after the criminals directly. That's the way it should be.

Blaming the money system for crime is like blaming the ocean for a drowning.
jgarzik
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October 05, 2010, 06:05:31 AM
 #7

How do they cut off the supply of USD/EUR to a criminal? Revoke all all of the bank notes in existence? I'm confused. You must be referring to electronic transfers.

Most criminals are not that stupid. They demand bank notes. Bitcoins are more like bank notes. Law enforcement are forced to go after the criminals directly. That's the way it should be.

I'm referring to both bank notes and electronic transfers.

As an example, the US has a large, on-going effort to track banks that accept large amounts of Federal Reserve Notes, interdicting those banks who accept deposits from criminals.  Several banks in Macau were shut down, for example, because they accepted lots of FRNs from North Korea.  You hear similar stories out of Mexico, where drug cartels have stupidly large amounts of FRNs.  The Feds play whack-a-mole with banks who accept large volumes of FRNs from drug kingpins.

You're incredibly naive if you think FRN flows are not actively tracked.  The Feds target digitization points -- ie. a location, usually a bank, that accepts paper USD in exchange for electronic USD credit in an account.  Additionally, many standard FRN counting/sorting machines, such as those found in casinos or banks, have the ability to scan the bill's serial number, thus providing another tracking point.  Ever heard of "marked bills?"  You don't need a special ink or marker -- law enforcement only needs to enter a bill's serial number into a Federal Reserve database somewhere.

The whole system is set up to marginalize (and de facto criminalize) large cash operations of any sort, legal or illegal.  Death by 1,000 paper cuts.

Quote
Blaming the money system for crime is like blaming the ocean for a drowning.

If that's a response to my post...  I was not casting any blame, nor making any judgements.  Just recounting the goal and reality of today's worldwide cash tracking operations.

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October 05, 2010, 06:34:13 AM
 #8

“We hang the petty thieves and appoint the great ones to high office.”

– Aesop
grondilu
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October 05, 2010, 06:37:18 AM
 #9

Blaming the money system for crime is like blaming the ocean for a drowning.

Nice metaphore.
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October 05, 2010, 06:44:53 AM
 #10

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How do they cut off the supply of USD/EUR to a criminal?

I dont know how you stop government taxing us. Cheesy
Timo Y
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October 05, 2010, 09:11:21 AM
 #11

I do care about organised crime using bitcoin.

The fact that a technology can be abused does not make that technology immoral.  But that doesn't mean that we should ignore such abuse.  We will never be able to eliminate a degree of abuse but we can use our common sense and refuse to do business with people who seem fishy. On a strictly voluntary basis of course.  If the Bitcoin economy becomes too dominated by criminals it will hurt Bitcoin's reputation.

 

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grondilu
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October 05, 2010, 04:00:54 PM
 #12

I do care about organised crime using bitcoin.

The fact that a technology can be abused does not make that technology immoral.  But that doesn't mean that we should ignore such abuse.  We will never be able to eliminate a degree of abuse but we can use our common sense and refuse to do business with people who seem fishy. On a strictly voluntary basis of course.  If the Bitcoin economy becomes too dominated by criminals it will hurt Bitcoin's reputation.


This is a perfectly acceptable point of view, apart from one thing :  I doubt the word "abuse" is appropriate.

Abuse is the improper usage for bad purpose.  When a gangster is using bitcoins, he's using it in a proper way, for its real purpose.  It's only his motivation which is "bad" or, more precisely, illegal.  When a ganster is getting in a train to move a stolen marchandise from a A point to a B point, we can't talk about any "abuse" of the train.  Otherwise we could say exactly the same thing about pretty much any single thing he uses : from his car to his telephone, not to mention his computer, his shoes, the food he eats or the air is breathing...  This would be ridiculous and would make the world "abuse" lose all its sense, turning it into a synonym for "used for criminal activities".

I agree with what you say about people refusing to do business with people who seem fishy.  But this has absolutely nothing to do with the business medium.  It could be bitcoin, fiat money, computers or telephones, Internet...  The list is long.

Crime should not be an obstacle to technical progress.
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October 05, 2010, 07:35:57 PM
 #13

Consider a bitcoin release in the future where a block can only be generated by proof-of-murder.  difficulty increases logarithmically, so this seems reasonable. 
nelisky
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October 05, 2010, 07:40:39 PM
 #14

Consider a bitcoin release in the future where a block can only be generated by proof-of-murder.  difficulty increases logarithmically, so this seems reasonable. 

Wow, there's an idea worth exploring! What proof of work could we use? Murder seems fitting, what about selfless generosity? Even harder to come by Wink
The Madhatter
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October 05, 2010, 08:07:41 PM
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As an example, the US has a large, on-going effort to track banks that accept large amounts of Federal Reserve Notes, interdicting those banks who accept deposits from criminals.  Several banks in Macau were shut down, for example, because they accepted lots of FRNs from

You are assuming that criminals need to deposit their illegally-derived cash into a bank. This is a myth; perpetuated by the movies and the general media.

Most of the smarter/larger criminals just deal in cash directly. Why would they risk depositing any of it when they can spend it back into the general economy again for commodities (supplies, etc)? These commodities can be traded yet again as.. well.. money. Banks are not needed.

North Korea.  You hear similar stories out of Mexico, where drug cartels have stupidly large amounts of FRNs.  The Feds play whack-a-mole with banks who accept large volumes of FRNs from drug kingpins.

These are all small fish. They are not drug kingpins. They are the street level dealers. You never even hear about the large guys. The media sensationalizes this and makes examples of them for two reasons. One is to show that the system's laws are effective against crime. The other is to educate new criminals. Teach them that 'big guys' deposit cash into banks.

have the ability to scan the bill's serial number, thus providing another tracking point.

The banks and government investigators may have this capability. This still operates under the assumption that large criminals use banks.

How many merchants who accept bank notes scan the serial number? Last time I was at a store they didn't even look twice at the bills I handed them. Turn off your TV.


Ever heard of "marked bills?"

Yes. It does nothing when the bills are spent back into the general economy.
The Madhatter
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October 05, 2010, 08:09:07 PM
 #16

I dont know how you stop government taxing us. Cheesy

Look at private currencies and jurisdiction. If you are already using Bitcoin you are well on your way to understanding these two subjects. Smiley
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October 05, 2010, 08:21:05 PM
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As an example, the US has a large, on-going effort to track banks that accept large amounts of Federal Reserve Notes, interdicting those banks who accept deposits from criminals.  Several banks in Macau were shut down, for example, because they accepted lots of FRNs from

You are assuming that criminals need to deposit their illegally-derived cash into a bank. This is a myth; perpetuated by the movies and the general media.

Most of the smarter/larger criminals just deal in cash directly. Why would they risk depositing any of it when they can spend it back into the general economy again for commodities (supplies, etc)? These commodities can be traded yet again as.. well.. money. Banks are not needed.

No -- you are making the assumption that a cash-only existence is possible for large criminals.  If that was true, then money laundering would not exist, because it would not be necessary.

But it does.  Drug kingpins have so much cash it is quite literally a problem of size.  After paying all their flunkies, and buying illegal guns and such, they are still stuck with bales of FRNs.  That's why the Feds target any place that might accept large amounts of cash for legitimate items -- cars, houses, boats, non-illegal businesses.

It is surprisingly difficult to spend large amounts of cash without getting noticed, and that is by design.

Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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The Madhatter
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October 05, 2010, 08:25:27 PM
 #18

If the Bitcoin economy becomes too dominated by criminals it will hurt Bitcoin's reputation.

It's a feedback loop. Bitcoin will attract criminals. It is inevitable. These criminals will be sensationalized on the news which will scare away legitimate business and attract more criminals. We have to be prepared for this. Smiley

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October 05, 2010, 09:01:16 PM
 #19

If the Bitcoin economy becomes too dominated by criminals it will hurt Bitcoin's reputation.

It's a feedback loop. Bitcoin will attract criminals. It is inevitable. These criminals will be sensationalized on the news which will scare away legitimate business and attract more criminals. We have to be prepared for this. Smiley

Indeed.  There is a risk that bicoins becomes used *only* by criminals.

I'm sorry to say that, but even in that scenario, I'll keep using bitcoins.
Not to buy stuffs, but to store value and avoid taxation (which I DON'T do right now, but might in the future).


A declaration of saying that you're going to avoid taxes is a bad idea.

grondilu
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October 05, 2010, 09:10:52 PM
 #20

A declaration of saying that you're going to avoid taxes is a bad idea.

I'm not sure I wrote that.  I don't remember.  Maybe something went wrong with your computer when you quoted me.  Please check.

Anyway, I can not be suited for something I say I *might do in the future*.  One can not be blame for supposed future actions.
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