Some questionable aspects of Bitcoin

[decisionmatrix]

Hello forum I have stumbled across Bitcoin recently and have some questions that particularly concern me. I work for various high-street banks, helping them ensure their facilities are not abused by criminals - anyone who would use a bank account as part of the process of making money illegally. The questions :

Can the administers of bitcoin track who is using their service?

Do they retain sorting codes and account numbers of money origins and destination?

Which bank provides bitcoin an account to store money which has been used to buy coins?

What is to stop, say, an identity thief, moving large amounts of money from my account into bitcoins and collecting them into their account?

What is to stop drug money being laundered through bitcoin?

What is to stop bitcoin being accessed by individuals or organisations under national or international sanctions - like evil regimes or terror groups?

(End of questions)

I don't mean to pry, and I don't imply any threats - I ask totally 100% out of personal curiosity. Just bear in mind that if the answers to those questions aren't what I want to hear, its probably because my work days might become a lot more stressful!
Peace and love x

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[crash893]

Hello forum I have stumbled across Bitcoin recently and have some questions that particularly concern me. I work for various high-street banks, helping them ensure their facilities are not abused by criminals - anyone who would use a bank account as part of the process of making money illegally. The questions :

Can the administers of bitcoin track who is using their service?
in a way yes. they can't do anything about it nor tell who is the person is. (just id numbers which can be changed at anytime)
Do they retain sorting codes and account numbers of money origins and destination?
yes
Which bank provides bitcoin an account to store money which has been used to buy coins?
none. Each person is responsible for storeing there own bitcions (kept in your wallet.dat)
What is to stop, say, an identity thief, moving large amounts of money from my account into bitcoins and collecting them into their account?
bit coins if i understand correctly are a push only transaction that can not be reversed. I can't take bitcons from you directly. There is nothing to say a trojan virus couldnt move the coins to me. but thats going around the bush
What is to stop drug money being laundered through bitcoin?
nothing
What is to stop bitcoin being accessed by individuals or organisations under national or international sanctions - like evil regimes or terror groups?
im not sure what you mean by accessed
(End of questions)

I don't mean to pry, and I don't imply any threats - I ask totally 100% out of personal curiosity. Just bear in mind that if the answers to those questions aren't what I want to hear, its probably because my work days might become a lot more stressful!
Peace and love x

Edit.

If by accessed you mean break into my account then they would have solved the basic fundamentals of modern crypto and i'm sure bitcoins would be the last thing on there list to steal.

[Grinder]

You may already know, but the wish for a currency with limited supply and anonymous payments is driven mainly by ideology. For the followers of this ideology, no price is too high if they think it gives them what they want.

[FreeMoney]

If there even is anyone who could be called an "administrator of Bitcoin" then the answer is no. Nobody is in any special position to track who is using bitcoin. This doesn't mean that no one can at all. For example you could keep track of which of your friends are using Bitcoin by asking them and writing it down. Or you could search the web for people who say that they use it. No one ever needs permission to use bitcoin nor is there anyone who could grant that permission.

The money used to buy coins goes to the person who sold them. Sometimes that is a person who found the coin by doing computational work and sometimes it is someone who previously bought the coin or received it in return for goods or services. There is no guarantee that you can get anything for them; there is only the fact that you can. This might sound odd, but think about your dollar, what is promised for that? A fresh new dollar? A dollar has value if people take them, same as a bitcoin.

Bitcoin does not stop fraud or theft, neither does my refrigerator or the dollar.

[LMGTFY]

Can the administers of bitcoin track who is using their service?

Bitcoin doesn't have administrators. It's decentralized, which means it works a bit like email or BitTorrent - lots of different people can generate ("mine") bitcoins, and swapping bitcoins for goods, services, cash or commodities is also decentralized (though a fair bit of trading goes on right here, on this forum).

Do they retain sorting codes and account numbers of money origins and destination?

Yes and no. Each bitcoin transaction is recorded, so it's possible to determine which bitcoin address sent bitcoins to which other bitcoin address. I suspect, however, you're interested in the interface between "regular" money (USD, EUR, GBP, etc) and bitcoins? Since the bitcoin economy is decentralized, this would depend on the individual or organization swapping bitcoins for "regular" money.

Which bank provides bitcoin an account to store money which has been used to buy coins?

Again, this would depend on the individual or organization swapping bitcoins for "regular" money. They'll each have their own bank accounts set up for this.

What is to stop, say, an identity thief, moving large amounts of money from my account into bitcoins and collecting them into their account?

Bitcoins are intended to be very similar to regular cash. Just like regular dollar bills, once an identity thief has them it's very difficult to stop them disposing of them as they wish. Assuming your scenario is one in which an identity thief manages to get hold of your dollars (say) they could buy bitcoins then transfer the bitcoins to another bitcoin account, but they could just as easily use the dollar bills to buy gold, sell the gold for cash, etc.

What is to stop drug money being laundered through bitcoin?

I'm going to gloss over this, apart from re-stating that bitcoins are like regular cash. If I was a money launderer I'd be looking to show there was a way I "legitimately" earned the income. I don't think bitcoin really helps with this, but cleverer evil geniuses than me may have better ideas!

What is to stop bitcoin being accessed by individuals or organisations under national or international sanctions - like evil regimes or terror groups?

I'll gloss over this one as well, though in this case it's because the bitcoin economy is currently too small for a certain Libyan despot to transfer his gazillions to Zurich ;-)

[genjix]

Can the administers of bitcoin track who is using their service?

There's no administrators.

Do they retain sorting codes and account numbers of money origins and destination?

Bitcoins uses a cryptographic address. You can see the flow of money around the network. That's not stopping somebody using a mixing service to obfuscate the origins of their money, so no.

Which bank provides bitcoin an account to store money which has been used to buy coins?

None. You store then on your computer. You can use a service like mybitcoin to store them for you.

What is to stop, say, an identity thief, moving large amounts of money from my account into bitcoins and collecting them into their account?

Nothing. You lost your identity and the criminal has access to all your emails, passwords, bitcoins, .etc Maybe you can buy insurance to protect yourself. I don't want such a service since I can protect myself more adequately than any bank and am willing to take on the risk for when I do.

What is to stop drug money being laundered through bitcoin?

Nothing.

What is to stop bitcoin being accessed by individuals or organisations under national or international sanctions - like evil regimes or terror groups?

Nothing.

(End of questions)

I don't mean to pry, and I don't imply any threats - I ask totally 100% out of personal curiosity. Just bear in mind that if the answers to those questions aren't what I want to hear, its probably because my work days might become a lot more stressful!
Peace and love x

[decisionmatrix]

Ok some examples.

Organised internet crime gangs trojan your laptop and get access to your online banking. They buy hundreds of coins from themselves with YOUR money. When you discover and tell your bank, can the bank look and see where the money went?

Columbian drug gangs deposit huge bags of hundred dollar bills in a St Maarten bank account. That bank has a USD account on Wall St. They convert the dollar bills to credit in their Chase Manhattan account and buy hundreds of coins from their Barclays account in the UK. American officials then raid the St Maarten bank. Are they able to notify Barclays?

An arms company in Germany wants to take a contract from the Iranian Revolutionary Guards to supply 5000 machine rifles. They know that while this kind of arms sales are legitimate business in Germany, it is illegal to trade with the Iranian regime. Can they use bitcoin to collect on the contract?

[LMGTFY]

Ok some examples.

Organised internet crime gangs trojan your laptop and get access to your online banking. They buy hundreds of coins from themselves with YOUR money. When you discover and tell your bank, can the bank look and see where the money went?

The bank will only be able to see that the USD (EUR, GBP, whatever) in my account were spent online at (say) a Bitcoin Exchanger. This is no different to my dollars being stolen via a trojan and then being converted to Swiss Francs. The exchange (whether for bitcoins or Swiss Francs) may be in a different jurisdiction, but may assist the bank. What I'm hinting at is: this problem isn't unique to bitcoin, it's not a bitcoin problem as such. We all need to secure our laptops! Bitcoin doesn't provide the crime gang with any feature they don't already have.

Columbian drug gangs deposit huge bags of hundred dollar bills in a St Maarten bank account. That bank has a USD account on Wall St. They convert the dollar bills to credit in their Chase Manhattan account and buy hundreds of coins from their Barclays account in the UK. American officials then raid the St Maarten bank. Are they able to notify Barclays?

I'm lost here. Does the drug gang transfer dollars from their Chase account to their Barclays account? If so, then yes, I'd imagine Chase could contact Barclays. Barclays will be able to say that the money in the UK was spent on bitcoins (and see the previous answer for where that leads us).

An arms company in Germany wants to take a contract from the Iranian Revolutionary Guards to supply 5000 machine rifles. They know that while this kind of arms sales are legitimate business in Germany, it is illegal to trade with the Iranian regime. Can they use bitcoin to collect on the contract?

In theory, yes. They could also accept Euros or dollars, or anything. They'd be breaking German law, however.

[FreeMoney]

Ok some examples.

Organised internet crime gangs trojan your laptop and get access to your online banking. They buy hundreds of coins from themselves with YOUR money. When you discover and tell your bank, can the bank look and see where the money went?

Columbian drug gangs deposit huge bags of hundred dollar bills in a St Maarten bank account. That bank has a USD account on Wall St. They convert the dollar bills to credit in their Chase Manhattan account and buy hundreds of coins from their Barclays account in the UK. American officials then raid the St Maarten bank. Are they able to notify Barclays?

An arms company in Germany wants to take a contract from the Iranian Revolutionary Guards to supply 5000 machine rifles. They know that while this kind of arms sales are legitimate business in Germany, it is illegal to trade with the Iranian regime. Can they use bitcoin to collect on the contract?

I'm sorry my answers didn't help. There is no magic here. If you use the standard banking system to buy coins then the trade in the standard system can be seen like always.

And yes, bad people can do bad things with bitcoin. This has nothing to do with bitcoin whatsoever. Bad people can do bad things with forks too. That has nothing to do with forks.

[SmokeTooMuch]

Hello forum I have stumbled across Bitcoin recently and have some questions that particularly concern me.
...

Your qustions show me that you haven't understood the concept of bitcoin at all.
Maybe you should look in the wiki and the design paper first.

[decisionmatrix]

So basically it boils down to -
When someone who has spent $10 on bitcoins looks at their statement, does it say "BITCOIN $10" or does it say "JOE BLOGS $10" (where Joe Blogs is the guy who now has less bitcoins)?

[LMGTFY]

So basically it boils down to -
When someone who has spent $10 on bitcoins looks at their statement, does it say "BITCOIN $10" or does it say "JOE BLOGS $10" (where Joe Blogs is the guy who now has less bitcoins)?

It depends. If you agree to transfer $10 to Joe Blogs' bank account (in exchange for bitcoins), it'll probably say "Joe Blogs". If you send funds to Joe Blogs' exchange (to fund a purchase of bitcoins), it might say something like "Joe Blogs' Bitcoin Emporium, Ltd". Or, you might need to fund Joe's exchange via PayPal, in which case you'll see "PayPal" on your statement.  Of course, you could just hand Joe a $10 bill, in which nothing will appear on your bank statement ;-)

[0x6763]

Yes, criminals can use bitcoin to help them get away with some crimes.  And before you get upset about that, here's something else to consider: People can also use bitcoin to get away with doing humanitarian things when authoritarian governments would have otherwise been able to stop them.

[barbarousrelic]

Organised internet crime gangs trojan your laptop and get access to your online banking. They buy hundreds of coins from themselves with YOUR money. When you discover and tell your bank, can the bank look and see where the money went?

You're talking about money being taken from your US Dollar-denominated, FDIC-insured bank account? Yes, they can see where the money went.

If you're talking about a trojan stealing your Bitcoin wallet, you could see which Bitcoin address the payment went to, but that would not be helpful for anything. This scenario would be analogous to someone breaking in your house and stealing your cash.

Columbian drug gangs deposit huge bags of hundred dollar bills in a St Maarten bank account. That bank has a USD account on Wall St. They convert the dollar bills to credit in their Chase Manhattan account and buy hundreds of coins from their Barclays account in the UK. American officials then raid the St Maarten bank. Are they able to notify Barclays?

Yes.

(if I understand you right this scenario has nothing to do with Bitcoin? Guy deposits money with bank A, transfers money to bank B, which purchases something from vendor C. Yes, bank B can contact vendor C. However, I very much doubt that Barclays sells Bitcoin.)

 Note that Bitcoin is more analogous to cash and cash transactions than to banking.

An arms company in Germany wants to take a contract from the Iranian Revolutionary Guards to supply 5000 machine rifles. They know that while this kind of arms sales are legitimate business in Germany, it is illegal to trade with the Iranian regime. Can they use bitcoin to collect on the contract?

Not legally. But they would have the ability to illegally collect the payment in Bitcoin, just as they could collect a cash payment.

[kiba]

You may already know, but the wish for a currency with limited supply and anonymous payments is driven mainly by ideology. For the followers of this ideology, no price is too high if they think it gives them what they want.

Do you want a currency that inflate over time or a currency that deflate over time? Ideology or no, currency is subjected to economic competition, not social engineering consideration.

[Mike Hearn]

decisionmatrix, I have to echo the poster who said you don't understand BitCoin at all. Bitcoin is not a company. It does not have a merchant account at a bank.

Whenever you see the word BitCoin just mentally replace it with "cash" and you'll be closer to understanding.

In short, nothing stops any of the scenarios you mentioned above. Just like criminal gangs can use cash they can use BitCoins. BitCoins are a little less anonymous than cash because you can see their flow publically, but ultimately these flows are much like the serial numbers on paper money - if you could see the serial numbers move between anonymous individuals, you might be able to puzzle things out when they enter or exit some other monetary world.

[TiagoTiago]

Wouldn't "seashells" be a better standin than "cash" ?

[markm]

Quote: "BitCoins are a little less anonymous than cash because you can see their flow publically, but ultimately these flows are much like the serial numbers on paper money - if you could see the serial numbers move between anonymous individuals, you might be able to puzzle things out when they enter or exit some other monetary world."

Excellent! That is it: BitCoin is that subsystem of the orbital mind control satellite network that reads those tracer things in the paper currency to track the serial numbers that same way the aliens track the people they imbed such tracers into. (s/such tracers/the same tracers/ if intelligence regarding goings on in Area 51 are correct).

So just like the mind-control satellite network we can see exactly which serial numbers send how much of their denomination (value) to which other serial numbers and when.

There is no need to know who those serial numbers might relate to because the implants in people are used for the people-tracking part of the problem (hahahahah).

Bitcoin is cash not radio pet-tracking chips. But, it is cash no-one can "resist" scrawling their private graffiti on so like other graffiti artists find the cans of (tracked by alien labelling molecules) spraypaint they scrawled the graffiti with and you've got them. (Or at least you've got the cans of paint, and thereby maybe whoever stole them from them or had them planted on them to incriminate them etc, how convoluted a plotwriter are you looking for for your conspiracy stories...)

-MarkM- (of course they can "replicate" the cans of paint and plant them on anyone or everyone on their botnet...)

[eMansipater]

Quote: "BitCoins are a little less anonymous than cash because you can see their flow publically, but ultimately these flows are much like the serial numbers on paper money - if you could see the serial numbers move between anonymous individuals, you might be able to puzzle things out when they enter or exit some other monetary world."

Excellent! That is it: BitCoin is that subsystem of the orbital mind control satellite network that reads those tracer things in the paper currency to track the serial numbers that same way the aliens track the people they imbed such tracers into. (s/such tracers/the same tracers/ if intelligence regarding goings on in Area 51 are correct).

So just like the mind-control satellite network we can see exactly which serial numbers send how much of their denomination (value) to which other serial numbers and when.

There is no need to know who those serial numbers might relate to because the implants in people are used for the people-tracking part of the problem (hahahahah).

Bitcoin is cash not radio pet-tracking chips. But, it is cash no-one can "resist" scrawling their private graffiti on so like other graffiti artists find the cans of (tracked by alien labelling molecules) spraypaint they scrawled the graffiti with and you've got them. (Or at least you've got the cans of paint, and thereby maybe whoever stole them from them or had them planted on them to incriminate them etc, how convoluted a plotwriter are you looking for for your conspiracy stories...)

-MarkM-

I think you just blew my mind MarkM

[hazek]

Let me give a shot at it as a layman:


Can the administers of bitcoin track who is using their service?
There is no central authority. If you want to receive, own and send BitCoins you install a client which connects to a network. The rules under which this network was created and is being run by are the authority and they now or ever practically can't be changed anymore. All transactions between users are being gathered into this long history chain of blocks and until a transaction isn't embedded into a finished block it's as if it didn't happen. Continue under next question..

Do they retain sorting codes and account numbers of money origins and destination?
Once a block is "completed" and contains your transactions it is fixed and irrevocable and anyone can see it and by it I mean which random address sent some BitCoins to another random address. Who those addresses belong to is unknown to this history chain and is hard or sometimes impossible to find out. You can create as man addresses for your self as you like and there's just nothing that associates that address to your identity. Perhaps the IP address if someone is monitoring your connection but even that can be masked and hidden.

Which bank provides bitcoin an account to store money which has been used to buy coins?
There are no middlemen for BitCoins. You own your digital wallet and that's it. If you want to trade your BitCoins for USD or EUR or a service or a product you need to find a vendor, a market that gives you that option. Or just a person that you can barter with. There are already several websites that have this service.

What is to stop, say, an identity thief, moving large amounts of money from my account into bitcoins and collecting them into their account?
Your question is the same as if I asked you what's to stop a mugger who mugged you and took a $100 bill from your wallet from going into a store and spending it on stuff.. Nothing. Btw your BitCoin wallet is a file on your computer to which apply the same laws and logic as do to a realworld wallet with dollar bills inside.

What is to stop drug money being laundered through bitcoin?
Nothing. If they can find a buyer for their USD or Pesos or what have you at their location or online and then send someone else the BitCoins and then that someone else finds a buyer and sells them for USD or EUR or what have you you can't do anything about.

What is to stop bitcoin being accessed by individuals or organizations under national or international sanctions - like evil regimes or terror groups?
Same logic applies as the last question. As long as that individual or organization can find someone who will take their USD, EUR or gold or whathaveyou and give them BitCoins they can then trade their BitCoins with whoever worldwide and if they try hard enough they can do it completely anonymously.

I don't mean to pry, and I don't imply any threats - I ask totally 100% out of personal curiosity. Just bear in mind that if the answers to those questions aren't what I want to hear, its probably because my work days might become a lot more stressful!
Peace and love x

BTW and please don't take this the wrong way I'd love it if your workday became a lot more stressful. I think there's too much regulations and sanctions and laws that only serve the governments and banks and not enough power and freedom for the people. I can't wait till the day it all comes crashing down and we all realize it was just another stone cow and that human beings can coexist peacefully and prosper through voluntary interaction between one-another.

p.s.: if one of geeks feels I made some huge mistake or oversimplified something, feel free to berate and correct I just felt the need to explain it plain terms which you programmers have a tendency to fail at.