DEA agent discusses Bitcoin in class today

[amencon]

My guess is that with the resources the US government has at their disposal (both manual and fiscal), not only could they probably find any silk road user if they really wanted to, but they could also probably locate the 1934 s penny that the user lost in a Walgreens parking lot on May 14, 1996.

Having worked as a defense contractor I would say the capabilities of the US govt are often over estimated.

It is more like:
The govt contracts to have a machine that locates pennies built.  It takes a couple years and millions of dollars but finally a contract is secured for $128M to have DOD penny locating machines mission ready in 5 years. 4 years into the project the administration will change and the new Secretary of Defense will make significant changes to the scope of the project (they now want it to locate dimes also).  Significant work will need to be scrapped and redesigned pushing the timeline back 7 years.  A couple years into the new project the CBO will report that prior estimates were invalid and the project cost has exploded to $1.3B.  Shortly before the project is completed major components will be completely redesigned and a new contractor will take over because now there is a "need" for penny locating machines to be "stealth".  Our enemies might be using stealth so we need to also.  Now nobody even knows what this vague requirement for "stealth" means so the project will be put on hold (but still burning $24M in taxpayer funds each year) while a separate project is launched to develop "stealth" technology.  Some years later (now two decades after original proposal) the stealth technology will be ready but it is incompatible with existing penny locating components.  Since that was outside the original contract it will be an additional cost.  A side note contractors are much better at writing contracts than the federal government.  The good news is integration will "only" cost $12M and take 18 months.  However ironically this is where Congress decides to put their foot down.  They end up spending $50M over 3 years in investigations, outside analysis, and contracts for alternative designs before concluding that while mistakes were made no laws were broken.

Finally the penny locating machines are deployed nationwide however 5 years prior the US mint had already stopped minting pennies and they are out of circulation.  A final contractor gets a juicy contract to securely remove the penny locating machines, dismantle them, and store the parts in case they are needed at some point in the future.  All together the project will take nearly 3 decades, cost $2.2B and never locate a single penny outside of testing.

My speculation is based upon the assumption that there is a lot of top secret stuff that some extremely intelligent people are working on.  If they can process the human genome, they can find some dude that leaves definitive traces of his actions through a computer.

I worked in a SCIF with TS SCI in the military and the incompetency and waste I saw daily was astounding.  I often had imagery of taxpayers gathering up piles of cash for the government to come pick up and truck to a facility where they paid workers $5/hr to shovel it into a furnace.

I was told it cost $50k to do the background check for my clearance.  After about a year or so I was told that administration lost all my paperwork (whoops!) and I got to be a paper shredder / groundskeeper with the seabees for a couple months while the whole thing was re-done.  As an experiment, one day I went the whole day without touching my mouse once to see if I could do it.

I'm sure there are groups in the government that are efficient and organized, but I believe that to be the exception and not the rule.  Everyone I trained and worked with had TS clearance and most weren't that intelligent.

[the joint]

My guess is that with the resources the US government has at their disposal (both manual and fiscal), not only could they probably find any silk road user if they really wanted to, but they could also probably locate the 1934 s penny that the user lost in a Walgreens parking lot on May 14, 1996.

Having worked as a defense contractor I would say the capabilities of the US govt are often over estimated.

It is more like:
The govt contracts to have a machine that locates pennies built.  It takes a couple years and millions of dollars but finally a contract is secured for $128M to have DOD penny locating machines mission ready in 5 years. 4 years into the project the administration will change and the new Secretary of Defense will make significant changes to the scope of the project (they now want it to locate dimes also).  Significant work will need to be scrapped and redesigned pushing the timeline back 7 years.  A couple years into the new project the CBO will report that prior estimates were invalid and the project cost has exploded to $1.3B.  Shortly before the project is completed major components will be completely redesigned and a new contractor will take over because now there is a "need" for penny locating machines to be "stealth".  Our enemies might be using stealth so we need to also.  Now nobody even knows what this vague requirement for "stealth" means so the project will be put on hold (but still burning $24M in taxpayer funds each year) while a separate project is launched to develop "stealth" technology.  Some years later (now two decades after original proposal) the stealth technology will be ready but it is incompatible with existing penny locating components.  Since that was outside the original contract it will be an additional cost.  A side note contractors are much better at writing contracts than the federal government.  The good news is integration will "only" cost $12M and take 18 months.  However ironically this is where Congress decides to put their foot down.  They end up spending $50M over 3 years in investigations, outside analysis, and contracts for alternative designs before concluding that while mistakes were made no laws were broken.

Finally the penny locating machines are deployed nationwide however 5 years prior the US mint had already stopped minting pennies and they are out of circulation.  A final contractor gets a juicy contract to securely remove the penny locating machines, dismantle them, and store the parts in case they are needed at some point in the future.  All together the project will take nearly 3 decades, cost $2.2B and never locate a single penny outside of testing.

My speculation is based upon the assumption that there is a lot of top secret stuff that some extremely intelligent people are working on.  If they can process the human genome, they can find some dude that leaves definitive traces of his actions through a computer.

I worked in a SCIF with TS SCI in the military and the incompetency and waste I saw daily was astounding.  I often had imagery of taxpayers gathering up piles of cash for the government to come pick up and truck to a facility where they paid workers $5/hr to shovel it into a furnace.

I was told it cost $50k to do the background check for my clearance.  After about a year or so I was told that administration lost all my paperwork (whoops!) and I got to be a paper shredder / groundskeeper with the seabees for a couple months while the whole thing was re-done.  As an experiment, one day I went the whole day without touching my mouse once to see if I could do it.

I'm sure there are groups in the government that are efficient and organized, but I believe that to be the exception and not the rule.  Everyone I trained and worked with had TS clearance and most weren't that intelligent.

Let me re-clarify my assumption...

I think that all top-of-the-line governmental agencies/personnel/projects are likely classified.  While I think agencies like the DEA are legitimate in the sense that they are given either objective or general goals and are expected to achieve them to a certain degree, I think the true capabilities of the government are kept hidden such that the general population only sees the broad surface rather than the dense underworkings. 

I suppose a speculative analogy would be science -- we can read all about on-the-horizon technologies in magazines like Popular Science, but my guess is the government has brilliant scientists who are well-aware of (or who have already developed) technology 20+ years ahead of our current time...the fun stuff like teleportation of poly-atomic substances or cloaking.  I also speculate this is true in the field of intelligence gathering, and I seriously wouldn't be surprised if the government has the ability to listen to and track any conversation had by virtually anybody, anywhere, at anytime. 

Now, keep in mind I understand the fine line between paranoia/conspiracy theories and simple plausibility.  But, seriously guys, tracking Bitcoin transactions can't be harder than much of what the government has already done.  If we can blast into space and STAY there or build a plutonium bomb, we can crack cryptographic hash functions.

[DeathAndTaxes]

I suppose a speculative analogy would be science -- we can read all about on-the-horizon technologies in magazines like Popular Science, but my guess is the government has brilliant scientists who are well-aware of (or who have already developed) technology 20+ years ahead of our current time...the fun stuff like teleportation of poly-atomic substances or cloaking.  I also speculate this is true in the field of intelligence gathering, and I seriously wouldn't be surprised if the government has the ability to listen to and track any conversation had by virtually anybody, anywhere, at anytime.  

Yeah except they can't.  You may not be aware but the CIA started a venture capital firm to invest in emerging high tech industries.  Why?  Because the explosion in productivity in the private sector has caused them to fall further and further behind in high tech fields like data analysis, distributed computing, crptography, wireless communication, etc.  When you combine that with the crushing bureaucratic insanity that has become the US federal govt and the complete dominance of the military industrial complex which siphons off obscene profits in bloated over-budget unnecessary systems you start to see that the federal govt isn't as leet any the Tom Clancy novels portray it.  

NASA can't even get to the moon anymore.  They lost most of that schematics and blueprints because they didn't have the budget or foresight to properly archive them right.  All that knowledge gone.  The Space Shuttle was suppose to be replaced in 1990 and we kept it running until this year with bailing wire and duct tape (killing a dozen astronaughts needlessly in the process).  Hell if weren't for the Russians and their 1970s era transfer pod we would have no choice but to de-orbit the international space station and watch that $150B project burn up on re-entry.

You don't need to fear the US govt seeing through walls, cracking uncrackable encryption, or analyzing your brainwaves.  No the reality is more mundane and scarier.  They will simply take your civil liberties away, bust into your house without warrant and hold you indefinitely as an enemy combatant.  Alternatively the President can sign your assassination order with no due process regardless of your Constitutional rights. Who needs fancy science when you simply use a police state to exercise control?  It is far cheaper and far more effective.  Throw a couple surprise twists in American Idol and your neighbors won't even notice it happening.

[MysteryMiner]

Science, but my guess is the government has brilliant scientists who are well-aware of (or who have already developed) technology 20+ years ahead of our current time...the fun stuff like teleportation of poly-atomic substances or cloaking.  I also speculate this is true in the field of intelligence gathering, and I seriously wouldn't be surprised if the government has the ability to listen to and track any conversation had by virtually anybody, anywhere, at anytime.

Now, keep in mind I understand the fine line between paranoia/conspiracy theories and simple plausibility.  But, seriously guys, tracking Bitcoin transactions can't be harder than much of what the government has already done.  If we can blast into space and STAY there or build a plutonium bomb, we can crack cryptographic hash functions.

Yes, and they can also levitate without using fart gases. The space travel and plutionium bomb is engineering and scientifically plausible. The ability to crack SHA256 hash function will ruin the Bitcoin, this is nothing to do with tracing bitcoin transactions to real life identities and transactions.

My guess the reality is more like:

You don't need to fear the US govt seeing through walls, cracking uncrackable encryption, or analyzing your brainwaves.  No the reality is more mundane and much scarier.  They will simply take your civil liberties away, bust into your house without warrant and hold you without due process as an enemy combatant.  Alternatively the President can have you executed without due process regardless of your Constitutional rights.
Who needs fancy science when you simply use a police state to exercise control?  Far cheaper and far more effective.  Throw a couple surprise twists in American Idol and your neighbors won't even notice it happening.

[RandyFolds]

I suppose a speculative analogy would be science -- we can read all about on-the-horizon technologies in magazines like Popular Science, but my guess is the government has brilliant scientists who are well-aware of (or who have already developed) technology 20+ years ahead of our current time...the fun stuff like teleportation of poly-atomic substances or cloaking.  I also speculate this is true in the field of intelligence gathering, and I seriously wouldn't be surprised if the government has the ability to listen to and track any conversation had by virtually anybody, anywhere, at anytime. 

Yeah except they can't.  You are aware the CIA started a venture capital firm to invest in emerging high tech industries.  Why?  Because the explosion in productivity has caused them to fall further and further behind the private sector.  Then you combine the crushing bureaucratic insanity that has become the US federal govt and the complete dominance of the military industrial complex which siphons off obscene profits in bloated over-budget unnecessary systems.

NASA can't even get to the moon anymore.  They lost most of that schematics and blueprints because they didn't have the budget or foresight to properly archive them.  The Space Shuttle was suppose to be replaced in 1990 and we kept it running until this year with bailing wire and duct tape (killing a dozen astronaughts needlessly in the process).  Hell if weren't for the Russians and their 1970 era transfer pod we would have to de-orbit the international space station (another project 15 years behind schedule and who's final cost was 5x the original estimate).

You don't need to fear the US govt seeing through walls, cracking uncrackable encryption, or analyzing your brainwaves.  No the reality is more mundane and much scarier.  They will simply take your civil liberties away, bust into your house without warrant and hold you without due process as an enemy combatant.  Alternatively the President can have you executed without due process regardless of your Constitutional rights. 
Who needs fancy science when you simply use a police state to exercise control?  Far cheaper and far more effective.  Throw a couple surprise twists in American Idol and your neighbors won't even notice it happening.

I agree with everything except your bitchin' about space. The US government is so far behind in technological frontiers that it is embarrassing. For christ's sake, local police can't even get their rape kits processed or their DNA evidence run, and that is barely high school level genetics these days. I was running an experiment with yeast and inducing and mapping double-crossover mutations with UV light this year with friggin seventh graders. I didn't learn that shit until college, and even now, a handful of years later, everything I learned is completely out of date.

Extrapolate that to technology, which is infinitely more expensive and equally complex, and you've got to realize the government can't keep up. It's just like any industry...bigger=bloated. The little corner store might have some kids swipe some candy, but they run a tight ship because they can see the whole thing. Scale that up to Best Buy, and they are dealing with massive credit fraud, employee theft, regular theft, vandalism, liability, low-wage workers driving forklifts and operating dangerous machinery...They are huge so they can absorb it, but they can't keep their ducks in a row. I imagine that there are some guys in the CIA who could track you down through a couple btc addresses and a throwaway gmail account and social engineer you into oblivion, just like there are a brilliant PhDs driving truck for a living. They don't make up the standard of the industry, in this case bloated shitty underfunded bureaucracy.

Space is fucking awesome. It is a frontier. It needs to be conquered. If I wasn't math-tarded, I would have gone into aeronautics to try and see it. Instead, I settled on marine biology, my closer frontier.

That turned into an unintentionally long rant. Apologies.

[DeathAndTaxes]

I agree with everything except your bitchin' about space.

  I think you misunderstood or I wasn't clear. I consider space exploration to be essential to the continued technological evolution of the human race.  I was just pointing out NASA awesome track record from 1950s to 1980 and then blundering two decades of mostly failures, project overruns, missteps, and lack of cohesive direction.  NASA is an example of how bloating inefficient government programs become never ending blackholes for money with little tangible progress.

Now NASA has done some good things post 1980s but it lost its drive, it lost talent to private companies, and it got crushed under never relenting layers of bureaucratic nonsense.

Space is fucking awesome. It is a frontier. It needs to be conquered. If I wasn't math-tarded, I would have gone into aeronautics to try and see it.

I agree 100%.  I just find it sad that the agency who went to the moon on 1960s technology now admits they can't do it today.  Somehow instead of advancing they regressed and lost invaluable information.  Information that if it had been made open source (a foreign concept in 1960s) would still at least be alive today.

If it were up to me NASA budget would be larger but everything they do would be open sourced.  Yeah I know it will never happen.

[RandyFolds]

I agree with everything except your bitchin' about space.

  I think you misunderstood or I wasn't clear. I consider space exploration to be essential to the continued technological evolution of the human race.  I was just pointing out NASA awesome track record from 1950s to 1980 and then blundering two decades of mostly failures, project overruns, missteps, and lack of cohesive direction.  NASA is an example of how bloating inefficient government programs become never ending blackholes for money with little tangible progress.

Now NASA has done some good things post 1980s but it lost its drive, it lost talent to private companies, and it got crushed under never relenting layers of bureaucratic nonsense.

Space is fucking awesome. It is a frontier. It needs to be conquered. If I wasn't math-tarded, I would have gone into aeronautics to try and see it.

I agree 100%.  I just find it sad that the agency who went to the moon on 1960s technology now admits they can't do it today.  Somehow instead of advancing they regressed and lost invaluable information.  Information that if it had been made open source (a foreign concept in 1960s) would still at least be alive today.

If it were up to me NASA budget would be larger but everything they do would be open sourced.  Yeah I know it will never happen.

Gotcha. I am interested to see what comes of the privatized shuttle industry, if it comes to fruition. We need to start another space race for morale.

[Exonumia]

If you see him again, get him to verify that silk road is owned and operated by the DEA

[astana]

I doubt DEA can keep any close tabs on bitcoin, it is simply anonymous

You want to make a bet on that? It's obviously being tracked, your dumb to think otherwise.

[rainingbitcoins]

The DEA prides itself on big hauls and tends to leave small stuff to the locals. Success in their line of work is measured in kilos and tons.

I can see them making a bit of noise about SR crackdowns to discourage use of the site, but it's hard to imagine them dedicating a ton of technological resources to a relatively tiny number of people selling each other dime bags over the Internet.

I could be wrong, but it seems like it would be a waste of a lot of time, energy, and money for very little return. Granted, that statement could apply to all drug law enforcement.

[quartz92]

Interesting...haha

[MaxSan]

The DEA prides itself on big hauls and tends to leave small stuff to the locals. Success in their line of work is measured in kilos and tons.

I can see them making a bit of noise about SR crackdowns to discourage use of the site, but it's hard to imagine them dedicating a ton of technological resources to a relatively tiny number of people selling each other dime bags over the Internet.

I could be wrong, but it seems like it would be a waste of a lot of time, energy, and money for very little return. Granted, that statement could apply to all drug law enforcement.

This.

[cablepair]

You don't need to fear the US govt seeing through walls, cracking uncrackable encryption, or analyzing your brainwaves.  No the reality is more mundane and much scarier.  They will simply take your civil liberties away, bust into your house without warrant and hold you without due process as an enemy combatant.  Alternatively the President can sign your assassination order with no due process regardless of your Constitutional rights.  
Who needs fancy science when you simply use a police state to exercise control?  Far cheaper and far more effective.  Throw a couple surprise twists in American Idol and your neighbors won't even notice it happening.

this is the only statement here that makes sense

[the founder]

I believe any threat to bitcoin isn't going to come from the FBI,  Homeland Security or the DEA...  the honest to goodness threat to bitcoin is going to come the IRS.

At some point in the future someone is going to have a bunch of bitcoins sold at Mt.Gox or whatever,  then when he tries to transfer the money to his bank account that's when the IRS is going to start asking questions..  freezing accounts.. etc etc...   

That's when it becomes a problem,  not when when the transfers are in bitcoin,  but when someone tries to convert it to another currency...   as long as the guy hangs out in bitcoin only most likely he is fairly safe... but the second it gets converted the IRS is going to start asking questions...

That's just my two satoshi's.

[strider007]

If you are a SR buyer, encrypt your wallet and never sign for a delivery, you are fine. You can only be busted by a PI if they get you in a controlled delivery which requires a signature. And the idea that the USPS would spend resources on a controlled delivery for personal use amounts of weed or pills is laughable. If you are buying a kilo of cocaine or heroine however, expect a controlled delivery and if you don't sign, expect a warranted search of your house/apt.

[Steve]

I believe any threat to bitcoin isn't going to come from the FBI,  Homeland Security or the DEA...  the honest to goodness threat to bitcoin is going to come the IRS.

At some point in the future someone is going to have a bunch of bitcoins sold at Mt.Gox or whatever,  then when he tries to transfer the money to his bank account that's when the IRS is going to start asking questions..  freezing accounts.. etc etc...   

That's when it becomes a problem,  not when when the transfers are in bitcoin,  but when someone tries to convert it to another currency...   as long as the guy hangs out in bitcoin only most likely he is fairly safe... but the second it gets converted the IRS is going to start asking questions...

That's just my two satoshi's.

But in what sense is that a threat to bitcoin?  If that person is properly accounting for income or gains from bitcoin, they're not breaking any law and they are paying their taxes.  If they aren't, well, then that person has an issue with the IRS, but it's not really a bitcoin or an exchange problem.  It might cause the IRS to pass some new regulations regarding individual and business reporting or record keeping when it comes to bitcoin.  This might even prompt people to write new software that helps them track things like capital gains on bitcoin investment, etc.  Now, of course, people can operate entirely underground (both individuals and merchants), but that happens all the time today, irrespective of bitcoin.

I think money laundering is the more immediate issue.  It's an issue that the exchanges need to be very careful about and make sure they're following all the KYC and AML laws.  Personally, I think law enforcement needs to give up trying to stop money laundering.  There are just too many ways criminals can launder money these days (again, irrespective of bitcoin).  They should focus on other techniques than tracking or stopping financial transactions (and tracking everyone's financial transactions is too great of a threat to people's liberty for it to be an acceptable law enforcement tool).  It may take a while, but I think in time, law enforcement and the public at large will arrive at similar conclusions.

[BadBear]

The DEA prides itself on big hauls and tends to leave small stuff to the locals. Success in their line of work is measured in kilos and tons.

I can see them making a bit of noise about SR crackdowns to discourage use of the site, but it's hard to imagine them dedicating a ton of technological resources to a relatively tiny number of people selling each other dime bags over the Internet.

I could be wrong, but it seems like it would be a waste of a lot of time, energy, and money for very little return. Granted, that statement could apply to all drug law enforcement.

That's exactly why they would do it, they need to justify their budget if they want to keep it.  Going after "a webring of drug dealing kingpins" goes over well in the press and in their budget review. 

[strider007]

The DEA prides itself on big hauls and tends to leave small stuff to the locals. Success in their line of work is measured in kilos and tons.

I can see them making a bit of noise about SR crackdowns to discourage use of the site, but it's hard to imagine them dedicating a ton of technological resources to a relatively tiny number of people selling each other dime bags over the Internet.

I could be wrong, but it seems like it would be a waste of a lot of time, energy, and money for very little return. Granted, that statement could apply to all drug law enforcement.

I think you hit the nail on the head regarding "waste of time, etc...". The reason silk road isn't going anywhere anytime soon is the size and scope. It is naturally restricted to a small internet community (relatively speaking) due to technology requirements.

Getting there with the Tor network is pretty straight forward but then going through the trouble of learning how bitcoin works, how to get funds from your hands to an exchange, how to then get the bitcoin to your wallet, then to SR will make your average user's head spin. Then throw in the fact that most seller's require PGP for messages within SR and the user now has to learn to use PGP ...suddenly the average user's head explodes. Easier for them to find some shady friend of a friend to get stuff from on the street.

This limited flow on SR would be like the cops wanting to spend hundreds of thousands (if not millions) of dollars in man hours and technology to bust a a few kids selling playboy magazines to a bunch of 15 year olds when real life politics and public relations force them to do the morally superior thing, i.e., spending those same resources hunting down and prosecuting peddlers of child porn.

[sunnankar]

The US government is so far behind in technological frontiers that it is embarrassing. ...

Extrapolate that to technology, which is infinitely more expensive and equally complex, and you've got to realize the government can't keep up. It's just like any industry...bigger=bloated.

I am surprised no one has talked about Mises and his work in Human Action about government's inability to perform Economic Calculation. That is the root problem of their inability to allocate resources without tremendous waste and there is nothing they can do about it. And this is even more pronounced with technology which because of complexity that requires greater division and specialization of labor.

Plus, it all comes down to the cost of protection and return on investment from extortion. Sure, if the NSA is really after you then they are going to find you and could even run a Tempest attack via Van Eck phreaking if they wanted to. But even in bureaucracies there are limited resources which have to be allocated. DEA agents are going to go after the targets where returns from civil forfeiture are highest because that is how their budgets are funded.

Sure, tracking bitcoin transactions is possible but is it probable? Probably not because tracking that takes 2 minutes with Paypal or a credit card takes hundreds of hours and tens of thousands of dollars with bitcoin. The cost of protection massively plummets while the return on investment from tracking or attempting to seize, etc. skyrocket at exponential rates. Thus, Bitcoin functions like all other forms of cryptography with intractability and therefore creating strong surveillance protection.

[moni3z]

Feds have broken up highly sophisticated Eastern Euro hacking groups that stole credit cards and operated in total anonymity by just infiltrating the organization, gaining trust and waiting for them to drop their comsec eventually, or bleeding them for intel. Obviously they are doing the same to SR. I remember SR 'hiring' for database admins in the news once you can be assured all the applications for the job were feds.

If they are eventually busted it definitely won't be due to bitcoin txn tracking, it'll just be informants and entrapment like they've always done. Sabu is probably their database admin working from FBI hq.

Stands to reason that whoever runs it probably runs their own bitcoin hosting company as well, since you wouldn't trust that kind of a server in anybody else's hands and the front company would help you launder the funds. You would also be the guy they go to and ask to retrieve the box should anything happen, allowing you to cut the power to it or push your deadman switch to nuke evidence before handing it over. Lot's of methods that don't involve any transaction tracing the feds can utilize though I would imagine one day SR will shut down, I wouldn't want to run something like that forever when you had enough money to retire to a beach mansion and be able to sleep without worrying about door being kicked down