You can't prove if someone is Holding Bitcoins | Indian Crypto Ban

[apoorvlathey]

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?

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[eaLiTy]

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."

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.

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?

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.

[mk4]

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

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.

[Artemis3]

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?

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 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.

[Jating]

i believe there should be ways to know if someone hodls anyway, that shouldn't be an issue, but should there be any issue with cryptocurrency users? Let's agree there are internet fraudsters many of which are the reason these governments are afraid of accepting them. maybe soon they will reconsider.

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.

[squatter]

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.

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.

[shield132]

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?

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.

[salty]

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.

[timerland]

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!

[seoincorporation]

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.

[Artemis3]

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.

[Oceat]

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.

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.

[Thirdspace]

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?

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

[coin-investor]

i believe there should be ways to know if someone hodls anyway, that shouldn't be an issue, but should there be any issue with cryptocurrency users? Let's agree there are internet fraudsters many of which are the reason these governments are afraid of accepting them. maybe soon they will reconsider.

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.

[timerland]

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.

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.

Seize Exchange Records

Smart people will use vpns and DEXs.

Offer a bounty to anyone that reports a Bitcoin User.

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?

Monitor ISPs to see if a personal Bitcoin Wallet is maintaining connections to a list of know bitcoin nodes.

Tor + VPN

Pretend to sell items on a dark site for bitcoin and record the shipment addresses.

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

[omone1]

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.

[Slow death]

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.

[Vaskiy]

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."

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.

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?

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.

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.

[OmegaStarScream]

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.

[CryptopreneurBrainboss]

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'.

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.