Tuesday, 4 May 2021


Thanks to my new found awareness that comments now require me to proactively seek them out and approve or, in the event they are spam, delete them, this blog has its first comment in a while. With regard to Bitcoin and it's traceability by law enforcement, Cats of Oxford wrote:

The question is, if Bitcoin is so easily traceable by law enforcement, why have we not been able to track down and stop the ransomware attackers who take payment in Bitcoin, nor even to work out who is behind the number of high profile "Bitcoin thefts" in the currency's history...

The comment by The Irrelevant Investor (Michael Batnick) was that:

"Law enforcement would love nothing more than for criminals to use a financial instrument whose history can clearly be traced, like Bitcoin."

When Batnick was challenged on this point, his reply was a rather weak:

"The US government seized roughly 70,000 Bitcoin from the Silk Road case last November, or more than $3 billion at current values."

Technically true, but from what I understand, this was after the authorities had seized the records of Silk Road, rather than from tracing the transactions. As someone on the thread said, the equivalent of Al Capone's accountant being turned.

This paper "In Math We Trust" published in March by One River Digital Asset Management has this opinion:

Reasonably, there are also concerns about the use of Bitcoin by nefarious actors. Yet, the immutable nature of the blockchain ledger has worked to the great advantage of law enforcement officials for tackling criminal behavior (Kathryn Haun’s journey at the Department of Justice is a terrific example). Forfeiture of digital assets is also far more successful than with cash criminal activity.

Who's Kathryn Haun? you may ask. Well, apparently she was asked in 2012 to look into shutting Bitcoin down.

But Haun quickly decided the currency itself wasn’t what needed probing.

“It would have been akin to saying ‘let’s go prosecute cash,’” Haun said.

Instead, her department prosecuted multiple cases where bitcoin was being used for extortion and white collar crime. In some cases, the technology behind bitcoin, known as blockchain, actually helped the department solve cases.

So it's probably the blockchain technology that Batnick was basing his opinion on. While several exchanges have been hacked with huge losses going back many years, there's also this problem reported on by the New York Times earlier this year:

"of the existing 18.5 million Bitcoin, around 20 percent — currently worth around $140 billion — appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis.

Unfortunately Bitcoin lost 4% yesterday, and Tesla lost almost as much, so not the best of starts to a month, but there's a long way to go yet. 

No comments: