[mantraxC]

I posted this because I found it of particular interest that the blackmailers ask for payment in Bitcoin.

It makes you think if Bitcoin is turning into a giant example of "be careful what you wish for".

We have exchange after exchange get hacked and legit Bitcoin users losing their money, and now Bitcoin enables extortion schemes that couldn't work so effortlessly before.

Where is this going?

[Shinkei]

Bitcoin is only pseudoanonymous. At some point, the 'bad actor' has to access 'legitimate' banking institutions to exchange the Bitcoins to fiat and that is the weakest link. It requires reporting to relevant tax or other authorities based on arbitrary (and secret) amounts, but targets money laundering, drug trade, gamlbing, etc.

I suppose if I had to throw a potentially disruptive idea out there, you could create a database of 'blacklisted addresses.' Let's say when Bitlocker came out, you entered that address into a database and it was verified as being associated with this scam, well it is trivial to track those coins between addresses and every address it enters is blacklisted until it enters a mixer or exchange, at which point you have a potentially complicit corporation that you could actually target with the subpoena or other legal action for discovery of IPs, login, etc.

[dsl]

People have suggested this before. A bad actor then just takes 100 illicit bitcoins and sprinkles them in random amounts across many addresses, 11 to himself at another address, 6 to a non-profit, and 14 to you. You are now indistinguishable from the bad guy.

[Shinkei]

I can't say I would complain if thousands of dollars was given to my address, but you are right... it would represent a difficult problem for enforcement and creative people would come up with clever workarounds.

[mantraxC]

> "At some point, the 'bad actor' has to access 'legitimate' banking institutions to exchange the Bitcoins to fiat and that is the weakest link."

And on the contrary they can do the exchange in, say, Nigeria. So Bitcoin's weakest link is also the law enforcement weakest link, because no one has authority over the entire world, and there are plenty of spots where you can do the exchange without trace.

[bunderbunder]

> Where is this going?

Not far's my guess. If BTC gets too popular as a tool for extortion and money laundering, then the authorities in developed countries are going to start carefully monitoring people who sell large quantities of BTC for sovereign currency or commodities. It would just be another part of their general efforts to combat organized crime. That would make major speculators feel less welcome. If major speculators decide to take their ball and go play somewhere else, the price of BTC will probably tank. That'll discourage everyone else. At which point BTC becomes a terrible medium for money laundering because nobody wants to buy them. I also suspect that the relative anonymity of any one transaction is closely related to overall transaction volume in the BTC economy.

[dublinben]

These organizations aren't in developed countries, so their potential cash-outs wouldn't be noticed. Going forward, I would expect even more of the expenses of running an online criminal operation to be payable in BTC, so you wouldn't even need to convert it.

[Tloewald]

Bitcoin — assuming it works — also becomes the perfect currency for kidnappers and blackmailers. Awesome, huh?

[jgrowl]

You mean like straight cash has been up until now?

[sanswork]

Yup. Except straight cash still needs someone to physically collect it which leaves a point of failure in the crime and a good place for authorities to catch the bad guys. Bitcoin removes that.

[kolinko]

But gives another ways to track the money that was paid. It's a matter of authorities catching up with the technology.

[sanswork]

The very nature of it makes it much easier for criminals to avoid authorities once payment is made though. Sure you can screw up and do something stupid like send it to coinbase and cash out but there are lots of ways to use it without the authorities being able to determine your identity or location.

[thinggowrrong]

yup, we can't have the cake and eat it too. we have to learn how to minimize risks and keeping bitcoin alive