Is Bitcoin Really So Evil That Sen. Chuck Schumer Must Shut it Down?

Sen. Charles Schumer, last seen attacking FourLoko, Joose, and "some of the other" caffeinated alcoholic beverages that he says are known as "blackouts in a can," is teaming up with Attorney General Eric Holder to attack Bitcoin, the peer-to-peer money substitute that is supposedly a haven for the buying and selling of illegal drugs online:

The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days.

More here.

On June 1, Reason's Katherine Mangu-Ward received (and published) this email from a Bitcoin developer:

Attempting major illicit transactions with bitcoin, given existing statistical analysis techniques deployed in the field by law enforcement, is pretty damned dumb.  🙂

The developer notes also "if Silk Road truly permits deposits on their site, that makes it even easier for law enforcement to locate the 'hub' of transactions." (Side note: I would have expected a Bitcoin guy to have evolved beyond emoticons circa 1992.)

So, is Bitcoin good or bad or indifferent? Here's a video featuring Jerry Brito of Mercatus telling you everything you need to know about Bitcoin but were afraid or embarrassed or too high from illegal drugs you bought using bitcoins to ask:

Comments

[MNG]

I've said it before and I will say it again: Shumer is the political equivalent of an ambulance chasing lawyer, he's like something right out of Bonfire of the Vanities. Blech.

[JoshInHB]

In this case he's trying to protect his Wall Street patrons.

[Middle Age Crazy]

Also, I believe a TEC-9 is correctly used one-handed. Sideways. Without a pussy-ass wristguard.

That bitch should learn how to represent.

[Resto Druid FTW]

+100

I LOL'D so hard at this^ I had several peeps stop by my office to see what was so funny.

[Middle Age Crazy]

I kid because I love. Check out Chuck's evil grin. A man that enjoys firearms that much can't be all bad.

[Brandon]

The hell he can't. Have you heard of Chuck Schumer?

[TheZeitgeist]

What makes him so bad is he wants to take my firearms away. I'd take my Dragunov @300m versus Senior Weiner and his TEC-9 any day. Ooo-rah. Fuck Chuck.

[robc]

My problem with bitcoin is it is YAFC - yet another fiat currency.

Its a good fiat currency, but its still a fiat currency. And it has the disadvantage of having to be exchanged for a different fiat currency in order to pay taxes (the one thing that provides value to the $, that the US government will accept it for taxes).

[roystgnr]

The US dollar is a fiat currency because its only intrinsic value is "US citizens need some to pay their taxes with", and it's considered a risky fiat currency because it's supply is limited only by politician's promises.

Gold is considered the anti-fiat currency... but is that because of its intrinsic value of "nice for overpriced electronics and shiny Veblen goods"? Or is it because the supply is limited by laws of physics and geology?

Bitcoin is potentially better than gold in terms of limited supply (the laws of mathematics tend to be even more solid than those of science), but depending on future events it could be better than gold or worse than even the dollar in terms of intrinsic value (how valuable is the ability to make pseudonymous payments? It depends...)

I could imagine Bitcoin becoming something of a more-extreme-than-gold hedge against bad government. Precious metals prices bubble up when people worry that inflation might run rampant again. Bitcoin prices might similarly bubble up in response to worries of much higher taxes/restrictions on non-black-market transactions, or worries about seizures of less-easily-hidden wealth.

But that only works if they make Schumer's whining moot. If Bitcoins are going to be useful to hedge against crooked governments, it needs to be technologically impractical for crooked governments to shut the system down. I suspect one of these days the law will say "anything that vaguely resembles an anonymous remailer is illegal", and start taking down Bitcoin/Freenet/Gnutella/Tor/etc. all at once.

[roo]

So long as there's a demand for a medium of anonymous online exchange with extremely cheap transaction fees, there's going to be some 'intrinsic value' in bitcoins - at least until someone designs a similar digital currency that works even better.

[TheZeitgeist]

My problem with bitcoin is it is YAFC - yet another fiat currency.

Its a good fiat currency, but its still a fiat currency. And it has the disadvantage of having to be exchanged for a different fiat currency in order to pay taxes (the one thing that provides value to the $, that the US government will accept it for taxes).

Bitcoin + egold = fiat solved -> and illegal tomorrow because it'd scare the good ol' boys that much that fast.

[Restoras]

Chuckie Shroomer is more concerned about government losing its monopoly power over money, and the subsequent decline in congressional power, than he is about teh illissitt drugzz.

[Almanian]

🙂

I'm Sooooooooo 1992....

[Warren]

*ring ring*
Hello?
It's for you. 1992 called, they want their emotilexicon

[Shocked]

You know what else is used to facillitate the drug business, roads!

[ClubMedSux]

And US dollars.

[Almanian]

And plastic baggies, so ZipLoc? and Glad?

[The Ghost of Hitler]

Whew!

[Sudden]

You were worried it was ging to be high speed rail?

[Anonymous Coward]

Prepaid cell phones?

[seguin]

SOMALIA

sorry, thought that was what went after Roads.

[Wind Rider]

Why isn't there a national discussion about how evil Chuckie Schumer is?

Well, this somewhat quiet corner of the intertubes will have to suffice in the meantime. . .

[P Brooks]

The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins.

wait, whut?

Did everybody but me throw their little pieces of paper with Presidential portraits away? I'm always the last to know.

[Wind Rider]

If the elitist schmuck had been in a Wally World in the last 10 years he would have noticed that one can purchase virtually untraceable pre-paid debit cards for cash, that can be used for electronic transactions. But even if he had heard of them, obviously, no one is smarter than Chuck about how dope deals get done. . .

[Matrix]

how, exactly, are bitcoins untraceable? I don't know anything about them, but if it is some website or service, surely there is a way to trace them that the company would know about in order to prevent people from pirating this e-money.

[Wind Rider]

The only thing untraceable here is Chuckie's logic. Other than to be a 'look at me' whore, that is.

[Pip]

MOOOOOOOOOOOBS!!!!!!!

[robc]

Hence the "statistical analysis techniques" quote above.

They are anonymous. You can trace a bitcoin from anonymous account A to anonymous account B to anonymous account Z.

The tricky part is connecting the account to a person. Or, on the other end, creating it without it being connected to you.

[heller]

Normally Bitcoins can be easily traced, but there are a number of electronic "banks" that can be used to launder it. Basically you put money into the "bank" where it becomes an anonymous part of the total amount of bitcoins being held, and the person you are sending the money to can then withdraw the proper amount. But the bitcoins he gets aren't the same bitcoins as the ones you put in, so they can't be traced correctly.

[heller]

The only way this can fail is if law enforcement uses statistical analysis to match deposits to withdrawals. The larger the transaction, the easier it is to match. But numerous small transactions will be imperceptible to analysis.

[Brett L]

I think that's the point of the respondant in the article. If every time you put 10 bitcoins in a drug dealer takes 10 out, it gets easy. If you put in random amounts and make purchases disagregated from your deposits, it is more work for you, but harder to detect.

[Warren]

BitCoins are fully traceable. However, they are traceable to an address. If one is careful, one can keep their identity from being linked to their BC addresses. But it takes some care.

[Matrix]

Leave it to politicians who have no understanding of an issue/product/service and yet pressure companies and individuals into stopping the sale of such product or service.

Can we not just put these people on a boat with no life preservers or life boats, sail it into the middle of the ocean, and sink it in shark infested waters?

We talk about 100 lawyers at the bottom of the ocean "a good start", but what about politicians? Though, I suppose many, if not most, of them are lawyers.

[Wind Rider]

The day Chuck Schumer falls victim to a completely unforseen horrific and very public fatal accident no one but he can be blamed for that makes Joe Theismann's leg snap footage look like a Care Bears re-run is the day I'll put on a rented suit and do the freakin chicken dance.

[Almanian]

Wind Rider, that treatise right there was a kegfull of AWESOME! Damn. Awesome.

[Episiarch]

Yes...yes. I hate Chuckles with every bone in my body, and if something unfortunate were to happen to Chuckles, it would be a great day.

[alan]

I would love to make a PNG flip of his head exploding like a watermelon my screensaver.

[alan]

And unless it's a shitweasel attack that occurs in the privacy of his estate bathroom, we will definitely have footage because that motherfucker loves him some camera.

[MaestroBud]

C'mon now... The real sharks would build a bridge out of their backs to the closest land mass so lawyers could escape, if for no other REASON than professional courtesy.

[Pope Jimbo]

How about putting them on the Golgafrinchan Ark Fleet Ship B?

[Mad Scientist]

How about we set up a Matrix-style reality simulator. Take the lawyers and politicians and plug them into that bad boy. They could then regulate and law-talkin'-guy to their hearts' desire but harm only each other. While their brains are off in la-la land, we could use their bodies for medical experiments. Everyone wins!

[Virginia]

Chuck is such a bitch to Wall Street.

[Politician]

Leave it to politicians who have no understanding of an issue/product/service

Meh. We have the big picture.

[Wind Rider]

And follow certain politicians on Twitter while claiming to be a 17 year old girl can get those 'big pictures' in your inbox, as well, ifyaknowatImeanandIthinkyoudo wink wink

[Wind Rider]

Whew. I feel completely safe and fuzzy with the knowledge that Chuckie is absolutely positive that PayPal CAN NOT be used for illicit transactions, in any way, shape, or form.

[TraderTimm]

I find it interesting that there isn't a similar crusade against the dollar. Cash transactions flow in every city, every day for illegal drugs. While police do enforce the current system of laws against such users, there isn't an equal effort to be rid of the dollar.

So why bitcoin? Because it removes central control. This is the real issue behind the smokescreen, which the "War Against Drugs" conveniently obfuscates. Just like cash, bitcoin has the same potential to be used in activities that may not be legal, depending on the country they occur in.

But I doubt Mr. Schumer will be hard-pressed to relieve himself of the cash in his pocket, even though a majority of them have traces of cocaine, another side-effect of drugs flowing through our society.

There are more important battles being fought here, and we shouldn't forget the ultimate goal of bitcoin is freedom to conduct transactions with whom we choose, not dictated by corporate-financed political puppets.

[Brett L]

The war on cash is real and ongoing.

[Pope Jimbo]

Double-T, you can't get all your bitcoins seized under dubious asset forfeiture laws by a cop during a traffic stop like you can with cash.

Who but a criminal would carry so much cash around with them?

I'm sure that if you could grab large amounts of bitcoins from people traveling through your fair city, the LEO's would be cool with that too.

[Captain Obvious]

They could seize your computer hardware and thus your bitcoin wallet if you're not smart about it.

[SugarFree]

But, but... Schumer has a JD from Harvard! Surely his credentials put him above reproach.

[proegg antichicken]

but that's just the opinion of one librarian. Surely we could assemble a super team of phds from the best institutions to show us the true evil behind bitcoin. It's the only way to be sure.

[wylie]

TOP. MEN.

[Channeling MNG]

JEW!!!!!!!11!!1

[MNG]

My, your lil' feelings are hurt this morning young man!

[MNG]

To quote Woody Allen "Even Harvard makes mistakes."

[WixZoo]

Yup, gonna be another E-Gold I bet.

http://www.complete-privacy.no.tc

[Thomas]

Most Bitcoin transactions are legit, so if you are going to make it illegal, then you should also make the US$ illegal. The Senators are in the pocket of CitiBank, who won't tollerate any competition, even so tiny as Bitcoin.

[Darren]

Schumer's the same doofus who tried to go after Internet firearm auction sites, before realizing that such sales still have to go through FFL dealers and background checks. Press conference first, facts later, if ever.

[P Brooks]

Schumer has a JD from Harvard! Surely his credentials put him above reproach.

Maybe something about Bitcoin prevents attorneys from billing 115 hours per day. That would impose a hardship.

[Tim]

Wiener!

[Spray]

Someone at an online community I frequent literally received minor brain damage from the heat his bitcoin mining setup generated in the room he lived in. I don't think it should be banned, but it's definitely funny to watch people kill themselves over a drug and child porn-based currency.

Honestly, bitcoin has long just been a place for amateur finance experts to experiment without putting substantial money on the line in the real stock market. I don't like government suits trying to regulate/ban it, but I also think the people defending it as the future of currency are completely deluded.

[toxic]

I'm sorry, you need to explain that mining/brain damage story again. It makes no sense.

[robc]

Bitcoins take a fairly serious amount of computing power to "mine". Im guessing someone overheated a small apartment.

[proegg antichicken]

Mining? Bitcoins, chinese gold farming? Specie? I'm missing the whole story and am a little bit confused. Which armada is attacking?

[lurkerbee]

Oops I accidentally the bitcoins and now am braindamaged.

Makes perfect sense.

[Wind Rider]

So, basically what you're telling us is that bitcoin is yet another in the growing list of practically non-existent issues that Chuckie has made an art of using to look like he's a big important man, doing big important things, very, very busily, all to make your fucking life better.

With each new tidbit of information about this perfectly good waste of a disposable afterbirth, the more I realize that I think of him in far too charitable terms.

[phryxian houndmaster]

Show me the miner or it didn't happen. Minor brain damage begins around what, 107 F? How did his operation heat a room sufficiently to prevent his natural heat shedding mechanisms? Did the rig catch fire? Did he fall asleep while attempting to use his own head as a temporary heat sink? I can't fathom a supposedly sentient being damaging itself this way without already possessing more than "minor" brain damage.

Now if you meant minor brain damage as a pun on miner, and this whole post was a joke, well done.

[Warren]

I hope they go after BitCoin hard... and fail. That will be the game changer. The whole point of BitCoin is that it's beyond the reach of evil governments. If it's not beyond their reach, then the sooner it fails the better. But if it withstands a gubmnt crackdown well, It's morning in America, and the rest of the world too.

[proegg antichicken]

It's morning in America, and the rest of the world too.

DOOM.

[Warren]

BC may be DOOM antidote.

[Gov]

Ultimately, money is only useful if you can purchase something with it. And most things worth purchasing are perfectly controllable by the government.

[Mattrue]

Yeah, like drugs, real estate investments, college tuition, medical expenses... all perfectly "controlled"!

What about my time? How are they going to control that?

[roo]

If you have even a little knowledge of how bitcoin and silkroad work it becomes even funnier since, despite Schumer's protestations, you CAN'T shut down a decentralized p2p network or seize a tor domain.

In fact, my first reaction upon seeing this story as well as several of my bitcoin-bug friends was laughing at how totally he misunderstands how this shit works.

[Anonymous Coward]

But he doesn't have to understand how it works. He's a Senator in the Congress of the United States.

Now shut it down or Al-Qaeda/Drug Cartels/Lord Xenu will win the future!

[proegg antichicken]

bullshit Walter, they want Lord Xenu to win-the-future.

[Warren]

Isn't it a series of tubes? Can't they just install a check-valve or something?

[Brett L]

+1

[Captain Obvious]

I've said it before and I'll say it again. Silk Road doesn't have one single bitcoin address that all payments are sent to. There is no 'central hub'. If a payment is sent to one address to hold it, then sent to the recipient, it never touches any of the other transactions. Bitcoin is completely anonymous, and although it is possible to trace individual coins back to their source, there are also bitcoin laundering operations that advertise openly, and it is simple to clean your coins using other creative methods. Plausible deniability is a few clicks away.

If the government wants to go after bitcoin, they're going to need to go after the buyers of illegal substances by setting up fake deals. There's little chance they're going to be able to bust the dealers, they will have to go after the small fries. Due to the reputation system in place this is going to be a serious uphill battle.

I can't wait to see this play out.

[Warren]

+1

[leviramsey]

The only thing that will happen if the DEA tries to set up fake sales on Silk Road to ensnare buyers is that the current Silk Road dealers will have an oligopoly. A couple of busts of buyers who are buying from new dealers, and nobody will buy at any price from a dealer who wasn't around before a certain date and who doesn't have massive positive feedback.

[Warren]

You lack imagination. If the n00bs were all feds, you could order felony weights and send it to Officer Friendly three blocks down.

Even if it was only a few sellers, it'd be worth it to order occasional misdemeanors for your local LEO.

It's all about the love.

[R C Dean]

And most things worth purchasing are perfectly controllable by the government.

If you're willing to shoot enough dogs, sure.

[James Anderson Merritt]

By opposing bitcoins, Schumer opposes the freedom that our ancestors (and more than a few of our contemporaries) fought and died to preserve. Schumer is thus unamerican. Too bad we can't deport him.

The harm that people might cause through "untraceable" transactions is negligible in comparison with the harm that people might cause when every transaction is traceable. Admitting the potential damage of the former, I still prefer it to the latter.

[scarpe Nike Store]

is good

[Jeff]

Evolved beyond emoticons? Well aren't you a self-righteous... whatever, bye.