The FBI's Giant Bitcoin Wallet

SonicSpike writes with a story about the huge amount of bitcoins owned by the FBI. "In September, the FBI shut down the Silk Road online drug marketplace, and it started seizing bitcoins belonging to the Dread Pirate Roberts — the operator of the illicit online marketplace, who they say is an American man named Ross Ulbricht. The seizure sparked an ongoing public discussion about the future of Bitcoin, the world's most popular digital currency, but it had an unforeseen side-effect: It made the FBI the holder of the world's biggest Bitcoin wallet. The FBI now controls more than 144,000 bitcoins that reside at a bitcoin address that consolidates much of the seized Silk Road bitcoins. Those 144,000 bitcoins are worth close to $100 million at Tuesday's exchange rates. Another address, containing Silk Road funds seized earlier by the FBI, contains nearly 30,000 bitcoins ($20 million)."

Re:Can it be invalidated?

[ASDFnz]

Sort of...

If 51% of miners got together they could in theory stop the FBI from using that wallet (it is actually an address, not a wallet but that is another story).

They would have to continue to do so though, and once they stop the FBI could then use the funds. One of the tennents of bitcoin is that it is very hard (if not near imposable) to confiscate/block/invalidate etc someone else's funds.

What the feds plan to do:

[alphonse23]

http://www.forbes.com/sites/kashmirhill/2013/10/04/fbi-silk-road-bitcoin-seizure/ [forbes.com] The feds plan to eventually sell them back into circulation -- if that's what they mean by liquidate. Though I think they should just throw/burn the private key away, and let those coins join the mass of other coins that were lost by early adopters.

Re:Delete it.

[petermgreen]

An address isn't actually a public key, it's the hash of a public key. So what you actually need to find to spend the bitcoins is an ECDSA keypair where the public key hashes to the address. I presume they did it this way to make addresses shorter (at the cost of making transactions in the blockchain longer).

But the principle remains, it's not "impossible" to go from a bitcoin address to a set of keys that can be used to spend coins from that addresses but it is "computationally infeasible" given current public knowledge of the crypto primitives involved and current or reasonablly forseable computing power.

Re:Can it be invalidated?

[camperdave]

Counterfeiting is a different animal than invalidating Bitcoins. With counterfeiting, you are flooding the market with worthless duplicates or fakes, thus throwing the authenticity of what you hold into question. With Bitcoin invalidation, a third party simply declares your bitcoins worthless. It's like when the money changed from Pounds to Euros. The currency may be authentic, but it is unable to be exchanged. The scary bit is that if someone can invalidate the FBI's wallet, they can invalidate yours just as easily.

Re:Can it be invalidated?

[paxprobellum]

They took physical possession of the wallet.

Re:Can it be invalidated?

[camperdave]

How did the FBI confiscate someone else's funds, then?

They confiscated the computers with the crypto keys, probably.

Re:Can it be invalidated?

[mrchaotica]

LOL, you've never heard of civil forfeiture [newyorker.com], have you?

Re:Can it be invalidated?

[thebigmacd]

"Money" never changed from Pounds to Euros.
http://en.wikipedia.org/wiki/Pound_sterling [wikipedia.org]

Re:Can it be invalidated?

[_Shad0w_]

I feel like pointing out that the "AngloSaxies" are by definition Germanic. The name is even derived from a combination of Angle and Saxon.