The FBI's Giant Bitcoin Wallet 177
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)."
Can it be invalidated? (Score:2)
If the majority of miners wanted to, they could invalidate the FBI wallet, correct?
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If so that would make all bitcoins worthless I would think.
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If so that would make all bitcoins worthless I would think.
Yep, the value of the Bitcoin, like the value of the Dollar, is in its security - if it were easy to make Dollars with your laserjet printer the market would flood with them and the Dollar value would plummet - this is beside the point of counterfeiting being illegal, if nearly everyone was doing it it would be a very difficult law to enforce.
Re:Can it be invalidated? (Score:5, Informative)
Re:Can it be invalidated? (Score:5, Informative)
"Money" never changed from Pounds to Euros.
http://en.wikipedia.org/wiki/Pound_sterling [wikipedia.org]
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Caveat: GBPs have, for brief periods in the last 30 years, been pegged to ECUs and the German Mark.
Re:Can it be invalidated? (Score:5, Funny)
Irish pounds were actually "Punts" [http://en.wikipedia.org/wiki/Irish_pound] - named to rhyme with the irish word for "banker".
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And Cyprus pounds, as well as Italian Lira - Lira is Italian for Pound, and both were originally based on a pound (in weight) of silver pennies.
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>> The scary bit is that if someone can invalidate the FBI's wallet, they can invalidate yours just as easily.
Translation: bitcoins are worthless if they can be invalidated by third parties.
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I feel like pointing out that the "AngloSaxies" are by definition Germanic. The name is even derived from a combination of Angle and Saxon.
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In fact, that's exactly how I think the government will, in the future, invalidate bitcoins (and keep control of currency).
They will put up a website where you can "validate" your bitcoins. The ones which the government doesn't like will get banned (because who wants to have "dirty" money?) and devalued.
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This isn't done, because governments have far more control over them than bitcoins.
Fixed that for you :)
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Why would you want such a system? So the big mining pools can invalidate all the bitcoins of rivals?
Re:Can it be invalidated? (Score:5, Informative)
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.
Re:Can it be invalidated? (Score:5, Interesting)
How did the FBI confiscate someone else's funds, then?
Re:Can it be invalidated? (Score:5, Informative)
Re:Can it be invalidated? (Score:5, Informative)
How did the FBI confiscate someone else's funds, then?
They confiscated the computers with the crypto keys, probably.
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Doesn't it mean that if the original owners still have a backup of the crypto keys laying around somewhere, they could still move the money away?
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Re:Can it be invalidated? (Score:5, Insightful)
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They do acknowledge the existence of bitcoins, however it is not clear whether or not they consider them to be legal. Regardless, when they bust a drug dealer, they will sieze all the assets, and they will include legal assets such as cars and dollar bills as well as illegal assets such as inventory of drugs. It doesn't matter at this point whether bitcoin is a legal or illegal asset.
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Surely one could examine the block chain and determine whether or not the government has transferred them to another account or not? Given the number of coins involved, seems like it would be pretty easy to figure out.
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Yes, it's even labeled:
https://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX [blockchain.info]
And since it's a known address, people are pranking it by sending tiny amounts with messages attached.
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How did the FBI confiscate someone else's funds, then?
They didn't take the money, they just took the data (and presumably the devices that data was on).
I wonder if you could pull a Walter White-style magnet attack... what happens if BTC wallet and keys is lost? Do the bitcoins just die?
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Ownership is established by knowing the private key for the wallet/address. The FBI gained that key --whether by keylogger, wiretap, plea bargain or $5 wrench is unclear-- and transferred all the funds to an address under their exclusive control.
So from the point of view of the bitcoin protocol, the FBI were the proper owners (they knew the key) and therefore weren't obstructed from making that transfer. Likewise they wouldn't be obstructed from further use of the address they control unless a majority of
Re:Can it be invalidated? (Score:4, Interesting)
So, invalidate and reissue on the behalf of Ulbricht, and any other bitcoins that were confiscated. That would actually be nice. The ultimate in theft prevention.
Imagine, if someone steals your (real world) wallet. You invalidate all the cash in it, and issue new cash.
Unfortunately, I can see the *huge* number of reasons why it's a bad idea. The first being, I do a high dollar transaction. I get the physical product. I complain that it never arrived, and 51% agree that I'm a good guy. Now the seller is out the funds, and the product.
So does this plan go for only funds seized in high profile cases? If the feds didn't say they seized the funds publicly, would they get to keep the them, and screw the accused? Who do you believe for deciding, the holder of the bitcoins, or the media?
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If the majority of miners wanted to, they could invalidate the FBI wallet, correct?
Yes. A code update to treat as invalid, any spend transaction with that wallet as a source.
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Why? They already have the largest actual wallet of real bitcoins in their possession. What reason would they have to undermine that?
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Sure, it would only undermine the entire concept of bitcoin, and defeat the very reason that btc was made distributed like it is in the first place. However, if enough thought it was a good idea, they could all start running some new code that treats some addresses as special.
This is highly unlikely and would be highly undesirable. The FBI has some bitcoins, good for them, they are just as protected by the system; and no more so; than anyone else. The way it was always intended to be.
I mean nearly the entir
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Sure. Just set the value of all bitcoins to 0. Just imagine the fun that would be.
"Sorry but a lot of us decided to take your money away from you because we do not like you."
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Wait, Silk Road users are going to sue the government to get back the bitcoins they received for selling illegal drugs? Yeah, that'll work, I'm sure the US government would happily give confiscated cash back to drug dealers when threatened with a *lawsuit*...
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Well maybe not. On the other hand I believe it was possible to buy a variety of things that aren't illegal on the Silk Road. I listen to a podcast where the commentators were talking about the twinkies they bought that way. There might be journalists who were using Silk Road to buy legal things and had their bitcoins seized. The argument could be made that it is like buying strawberries at a flea market where some sellers are engaging in illegal activity and the buyers of strawberries have a legitimate righ
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Well, like a black market "bank" with no FDIC registration or insurance named "Drug Money Laundering Bank" that openly advertised itself as a haven for illegal activities
Re:Can it be invalidated? (Score:5, Informative)
LOL, you've never heard of civil forfeiture [newyorker.com], have you?
Civil forfeiture (Score:3)
So they can take away whatever they want without proving you guilty in due process just because? Wow.
This is about the most ridiculous and frightening thing I read in a while and I would have expected it to happen in China (sorry, my predjudices) and not in the US. Wow, again.
Re:Zrocs (Score:2)
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I'm sure the FBI will be quite accomodating to people wanting their buttcoins back. All
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On the other hand, demanding your coins back may in fact provide sufficient probable cause to issue a warrant to search your home.
I'm in ur blockchain (Score:2)
easy come, easy go (Score:2)
Re:easy come, easy go (Score:5, Insightful)
This whole thing smells like a bubble right now. The value increases for mostly speculative reasons. Bitcoins could never be a viable mainstream currency, because the volume can't readily be increased to match rising demand from transactions involving them. That's the whole point of Bitcoin, isn't it? Money in essentially fixed supply that can't be "printed" at the whim of a central bank? That makes it a deflationary currency, and no one will exchange it for stuff today if the price of that stuff is likely to be dramatically lower next week. And if it's not a viable currency, what is the value based on? Scarcity by itself isn't enough.
Bubble? Not necessarily .... (Score:5, Interesting)
Not saying you're wrong... but simply saying it's complicated enough that I sure wouldn't write it off yet.
Bitcoin may have a fixed limit, but there are literally dozens of other cryptocoins out there vying for attention and viability. Some appear to be little more than bad ripoffs of existing code used for an earlier coin, and likely pre-mined by the author in the hopes of making a quick buck off of them. Others (like litecoin) seem to be following in lock-step with the rises and falls of bitcoin in the marketplace, although at a much lower value per coin.
I think it's very short-sighted to believe bitcoin would ever be used by itself as a form of digital currency. It's worth a high enough value already (and continues to trend upwards) that it's very inconvenient to use to pay for smaller items or more inexpensive services. (Nobody likes to work with numbers multiple digits to the right of the decimal place.) The litecoin proponents often use the analogy of it being "silver to bitcoin's gold". Who knows ... but it's certain that when using U.S. currency, simply having $100 bills to pay for smaller items is impractical. (Many shops caution you with signs in the window that they don't make change for bills larger than $20.)
I'm not sure if bitcoin would run into the perceived "volume required exceeds coins in existence" issues, causing deflation, if it wound up only used for very large transactions, alongside multiple other altcoin options? As long as coin exchanges exist and other cryptocoins are in active use, there would be ways to convert bitcoin into other coins anyway -- further eliminating the concerns of it becoming a deflationary currency.
Heck, there's really nothing saying bitcoin will be around in the long haul either! It's essentially a version 1.0 attempt at all of this stuff.... I could easily see bitcoin deprecated in the marketplace, with people instructed to convert it to some newer, better cryptocoin alternative before a certain "drop dead" date when it would become worthless.
Re: Bubble? Not necessarily .... (Score:4, Interesting)
Youre right, it is a 1.0 attempt at a peer to peer currency. But it'll be next to inpossible to go back to the drawing board on it. Too much vested interest. Think all those people who have spent tens of millions (most likely) on mining equipment will endorse even a slight change to the algorithm that renders their equipment useless? Not likely. And that's just at the simest level. Then there's more fundamental things like block generation rate ( which is the time for a transaction to get into the block chain), even if 90% of people thought it should be changed, it's not a democratic process - so long as the important people thought otherwise, nothing would happen.
Point out enough of this on the bitcoin boards and you're told "if you don't like it make your own" but then if you make your own, at best it's called a cheap knockoff with a couple parameters changed, at worst it get attacked by bitcoin miners in the name of "defending bitcoin"
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Yes, ASIC's can hash SHA256. But suppose a flaw is found in SHA256 - not a crushing flaw that renders it useless, but something theoretical enough that researchers are worried. My bet is that Bitcoin would stay put on SHA256 because of the huge investment in custom hardware to do the work.
I've been following Bitcoin for a long time now (comparatively to many, at least). And i think the move to ASIC is the worst thing that could have ever happened to it. Each day that goes by, bitcoin becomes even less "peer
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I think it's very short-sighted to believe bitcoin would ever be used by itself as a form of digital currency. It's worth a high enough value already (and continues to trend upwards) that it's very inconvenient to use to pay for smaller items or more inexpensive services. (Nobody likes to work with numbers multiple digits to the right of the decimal place.)
That issue is already being solved by lots of merchants/wallets and other services switching to milibitcoins denomination by default.
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Nobody likes to work with numbers multiple digits to the right of the decimal place.
So move the decimal place and call it something else. Bitcents or something. (Not catchy, I know; purely illustrative.)
They are called satoshis.
1 BTC == 100,000,000 satoshis
There are also intermediate denominations like mBTC (micro bitcoin).
1 BTC == 1,000 mBTC
http://bitcoin.stackexchange.com/questions/114/what-is-a-satoshi [stackexchange.com]
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How are all of the mining rigs actually backing bitcoins?
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The mining rigs are what process the transactions. "Mining" is the act of taking a block of transaction messages, verifying that they're moving money that actually exists, signing them, and then appending them to the distributed ledger. The network pays the miners to do this by creating new BTCs, and people making transactions also pay for it by including processing fees in their transactions.
Re:Bubble? Not necessarily .... (Score:4, Interesting)
RE: massive hardware requirements (Score:2)
No, I don't think it's "sad" at all. You've got to remember a few key things here:
1. This is more than just "wasting an amazing amount of computing power on transaction handling". This is the start of a revolution in payments and currency. I don't think it's really fathomable that you could create a universal, decentralized yet reliable digital payment system like this via a commercial entity (such as PayPal) trying to market it. You need something much bigger to make it viable; something on this scale of
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I'm not suggesting that paypal or some other commercial entity ought to have brought a decentralized currency to market. I only brought them up because they too facilitate lots of financial transactions of a digital variety. While I understand that their service is nothing like what i
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Fair enough.... But I'm not sure anyone's ready to utilize this processor power for something else (like curing cancer or getting us to colonize another planet)? Projects like Folding@Home created a lot of buzz and sounded amazing on paper, until you talk to researchers about it and find out there are very few computational problems they need to solve which could best be handled in a distributed computing nature.
I think some of this goes back to the old sayings like, "You can't bake a cake any faster by a
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That's the whole point of Bitcoin, isn't it?
Another "whole point" of bitcoin? I wonder how many whole points bitcoin has. I regulary read on slashdot that the whole point of bitcoin is that it cannot be regulated, that it is currency, that it is annonymous/untracable, that it can be used to avoid taxes... all of this is of course false (it is not unregulated, it is not annonymous and untracable) . Bitcoin has no single purpose, it could be currency (but the volatility prevent this at the moment), or long term store of value (like gold), or payment ne
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So the problem with bitcoin is no one would spend one today knowing they could get it for cheaper tomorrow. And the opposite is true with gov't backed currency. Nobody would hold onto a currency knowing it will not have a s much buying power tomorr
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One of the strengths of a (slightly) inflationary currency is that there is an incentive to invest it in productive activities - ie starting a business. This also creates opportunities for lending the money out for others to use at interest and pooling monies in banks to use for lending, and things like that. Putting your money under the mattress for later use is not so good for the economy. Spending it or getting it into a bank so others can spend it and provide liquidity to the whole system is what is nec
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That would be true if the ROI was better than the inflation rate, which it isn't for just about anything you can find offered by a bank ( especially after you figure in taxes on your interest). Still better than hiding it in your mattress. For most people, the only way to keep their dollar worth a dollar is to invest in the stock market or a business. However, for no risk at all, they could go and buy something tangible right now, and be better off than waiting until tomorrow to buy it (on average).
"That" is still true even with a lower ROI, since the "that" that my post was about was the idea that slight inflation provides an incentive to invest, and in fact buying something right now is a form of investing. My point is still that currency is a device designed to ease trade and production, thus currencies that have built-in incentives to use them (or at least make them available for others to use) are "better" than ones without such incentives. The system works better if the money moves around.
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The tulips are dying, the tulips are dying!!
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The tulips are dying, the tulips are dying!!
Nah, they're safe as houses.
Are you sure about that? (Score:1)
"but it had an *unforeseen side-effect*: It made the FBI the holder of the world's biggest Bitcoin wallet."
I'm sure that was an accident..
Auction question? (Score:2)
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An FBI seizure is not a police seizure and the FBI doesn't hold police auctions
Just because the FBI doesn't auction it, doesn't mean that it doesn't get auctioned. Googling around, I found two different cases of assets that were seized by the FBI and auctioned off by the US Marshals.
Bitcoin post = win (Score:5, Funny)
Let me try a random headline generator with the word Bitcoin substituted in, see how many land on Slashdot
Could binge bitoin mining burgle the middle class?
Will the bitcoin steal the identity of the conservative party?
Is the nanny state destroying the bitcoin?
Could dumbing-down bitcoin tax england?
Is cancer stealing the bitcoins of your children?
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Or to borrow some actual slashdot headlines...
Formhault C has a huge bitcoin debris ring
Scientists print bitcoin
Police pull over more drivers for bitcoin tests
Apple pushes developers to bitcoin
NASA schedules space walks to fix bitcoin pumps
Bitcoin exchange value halves after... wait, I did this one wrong
Unreleased 1963 bitcoin on sale
Want to fight allergies? Get bitcoin
Dammit, it still works, I would read every single one of these.
Steal that Wallet (Score:2)
Please, please, please, somebody steal those wallets. What are the chances they haven't been secured correctly? All it takes is some bureaucratic error resulting in bad opsec and some thieves with big balls of steel and we'll have the bitcoin story of the year.
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Right, because we need the government to find news ways to lose another $100M.
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Please, please, please, somebody steal those wallets. What are the chances they haven't been secured correctly? All it takes is some bureaucratic error resulting in bad opsec and some thieves with big balls of steel and we'll have the bitcoin story of the year.
Actually, I bet something like this is happening as we speak:
John Travolta (made up to look slightly different, as a blonde with a bit of a goatee): "Hey, Stan. How've you been?"
Hugh Jackman: "Oh, SHIT! Not this crap again..."
Must be an old article (Score:2)
144,000 bitcoins is only $82M, since they're only $574.17 at the moment.
They should have run this story on the 1st of dec, when they were going for $1203
Ugh... (Score:2, Flamebait)
Re:Ugh... (Score:4, Funny)
Cue the paranoid right wing "Obama wants to take your Bitcoins" brigade.
Nonsense! Obama said quite clearly: "If you like your Bitcoin, you can keep it."
I suspect that the FBI will use these Bitcoins in undercover operations, to lure out criminals who will only accept Bitcoins.
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criminal != smart (Score:2)
"a smart criminal would"
I've known a few criminals. Never seen a smart one.
All of them fail to understand the very simple fact that you might get away with it today and you might get away with it tomorrow, but you WILL get busted at some point .
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"a smart criminal would"
I've known a few criminals. Never seen a smart one.
Don't know many bank CEOs, huh?
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I've known a few criminals. Never seen a smart one.
...and you never will. Smart criminals don't get caught. Prisons are filled with the stupid ones.
Soon to be rebranded (Score:2, Funny)
Federal Bitcoin Industries.
Not to be pedantic but....... (Score:2, Offtopic)
They are "worth" nothing. The bitcoins however are currently valued at X amount.
Mind you, I'm not implying cash is "worth" anything either.
On topic, the Winklevoss Bros are predicting up to $40,000 per coin :/
http://www.theregister.co.uk/2013/12/17/winklevoss_predicts_400bn_bull_market_for_bitcoin/ [theregister.co.uk]
Who knows what will happen? I just wish I'd made some money from it myself
You aren't being pedantic (Score:3)
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Doctor: You know the leech comes to us on the highest authority?
Edmund: Yes. I know that. Dr. Hoffmann of Stuttgart, isn't it?
Doctor: That's right, the great Hoffmann.
Edmund: Owner of the largest leech farm of Europe.
What the feds plan to do: (Score:4, Informative)
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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.
That'd be stupid. Keeping it away would have the same effect (getting the coins out of circulation) while allowing them to use the bitcoins in the future if they so desire. Or maybe they'll give the bitcoins to the CIA, who could start paying terrorists (I mean, freedom fighters) with bitcoins instead of dollars.
Or dump them en masse on the exchanges, sit back, and watch Bitcoin destroy itself.
Sting Operations (Score:3)
I'd expect the FBI to use its collection of Bitcoin to engage in a number of sting operations. Buy contraband using their Btc and break up the next Silk Road. I'm sure they are getting set up with their own mining operation which would give them an up to date view of the block chain.
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Not likely. They would need to tumble those coins.
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If they planned to do that then they were dumb to collect them into a single address like that.
This means... (Score:2)
The FBI can buy the first round.
How much is that in drugs? (Score:2)
I have no idea how profitable the drug dealing business is, nor the pricing of drugs, but that sounds like a shitload of product sold.
You must need a warehouse with employees to ship all that stuff. And how much jailtime do you get when they catch you with that
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From the stories I read about it, I get the impression that Silk Road acted more like eBay, a platform allowing independent vendors sell their product. So the operator of the Silk Road only took a certain percentage of the deals, they didn't handle the drugs and other products directly. That doesn't mean it was a small operation overall, of course.
For most of 2013, the bitcoin traded at around USD 120 each. So 144k BTC would be worth over 17 mln USD. And that's after cost. Not likely he had many staff or so
What a joke: they're worthless (Score:2, Insightful)
There is not enough liquidity in the entire world-wide bitcoin market for the FBI to be able to exchange even a small fraction of those. The $100M value is absurd. If they tried to convert them to a more usable currency the exchange rate would plummet and they would become nearly worthless.
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From Bitcoin Charts [bitcoincharts.com]
Bitcoins sent last 24h 1,303,510.08 BTC
Bitcoins sent avg. per hour 54,312.92 BTC
So the FBI's 174,000 coins would equate to less than 13% of the current daily volume, or in other words wold satisfy the full current demand for, oh, about 3 whole hours.
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If they dumped them the market would crash. An increase of available bitcoins for sale of 13% would cause a massive crash.
Posting to undo moderation (Score:2)
wrong (Score:2)
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Freedom is now, has always been and always will be, an illusion given to the masses to keep them pacified.
Why do you think you've lost something?
Re:Delete it. (Score:4, Informative)
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.
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