Posted on 02/21/2015 4:31:58 AM PST by 9thLife
Bitcoin is growing in popularity as a way of quickly and safely moving money. But that also makes the job of a thief much more lucrative and efficient. (Photo: Getty)
Bitcoin, the technology that’s meant to revolutionize the way we think of money, is simultaneously revolutionizing the way we get mugged.
A New York City firefighter named Dwayne Richards was recently held up, stabbed and robbed by thieves who were after his bitcoin, the Observer has learned. From what we’ve discovered, Mr. Richards, who is a firefighter in lower Manhattan, was mugged and left bleeding after meeting the robbers under the pretense of exchanging bitcoin for cash in Williamsburg, Brooklyn. He’s alive, well, and refusing comment.
Typically, when we hear of bitcoin-related crimes, it’s a white-collar affair—millions of dollars going missing from an overseas exchange, or a plucky enthusiast finding himself in an international money-laundering scheme.
But robbing someone of his bitcoin in person can be an astonishingly effective way to make off with vast sums of capital quickly and untraceably. And Mr. Richards is far from the first to fall victim to bitcoin-related brutality.
Stagecoach robberies
Dean Katz is a one-man bitcoin exchange. Every day, he drives around New York buying and selling bitcoin, on call to a large customer base. He’s like a weed delivery guy, only instead of delivering drugs, he’s bringing people the future of financial transactions.
One day, he received a call from someone who had heard about his services, either online or through a referral, who wanted to visit him out in Queens at a secure location.
“He called because he wanted to gamble during the Super Bowl, which is pretty common,” Mr. Katz told the Observer.
When the person arrived, he held Mr. Katz up at gunpoint and forced him to transfer $8,500 worth of bitcoin. Then, the robber took $3,500 in cash and split.
‘Right now, it’s like the Wild West,’ Mr. Katz said, ‘and stagecoach robberies are going to happen.’
Mr. Katz reported the incident to the police, and he’s heard from a number of people also who trade bitcoin in person that there have been other incidents. Some of the occurrences have been physical robberies, others have just involved the use of counterfeit money—which as a hustling entrepreneur, Mr. Katz considers just as offensive.
Bitcoin may be a digital currency, but trading it in person is still one of the fastest and most reliable ways to exchange it. Signing on and having your account verified with an exchange can take weeks, and if you’re new to using cryptocurrencies, it’s helpful to have someone knowledgeable over your shoulder to walk you through the process.
Also, having someone with you in person is, ironically, a safer way to transact. It allows you to monitor the transaction and adds a layer of trust. Again, bitcoin is so new to so many people, there are plenty of creative ways to defraud people online. It accounts for why LocalBitcoins, a platform for finding people to do business with in your area, is one of the largest trading platforms in the world.
But if the person you’re dealing with turns on you, you’ll find all of the benefits of bitcoin turning on you, too.
The Wild West
The best thing about bitcoin is that you can move vast sums of money nearly instantly without needing to go through a bank or centralized, governing body for approval or monitoring. But one thing banks are good at is dealing with thieves.
If someone held you up at gunpoint and made you wire your money from a bank account, a bank would be able to see the receiving account and, in most cases, link it to the person who goes to collect from that account. Bitcoin isn’t exactly anonymous, per se, but a thief who is smart and careful enough can make it nearly impossible to be linked to an account once he’s received his payload.
New York State is currently working on controversial legislation to legitimize and regulate bitcoin without totally clipping its wings as a revolutionary tool. Mr. Katz says that he hopes there will eventually be physical, centralized exchanges and centers where bitcoin can be traded in safe, public forums. Until then, he simply has to watch his back.
“Right now, it’s like the Wild West,” Mr. Katz said, “and stagecoach robberies are going to happen.”
I’m still trying to figure out how bitcoin is not just another form of currency in a sea of currencies.
I see dollars as bitcoins. I’m paid electronically. All of my bills are paid electronically and automatically (except credit cards). I buy things electronically.
The only cash I see any more is the %40 to $100 I get when my band plays a gig.
e.g. it’s just another “country’s” money.
Silly robber, he already had the bitcoin.
I have some pogs and some Monopoly money.....and I once traded a Marv Throneberry 1962 topps card for a bullfrog.
“I’m still trying to figure out how bitcoin is not just another form of currency in a sea of currencies.
I see dollars as bitcoins. I’m paid electronically. All of my bills are paid electronically and automatically (except credit cards). I buy things electronically.”
One difference is that the dollar is controlled by the Fed, routinely inflates, and is subject to other manipulations and influences. Bitcoin is intended to be stable, although so far it’s been quite volatile due to external factors like China banning it. At the moment holding bitcoin is speculative, similar to holding individual stocks.
Another difference is that transmitting/accepting money using bitcoin is extremely cheap compared with other methods, and doesn’t require a middleman. Imagine accepting electronic payments for your business with no fees, and no bank involvement. Even large companies like Dell, Microsoft, PayPal, Tiger Direct and Overstock.com are accepting bitcoin for those reasons.
Finally, bitcoin payments can be as small as 1/100,000,000 of a coin (referred to as a satoshi). That’s the reason that the eventually fixed number of total bitcoins isn’t really a problem, they could eventually be worth $1,000,000 apiece and each satoshi would be a penny. The protocol could also be modified to allow further subdivision if desired. Right now the divisibility allows for cheap micro payments, which aren’t practical any other way.
It’s stable w/r/t supply.
Government regulation is a bitter pill, but without it, you get this kind of crime. Wanting to go back to the Wild Wild west is stupid.
Thinking that Bitcoin can elude government is an illusion.
But at the end of the day it’s the mother of all fiat moneys, right? Who backs it?
The people who invented it of course. I just don't get it, and I've never been accused of being a math dummy. It seems that instead of fiat money that has no inherent value, it's fiat money without the fiat money. It's....thin air.
The problems with fiat money make me want to have something of inherent value that I can hold and see and is recognized as worth besides its value as coinage. Bitcoins seem to be the exact opposite....I can't see them, touch them, store them outside a computer. I still don't know where bitcoins come from.
Who are the people either stupid or desperate enough to make these transactions in vulnerable situations?
There is a certain mystery about the story, isn't there?
“Government regulation is a bitter pill, but without it, you get this kind of crime. Wanting to go back to the Wild Wild west is stupid.”
You hate cash? That’s all bitcoin is at heart, digital cash.
“Thinking that Bitcoin can elude government is an illusion.”
Yep, surely government can control anything. Take drugs as an example...
Bitcoin is thoroughly decentralized. A sufficiently totalitarian government can crack down on it internally, but that’s about it.
“But at the end of the day it’s the mother of all fiat moneys, right? Who backs it?”
Who “backs” the dollar? A dollar is worth what someone will give you for it. The government doesn’t mandate that a dollar is worth a certain amount of something else, and if you ask me it’s been inflating like crazy the last few years. I sure never thought I’d see the prices I’ve been seeing at the grocery store...
It’s the same with bitcoin, no more no less - except only a fixed amount of bitcoin is produced in a given time period, and the total quantity is capped. The government, on the other hand, can print an endless stream of dollars at will...
Fiat money backed by governments is not very valuable, I grant you, but bit coin is backed by even less. That’s my problem with it. Imagine the US dollar swinging as much as bitcoins do.
“Fiat money backed by governments is not very valuable, I grant you, but bit coin is backed by even less.”
What is fiat money “backed by”, exactly? What does “government backing” mean?
Bitcoin has been so volatile because a) it is new and b) certain political events (Cyprus in particular) have made it attractive as a place to stash wealth. When demand rocketed, so did the price of bitcoin. The price plummeted when China cracked down on it, as it was an attractive way to hedge the Chinese economy to that point.
“That’s my problem with it. Imagine the US dollar swinging as much as bitcoins do.”
In 1918, $100 bought 5.26 ounces of gold. In 1973, $100 bought 1.03 ounces. Today, $100 buys 0.08 ounces (about 12 times less than in 1973, and about 63 times less than in 1918). Not that long ago, gold was around 50% higher than it is today.
Bitcoin is at the moment around its price through most of 2013, before the China-influenced wild swings. We’ll see where it goes from here...
I’d suggest that holding bitcoins as an investment isn’t a particularly good idea, but it’s better than holding dollars as an investment. Using it as a medium of exchange is a different thing altogether.
What is fiat money “backed by”, exactly? What does “government backing” mean?
And how strong are those that back Bitcoin? And who, exactly, backs it? I need names. A “throat to choke”, as we say, if somehting goes bad.
“It means the government has to either collapse or do overtly bad things before the money has any wild swings. The stronger the government, the stronger the money.”
The dollar doesn’t often take “wild swings” but it is worth a good deal less now than it used to be. Many right here on FR are waiting for a big move based on the policies of the current administration.
“And how strong are those that back Bitcoin? And who, exactly, backs it? I need names. A “throat to choke”, as we say, if somehting goes bad.”
There is the Bitcoin Foundation, that is the steward of the software behind BTC. However, in the sense you mean it, no one “backs” bitcoin. Bitcoin is “backed” in the same sense that gold is “backed”. A bitcoin is worth what someone will give you for it, just the same as an ounce of gold.
Bear in mind that the dollar isn’t backed by anything tangible either, for that matter.
My take is that the dollar is not a very good thing to hold, and neither is bitcoin. Both have their uses as discussed earlier.
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