Russia will buy Bitcoin to avoid US sanctions, economist claims

Asia Times ^ | 01/14/2019 | Luke Thompson

[Rockingham]

I think that you are correct, with some qualifications. Developed nations may tolerate bitcoin and other cryptocurrencies for a while, but they will eventually suppress them as infringements of their control of the money supply, menaces to tax enforcement and earnings from seigneurage, and as conducive to criminal black markets and terrorist financing.

Legally recognized block chains linked to official currency no doubt offer potential gains in security and economic efficiency. Central banks and interbank clearinghouses though will probably resist because the technology can eliminate many lines of intermediary and escrow functions in banking and commercial transactions relied on by large banks for fee income. It may take a hard fight against such politically powerful incumbents before bitcoin dollar transactions are generally permitted.

Do you know of any confirmed use of bitcoin by terrorists or by hawala networks? Or do they avoid it for fear of leakages from and surveillance of the transactions ledger? Surely breaking through bitcoin's encryption must be a top priority of the NSA.

[aMorePerfectUnion]

Do you know of any confirmed use of bitcoin by terrorists or by hawala networks?

none I've read about. Of course, their strongest method involves not physically transferring assets, but changing ownership of assets in one country for a "credit" of assets in another country.

Or just getting one of their people to head up the CIA...

Or do they avoid it for fear of leakages from and surveillance of the transactions ledger?

At the present, Bitcoin is not private. Transactions and ownership are identifiable. I've read the IRS hired a firm to track down US bitcoin owners, to track transactions for tax purposes. They are considered gains, if you sell for a profit and must be reported.

As a side note, at the currently, only tangible assets with no attached financial institution account numbers, are non-reportable as overseas holdings. This includes real estate, bullion, collectibles. Things of that nature, held outside a financial institution.

Surely breaking through bitcoin's encryption must be a top priority of the NSA.

It is getting increasingly harder as technology gets better.

[Rockingham]

In a way, bitcoin is like the hawala system in which money is not transferred directly via a conventional modern banking transaction but as credits outside of the system converted to currency on the receiving end. Even so, I imagine that intel agencies have all sorts of ways to monitor hawala and bitcoin.

I recall one intel expert commenting with a sly smile that Tor was not really a problem because even though it was secure, watching who used Tor and on what platforms told them who and where to focus other collection methods on. That was a tacit reference to the thick book of intel spyware and methods that, even if encryption stands, can nevertheless covertly capture messages and internet traffic before or after encryption.

I see no reason why hawala shops and bitcoin holders would not be vulnerable to similar tactics. Plausibly, these are not confined to intel purposes in that a court could authorize them as part of, for example, a tax fraud investigation.

[AdmSmith]

Cryptocurriencies in 2018:



They will go to zero.