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Comment by nxsynonym | Hacker News Reader

I don't understand the comment either.

It's not like terrorist groups are currently un-funded. Cash is still king around illegal activities of all kinds. Why is using bitcoin for illegal activity any different than untraceable cash?

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Your points are valid, but I think you're misunderstanding his point. If a terrorist attack happened that was funded via Bitcoin, and could've only been funded via Bitcoin (including a false-flag) the governments would throw the book at it. This could be terrorist groups sending BTC to legit US citizens who purchase things (like weapons) legally and then use them in an attack, &c.

The "could've only been funded via Bitcoin" part isn't even necessary. The US government is kind of crazy when it comes to terrorism. Any connection between Bitcoin and terrorism that gets a lot of public attention is likely to result in major legal problems. It doesn't matter whether or not the fear is well founded or whether Bitcoin's role was incidental. Look at how much pressure there is to crack down on encryption in general, and that would have far wider-reaching consequences than regulating a cryptocurrency only a tiny percentage of people actually use.

That bit about the false flag has me thinking. Has that possibility been seriously discussed?

He's not arguing that Bitcoin would be responsible for the terrorist action. He's arguing that hysteria would hold Bitcoin accountable. And this would create pressure to pass legislation that would crack down on it.

And deserved or not Bitcoin is perceived differently than cash. Its seen as something nefarious, and strange. Where cash is something familiar.

The irony of course being that the US has even bombed USD cash reserves of ISIS. The USD network funds plenty of unscrupulous acts. It's a shame that people won't be able to see that equivalency though. When regulators come after Bitcoin, it will be from a conflict of interest, not a moral high ground.

To play devil's advocate: cash (fiat in general) is often traceable to bank accounts, wire transfers, ATM CCTV, credit card records, marked bank notes, etc.

While it's still v possible to track a bitcoin transaction from recipient to sender, there are countermeasures with varying degrees of efficacy. At any rate, it's not the traceability of X per se that matters, but rather the stigma, and given how many billions of $ in illegal activity bitcoin has been used for, and the high-profile cases of Silk Road etc, it's very easy to see that scenario (i.e., the US Congress + interested lobbyists cracking down on Crypto) happening.

I'm going to take the cynical view here. The issue is that there are rules around movement and use of cash that are clear that banks can follow to say 'not my fault' when terrorists use cash. No one knows what's illegal and legal for the movement of bitcoins. No one knows what compliance they need. How does investing in a currency where the regulations are likely to dramatically and suddenly increase in certain unpredictable ways play out? Can regulatory changes cause a huge amount of volatility and downward pressure?

One of the big pluses to bitcoin is the fact that you can move large amounts of money relatively quickly instead of relying on banks.

Illegal operations would obviously not rely on banks.

I think you would surprise yourself with that comment. Illegal operations do indeed rely heavily on banks.

> Illegal operations do indeed rely heavily on banks.

https://www.reuters.com/article/us-hsbc-probe/hsbc-became-ba...

As an example for anyone not familiar with these types of stories.

When I bought drugs in high school, it was usually in cash. Sure, I concede multi-million dollar operations may have bank help, but I don't think you're thinking about the full picture.

HSBC and Wachovia were recently involved in the laundering of hundreds of billions of dollars for Mexico's biggest drug cartel (and pretty much every executive involved came out unscathed once it was revealed).

https://www.theguardian.com/commentisfree/2015/feb/15/hsbc-h...

Don't be so sure...

is that different than cash - especially surrounding illegally obtained cash?

I'm not saying it's not a risk - I just don't see it as inherently more risky than currently viable currencies.

One big difference is that cash is too popular to ban entirely. If a major attack were somehow linked to Bitcoin, the US government could make the whole thing illegal. We all know that wouldn't do much to actually stop terrorist attacks, but it would be a major problem for a wealth manager trying to operate within the law, and being ineffective certainly hasn't stopped the US government from passing dumb anti-terror laws in the past.

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