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Comment by johnzim | Hacker News Reader

This has always been part of how Bitcoin works and it’s been the reason I’ve felt like I’ve been taking crazy pills for well over a decade trying to understand its popularity amongst criminals.

Do people realize how HARD it is to trace regular currency!? It’s a nightmare! At law there’s an entire equitable principle devoted to the tracing of money. You can’t just prima facie say $A Dollars are $B Dollars, you have to convince a judge to invoke and principles of natural justice to imply such a connection!

Meanwhile, Bitcoin literally stores _every transaction ever_.

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The moment a Federal court declares that Bitcoin addresses aren't fungible is the beginning of the end of Bitcoin as a laundering tool. If the government can seize derivative Bitcoin addresses (and/or other assets purchased in exchange), then as a payee I care very much about the provenance of payments I receive. Almost immediately the value of Bitcoins passing through mixers would plummet.

Monero and others exist. You can’t easily trade them because the government doesn’t like the anonymity, but they exist.

If Bitcoin gets poisoned, you’ll just see it sold for monero, laundered, then passed back into Bitcoin.

Who is going to exchange their Monero for your Bitcoin when the Bitcoin you give them can be seized? At what discount?

Now that El Salvador has made BTC legal tender, they may take issue with their citizens having their BTC randomly seized by other governments.

The ability to seize BTC is dependent on the jurisdiction of the seizing authority, and their ability to access the wallet. Money launderers will likely concentrate in locations where the local authorities look the other way. Exchanges will charge fees to payout potential seizures in jurisdictions where they can be seized.

I should restate. Mary wants to buy from John, but the dollar exchange won’t convert for her.

She exchanges her Bitcoin for monero. That monero is sent to John. John now converts it back into Bitcoin. When it converts to Bitcoin, the money is perfectly laundered and ready for conversion to dollars.

The problem is that when John converts to Bitcoin he may receive Bitcoin that has a criminal history attached tainting it. That taint may prevent John from using his Bitcoin at certain places or exchanging it elsewhere. It may also mean the US decides at some point that his Bitcoin should be seized due to that criminal history.

How does John know he is getting Bitcoin with only a clean history?

Popularity among criminals is almost certainly the ease with which it can be converted back into real money, typically in another country, but the key element is the conversion to cash. The majority of actually anonymous crypto currencies don’t have a fast path back to real money.

and yet we don’t hear of either ransomware gangs being taken down on the regular, or ever; or of cash ransoms. do you know how hard it is to deliver or receive a cash ransom?

Delivering Cash to Pirates as Difficult as Negotiating Ransom

https://abcnews.go.com/International/story?id=6298733&page=1

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