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>“All it would take would be one terrorist incident in the U.S. funded by bitcoin for the U.S. regulator to much more seriously step in and take action, he said

>“All it would take would be one terrorist incident in the U.S. funded by bitcoin for the U.S. regulator to much more seriously step in and take action, he said. “That’s a risk, an unquantifiable risk, bitcoin has that another currency doesn’t." You can't make this up... or maybe I'm not understanding something. So, what's currently funding terrorist attacks?

nxsynonym 9y ago
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?
- zitterbewegung 9y ago
  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.
  - iamthirsty 9y ago
    Illegal operations would obviously not rely on banks.
    - infecto 9y ago
      I think you would surprise yourself with that comment. Illegal operations do indeed rely heavily on banks.
      - knz 9y ago
        > Illegal operations do indeed rely heavily on banks. https://www.reuters.com/article/us-hsbc-probe/hsbc-became-bank-to-drug-cartels-pays-big-for-lapses-idUSBRE8BA05M20121212 https://www.reuters.com/article/us-hsbc-probe/hsbc-became-ba... As an example for anyone not familiar with these types of stories.
      - iamthirsty 9y ago
        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.
    - dashundchen 9y ago
      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-has-form-mexico-laundered-drug-money https://www.theguardian.com/commentisfree/2015/feb/15/hsbc-h...
    - Danihan 9y ago
      Don't be so sure...
  - nxsynonym 9y ago
    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.
    - mikeash 9y ago
      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.
- dajohnson89 9y ago
  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.
- iamthirsty 9y ago
  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.
  - mikeash 9y ago
    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.
  - oolaf 9y ago
    That bit about the false flag has me thinking. Has that possibility been seriously discussed?
- JamesBarney 9y ago
  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.
  - ftlio 9y ago
    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.
- TimPC 9y ago
  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?
samsonradu 9y ago
I think the point is that bitcoin is very fragile and any powerful enough state-actor can bash it to the ground. There are various ways to achieve this, from shorting to propaganda, to attacking (hacking) large exchanges or miner networks and so on. Only time will tell of course, maybe that is already priced in.
- adamnemecek 9y ago
  The same thing could be/could have been said about the internet as a whole.
  - samsonradu 9y ago
    Sure, but the internet serves the economic purposes of most of the world. Nobody wants it to go away. Can't say the same about bitcoin however.
    - sodafountan 9y ago
      And that sentiment towards Bitcoin is changing every single day.
  - paulhodge 9y ago
    Big difference is that Bitcoin has all the right conditions for a bubble pop. If someone did a 51% attack, this would cause people to lose trust in the currency, everyone would cash out, creating a bank run, which would be a self-accelerating process that drives the price even lower. So even if the network recovered the next day, it would take a long long time to rebuild that trust. Whereas with the internet, if someone is able to knock out critical infrastructure one day, engineers would figure out a way to fix/reroute it, get it working a few days later, and everyone would happily log back on as soon as it's working. Although maybe they would throw out their "smart" coffee machines and etc.
    - Klathmon 9y ago
      I disagree that everyone would cash out. There have been crashes of bitcoin before. None "to zero" but pretty substantial, and not everyone "cashes out" right away.
thisisit 9y ago
He is alluding to the anonymous nature of bitcoin. Today even if the funding happens in USD there is trail - to countries and banks. Sanctions can be slapped against countries and banks fined. What about bitcoin? It cannot be fined and the only way to sanction is to "take action"
- JumpCrisscross 9y ago
  Bitcoin leaves a permanent trail in a way cash does not. For the IC, Bitcoin is a bonanza.
  - thisisit 9y ago
    Sure but mixer services with ability to create unlimited accounts unlike the KYC fulfilled real accounts make things easier on BTC.

nxsynonym 9y ago

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?

zitterbewegung 9y ago
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.
- iamthirsty 9y ago
  Illegal operations would obviously not rely on banks.
  - infecto 9y ago
    I think you would surprise yourself with that comment. Illegal operations do indeed rely heavily on banks.
    - knz 9y ago
      > Illegal operations do indeed rely heavily on banks. https://www.reuters.com/article/us-hsbc-probe/hsbc-became-bank-to-drug-cartels-pays-big-for-lapses-idUSBRE8BA05M20121212 https://www.reuters.com/article/us-hsbc-probe/hsbc-became-ba... As an example for anyone not familiar with these types of stories.
    - iamthirsty 9y ago
      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.
  - dashundchen 9y ago
    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-has-form-mexico-laundered-drug-money https://www.theguardian.com/commentisfree/2015/feb/15/hsbc-h...
  - Danihan 9y ago
    Don't be so sure...
- nxsynonym 9y ago
  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.
  - mikeash 9y ago
    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.
dajohnson89 9y ago
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.
iamthirsty 9y ago
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.
- mikeash 9y ago
  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.
- oolaf 9y ago
  That bit about the false flag has me thinking. Has that possibility been seriously discussed?
JamesBarney 9y ago
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.
- ftlio 9y ago
  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.
TimPC 9y ago
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?

samsonradu 9y ago

I think the point is that bitcoin is very fragile and any powerful enough state-actor can bash it to the ground. There are various ways to achieve this, from shorting to propaganda, to attacking (hacking) large exchanges or miner networks and so on. Only time will tell of course, maybe that is already priced in.

adamnemecek 9y ago
The same thing could be/could have been said about the internet as a whole.
- samsonradu 9y ago
  Sure, but the internet serves the economic purposes of most of the world. Nobody wants it to go away. Can't say the same about bitcoin however.
  - sodafountan 9y ago
    And that sentiment towards Bitcoin is changing every single day.
- paulhodge 9y ago
  Big difference is that Bitcoin has all the right conditions for a bubble pop. If someone did a 51% attack, this would cause people to lose trust in the currency, everyone would cash out, creating a bank run, which would be a self-accelerating process that drives the price even lower. So even if the network recovered the next day, it would take a long long time to rebuild that trust. Whereas with the internet, if someone is able to knock out critical infrastructure one day, engineers would figure out a way to fix/reroute it, get it working a few days later, and everyone would happily log back on as soon as it's working. Although maybe they would throw out their "smart" coffee machines and etc.
  - Klathmon 9y ago
    I disagree that everyone would cash out. There have been crashes of bitcoin before. None "to zero" but pretty substantial, and not everyone "cashes out" right away.

thisisit 9y ago

He is alluding to the anonymous nature of bitcoin. Today even if the funding happens in USD there is trail - to countries and banks. Sanctions can be slapped against countries and banks fined. What about bitcoin? It cannot be fined and the only way to sanction is to "take action"

JumpCrisscross 9y ago
Bitcoin leaves a permanent trail in a way cash does not. For the IC, Bitcoin is a bonanza.
- thisisit 9y ago
  Sure but mixer services with ability to create unlimited accounts unlike the KYC fulfilled real accounts make things easier on BTC.