59 votes

FBI Unable To Seize 600,000 Bitcoins From Silk Road Operator

By Ryan Whitwam on October 7, 2013

Closing down the Silk Road and arresting its alleged operator has left the FBI in uncharted territory. After shuttering the hidden site, law enforcement went to work confiscating the money and materials belonging to supposed drug kingpin Ross Ulbricht, but this usually routine procedure is proving especially troublesome in this case. The cache of more than 600,000 bitcoins in Ulbricht’s personal fortune are still inaccessible to the FBI.

The only way to move Bitcoins out of a private wallet is to have the corresponding private key to authorize the transaction. The FBI has been unable to get through the encryption protecting Ulbricht’s wallet, leaving all those Bitcoins — amounting to roughly $80 million at current rates — out of reach. Based on publicly available data, this is about 5% of all Bitcoins in existence right now.

Read more; http://www.extremetech.com/computing/168139-fbi-unable-to-se...



Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

Please.

Stop trying to sell me your software.

All rights reserved and no rights waived.

how is that a success?

if your car is seized and they can't get to your stereo, is that a success?

they still have your car.

you are never getting your car or stereo back.

...

We have good news and bad news. The good news. You no longer have cancer. Bad news... your dead. Hey, are you listening to me.

Gosh, these patients are so rude.

All rights reserved and no rights waived.

your insnsitive to cnacer patients.

Why are you so mean?

Defeat the panda-industrial complex

I am dusk icon. anagram me.

...

I have bone cancer. It hurts very much. It makes me an asshole. I have only good intentions. You have any more questions?

All rights reserved and no rights waived.

Just one. What's it like to be able to stick parts of your body

through other parts of your body?

Defeat the panda-industrial complex

I am dusk icon. anagram me.

...

Well I take my head out of my ass, I am gonna have to smell all that s-hit coming out your mouth.

If you are not laughing than you are not doing it right.

All rights reserved and no rights waived.

As long as we're on the same page.

:)

Defeat the panda-industrial complex

I am dusk icon. anagram me.

...

Cheers to that my good friend.

All rights reserved and no rights waived.

Rotten pigs can't get their hands on it

This is exciting news!

Take back the GOP and Restore America Now.

The Bitcoin Money Myth - LewRockwell.com

http://www.lewrockwell.com/2013/04/frank-shostak/the-bitcoin...

Many economists and financial commentators believe that in the unregulated market of the internet economy, new forms of money can be created that bypass central-bank and government supervision. The latest development is the emergence of a new electronic means of exchange, Bitcoin (BTC). Bitcoin was launched on January 3, 2009 by its inventor, a programmer called Satoshi Nakamote.

The basic idea behind Bitcoin is to create, by means of a mathematical algorithm, a digital good that is scarce and fungible.

Nakamote devised a software system that enabled people to obtain bitcoins as a reward for solving complex mathematical puzzles. The resulting coins are then used for online trading. Nakamote also arranged that the number of bitcoins can never exceed 21 million.

Some experts maintain that Bitcoin will displace the existent fiat money and will usher in a new era of free banking, which will finally put to rest the menace of inflation.

Unfortunately, this is a pipe dream. Electronic money will not replace fiat paper money. The belief that it can stems from a failure to understand the nature and function of money and how it emerges on the market.

To see where this view goes wrong, let’s first see how money comes about. Money emerges out of barter conditions that permit more complex forms of trade and economic calculation. The distinguishing characteristic of money is that it is the general medium of exchange, evolved from private enterprise from the most marketable commodity. On this Mises wrote,

There would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money. (The Theory of Money and Credit, pp. 32-33)

In short, money is the thing for which all other goods and services are traded. Furthermore, money must emerge as a commodity. An object cannot be used as money unless it already possesses an exchange value based on some other use. The object must have a pre-existing price for it to be accepted as money.

Why? Demand for a good arises from its perceived benefit. For instance people demand food because of the nourishment it offers. With regard to money, people demand it not for direct use in consumption, but in order to exchange it for other goods and services. Money is not useful in itself, but because it has an exchange value, it is exchangeable in terms of other goods and services.

The benefit money offers is its purchasing power, i.e. its price in terms of goods and services. Consequently for something to be accepted as money, it must have a pre-existing purchasing power: a price. This price could have only emerged if it had an exchange value established in barter.

Once a thing becomes accepted as the medium of exchange, it will continue to be accepted even if its non-monetary usefulness disappears. The reason for this acceptance is that people now possess previous information about its purchasing power. This in turn enables them to form the demand for money.

In short the key to the acceptance is the knowledge of the previous purchasing power. It is this fact that made it possible for governments to abolish the convertibility of paper money into gold, thereby paving the way for the introduction of the paper standard. Again the crux here is that an object must have an established purchasing power for it to be accepted as general medium of exchange, i.e. money.

In today’s monetary system, the core of the money supply is no longer gold, but coins and notes issued by governments and central banks. Consequently coins and notes constitute the standard money we know as cash that are employed in transactions. Notwithstanding this, it is the historical link to gold that makes paper money acceptable in exchange.

Observe that a bitcoin is not a thing; it is a unit of a non-material virtual currency. A bitcoin has no material shape; hence from this perspective the notion that it could somehow replace fiat money is not defendable.

Bitcoin can function only as long as individuals know that they can convert it into fiat money, i.e. cash on demand (see, e.g., Lawrence H. White "The Technology Revolution And Monetary Evolution," Cato Institute’s 14th annual monetary conference, May 23, 1996).

Without a frame of reference or a yardstick, the introduction of new forms of settling transactions is not possible. On this Rothbard wrote,

Just as in nature there is a great variety of skills and resources, so there is a variety in the marketability of goods. Some goods are more widely demanded than others, some are more divisible into smaller units without loss of value, some more durable over long periods of time, some more transportable over large distances. All of these advantages make for greater marketability. It is clear that in every society, the most marketable goods will be gradually selected as the media for exchange. As they are more and more selected as media, the demand for them increases because of this use, and so they become even more marketable. The result is a reinforcing spiral: more marketability causes wider use as a medium which causes more marketability, etc. Eventually, one or two commodities are used as general media-in almost all exchanges-and these are called money. (Murray N. Rothbard, What Has Government Done to Our Money?)

It was through a prolonged process of selection that people had settled on gold as the most marketable commodity. Gold therefore had become the frame of reference for various forms of payments. Gold formed the basis for the value of today’s fiat money.

Besides, Bitcoin is not a new form of money that replaces previous forms, but rather a new way of employing existent money in transactions. Because Bitcoin is not real money but merely a different way of employing existent fiat money, obviously it cannot replace it.

The fact that the price of bitcoins has jumped massively lately implies that people assign a high value to the services it offers in employing existent money. This is no different from the case when in a country which imposes restrictions on taking money out people will agree to pay a high price for various means to secure their money.

Summary and conclusion

Contrary to the recent hype, we hold that Bitcoin is not money but rather a new way of employing existent money in transactions. The fact that the price of bitcoins has jumped massively lately implies that people assign a high value for the services it offers and nothing more.

Frank Shostak is an adjunct scholar of the Mises Institute and a frequent contributor to Mises.org. He is chief economist of M.F. Global.

All rights reserved and no rights waived.

If you want one good response to the above, read this!

[I love Peter Surda's articles :)]

You can replace "Walter Block" with "Lew Rockwell" below:

Professor Walter Block is clueless about Bitcoin

"...Once a good becomes a medium of exchange (and we thus know it is saleable/liquid), then it competes with other media of exchange not on the basis of its origin, but on criteria unique to media of exchange, such as liquidity and transaction costs. The question of its origin becomes irrelevant. The Austrian critics of the origin of Bitcoin are too late. Their objection would only have been relevant in the narrow timeframe between October 2008 and May 2010. Since then, the criteria determining the future of Bitcoin, as Menger explains, have changed. Sadly, the Austrian critics didn't shift their attention accordingly, and remain silent on the issues of liquidity and transaction costs."

Conclusion regarding the regression theorem
"As a medium of exchange, Bitcoin emerged exactly as Menger predicted. He and Mises also explained that it would not have been logically possible otherwise. It is regrettable, that people who proclaim to adhere to Menger's teachings do not recognise it when it happens right under their noses. It also is something which already happened over three years ago and cannot unhappen. My recommendation is that the "Mengerians" need to shut up and move on."

Just plain 'Happy'about the direction the world is taking! Especially if we live to reach LEV [Longevity Escape Velocity]

...

“Once a good becomes a medium of exchange, then it competes with other media of exchange not on the basis of its origin, but on criteria unique to media of exchange, such as liquidity and transaction costs.”

Sounds like you’re a follower and believer of the already disproved Keynesian economics theory. All good things must come to an end. Reality will sink in eventually. Everyone should know by now, what goes up, must come down. Mediums of exchange end just as fast as they begin. Corrections always come. It’s scientifically and mathematical certainties.

If the Federal Reserve can buy treasury bonds and foreclose on those who lawfully possess land. Than they can also buy bitcoin and make you use it. Bitcoin is a threat to human existence. The last safe guards on the value of human life are being lost. It uses vast amounts of energy, time and resources, it produces nothing.

If the world decided to use bitcoin as a primary medium of exchange than effectively whoever created bitcoin, made the first insider “bitcoins” and mined the available bitcoins before the cap, would own the earth.

“ The Austrian critics of the origin of Bitcoin are too late.”

What are you doing on Dr. Paul’s site? What are you playing at? What is your game?

"My recommendation is that the "Mengerians" need to shut up and move on."
http://mises.org/media/7870/

All rights reserved and no rights waived.

The regression theorem relating to Bitcoin has been explained:

Please see this wonderful article:

http://www.libertariannews.org/2011/07/07/the-economics-of-b...

"The essential point is that once exchange can occur between a money (USD) and Bitcoins, providers of goods have a means by which to value Bitcoins as a potential medium of exchange. The money regression is satisfied, because taken back far enough we reach traditional commodity money: BITCOINS -> USD -> MONETIZED GOLD & SILVER [start monetary economy] -> [end barter economy] COMMODITY GOLD & SILVER."

"...In order for Bitcoins to serve as a medium of exchange without commodity value for uses besides indirect exchange, there must be a translated knowledge of money prices. Market exchangers fill this gap and give Bitcoin users access to this knowledge. Bitcoins may therefore currently serve as a money intermediary for paypal dollars\pecunix\euros. But why is there demand for Bitcoin over USD?? This is a subjective valuation arising from properties such as anonymity, decentralized system of clearance, cryptographic trust, predetermined and defined rate of growth, built in deflation, divisibility, low transaction fees, etc…. inherent to the Bitcoin system..."

also:

Michael Suede also refuted Casey in The Economics Of Bitcoin – Doug Casey Gets It Wrong where he states:

"Casey is essentially making the claim that because Bitcoins have no uses outside of acting as a money, they are inherently worthless. I have argued against this in previous articles and I will repeat myself here. This is a fallacious argument. To claim Bitcoins are nothing is like claiming your operating system is nothing, therefore it is worth nothing. Clearly an inordinate amount of time and resources went into the development of your computer’s operating system. The time and resources that went into the development of the software constitutes “something”, which is obviously more than nothing. Software can have inherent properties that give it value in and of itself. In the case of Bitcoins, they are imbued with value by the free market because of the properties they have that allow them to act as a store of wealth and as a trade facilitator. Those properties which allow Bitcoins to act in this specific capacity are exactly the same properties that gold has which allow gold to act as a store of wealth and as a trade facilitator. Again, even if gold had absolutely no other uses besides sitting in bank vaults as ingots, gold would still be a money."

Just plain 'Happy'about the direction the world is taking! Especially if we live to reach LEV [Longevity Escape Velocity]

...

So many assumptions and invalid assertions. I'm sorry you can not prove that if gold had no other uses other than sitting in bank vaults that it would still be money. Your sitting on a computer built from gold refuting that fact.

Are you trying to prove that Bitcoin has uses outside as acting as money? Because I thought the given was they are inherently useless. Maybe we need to go back to the chalk board... or crayons maybe.

I can poke holes through about 2/3rds of your response. I don't have time for that.

Sorry fail. Abort mission.

All rights reserved and no rights waived.

Bitcoin _is_ used as a currency

That's what the Silk Road was, a trading post where the medium of exchange is bitcoin instead fiat. Even gold used for barter is going to be priced against fiat, not stand alone with gold having an intrinsic and obvious conversion to other non-cash items. Until fiat implodes anyway. Then bitcoin will convert to precious metals rather than fiat to set its value.

Take back the GOP and Restore America Now.

...

Silk Road is financial loss for many people now. Theory seems to work better than practice. It's unfortunate, I know.

All rights reserved and no rights waived.

I have been a guest reader at

I have been a guest reader at DP from Jan 2012 and over the past 2 years I have noticed that while on most threads, most DP members agree on a consensus on the libertarian or conservative view-point, the threads on bitcoin are always fun :)

Why Libertarians wouldn't use Bitcoin is beyond me

IT seems some Libertarians are simply stupid. Damn Stupid.

By Stupid I do not necessarily mean of low intelligence, but more of having an unwitting tendency towards self-destruction.

Ok, You want to use Gold and Silver, I get that.. Trust me I have plenty.

But you can't realistically live of transacting in Gold or Silver right now. So you use dollars right?

*Right*

and every time you use Dollars all youre doing is empowering the Federal Reserve and International Banking Cartel by legitimizing and participating in their corrupt convoluted immoral monopoly.

You have a Real option to opt out, To by pass the system, to use legitimate currency!

What the hell is wrong with you people? It's like you all have Stockholm syndrome. Your complaining about the Fed but when a real opportunity and solution presents itself for you to escape their oppression you fight it tooth and nail running back to be oppressed by the wicked central bankers!

Stooooooopid Libertarians...

...

Spoken like a true believer. Insult and brand your opposition. My guess is you carry a single book around and knock on peoples doors all day.

All rights reserved and no rights waived.

Fantastic Post

Is metal better? Probably. We tried that- it was called the liberty dollar. That ended well.

I'll be the first to hop on board a metal based digital currency once we reach a free society. Unfortunately we don't live in that society yet. In our increasingly digital world you have 2 options-- Federal Reserve Notes or Bitcoin.

Nothing annoys me more than libertarians attacking Bitcoin... and then using federal reserve notes for their purchases.

Explained well PeacefulAnarchism.

Easy to explain

Gold has been a store of value for millennia. It will still be a store of value when your grandkids have grandkids. And there aren't going to be any new precious metals added to the periodic table. There isn't going to be a "Gold 2.0" element invented next year that pushes gold out of the market.

Digital currencies are going to survive in one form or another, but there's no particular reason to think that Bitcoin will dominate that field. What bitcoin has going for it right now is popularity, but when competitors can be created relatively easily predicting whether bitcoin will dominate the field or Litecoin or something that hasn't been invented yet is impossible.

The bitcoin FAQ says: "It would certainly be in keeping with internet history for a similar system built from the same principles to supersede and cast Bitcoin into obsolescence, after time had revealed its major shortcomings. Friendster and Myspace suffered similar fates at the hand of Facebook, Napster was ousted by Limeware, Bearshare and torrent applications, and Skype has all but crushed the last few disciples of the Microsoft Messenger army."

Bitcoin is the geocities of digital currencies. If you haven't heard of geocities, it was the big thing before friendster and myspace, which of course were the big things before facebook. Geocities got there first, in a field with few competitors it was the most popular, but it hadn't yet begun to be challenged by competitor. Over time it lost out, but there was a point at which the company had a market cap of billions.

Libertarians should start learning about digital currencies. But while you can put a significant percentage of your net worth into gold and silver and be confident that over the long term they will serve as stores of value through wars, economic meltdowns, and all the other things that they have survived over the centuries, you can't have that confidence with bitcoin. It might win, it might not.

As an investment bitcoin is very, very risky, and anyone thinking of putting a significant amount of money into it should read the bitcoin FAQ very carefully first. At least that, and preferably a lot more. "Anyone who puts money into Bitcoin should understand the risk they are taking and consider it a high-risk currency." That's not to say that if you like risky investments you shouldn't put some money into bitcoins, but it would be foolish to put more into it than you can afford to lose.

I appreciate your reply

But again just like all the Stupid Libertarians do, You revert to the Gold and Silver debate.

Please just STFU with that non-sense. There is no argument from me or anyone else that Gold and Silver as a store of value isn't far superior at this point.

All my Bitcoins or other Crypto currencies are considered High Risk investments.

However, When for daily purchases, online payments, or transferring money... Why would Libertarians use FIAT evil funny money Dollars?

Stop empowering the central bankers you stupid Libertarians... GEEEEZ!

Are you that dumb? It's so freaking simple! Use Peanuts, seashells, chickens, or Bitcoin... Just stop using Dollars!

Whats Next..Whats Next...Whats next...

Don't get all vexed :) It is

Don't get all vexed :)

It is okay for libertarians not to use bitcoin, but it is an entirely different matter that most go to great extremes to denounce bitcoin as if it is the plague. They seem to have placed bitcoin lower than fiat USD in the desirability index, which is so sad.

...

Data is more common than trees. It's pretty basic why the Austrian School does not consider bitcoin currency unlike the dollar.

All rights reserved and no rights waived.

I do not understand the bitcoin issue?

Is a bitcoin wallet a specific piece of tangible electronic hardware, or is it more software that can be accessed from any where in the world, allowing the owner of these virtual coins to move their bitcoins at any time, to any where in the world they choose?

Is the 'Key' to a wallet just a password, allowing activation of the software for bitcoin movement?

Where do you go to learn about all this stuff, where do you go to buy and sell bitcoins?

www.SpiderWebbs.com (Take Your Bookmarks Wherever You Go!)

Good question

A "wallet" is just software.

A good way to think of Bitcoin is like the Internet. The Internet exists everywhere right? Okay, to access the Internet you use a Web browser.

Bitcoin works very similar. Bitcoin exists everywhere just like the Internet (actually on the Internet). To access Bitcoin you use wallet software.

Just like some people access the Internet different ways, like mobile phones for example, people have different wallet options.

The "key" to the wallet is like a password, but a very sophisticated password called the private key, which is a 256 bit number (very large). The private key (number) is so big it would take full-time computers forever to try to guess it - they never would.

You might try http://bitcoinquickstart.com

Also bitcoin doesn't even

Also bitcoin doesn't even need the internet as much as you may realize. You can print out your very own paper wallet and never connect it to a computer: https://www.bitaddress.org/

If you do not trust that site you can download the javascript and run it on a non-internet connected PC and print your wallets that way. Various projects exists that do something similar by connecting a small non-internet connected box to a printer for added security.
All of my cryptocoin wallets are done this way. Research the pros and cons if you decide to do this.

The block-chain that makes up bitcoin doesn't necessarily need the internet to survive either. The internet makes it much more convenient but no matter how much shutting down the government does, the block chain will always exist somewhere. It will work its way around prohibited networks. Even if that means transmitting it by carrier pigeon.

You can have a wallet on your

You can have a wallet on your comp or you could use a 3rd party wallet online. You run the least risk if you own the coins yourself, instead of entrusting it to a 3rd party wallet. Though it must be mentioned that 3rd party wallets can sometimes have features the main walllet (that comes with the original BC client) doesn't have.

You have your public key, which anyone can see and this public key is basically like your email address. People can send money to your public key. Your private key is the hidden key, which only you know and you need this key to spend the money. Don't give this key to anyone and never reveal it, because giving this key away effectively means that someone else can spend your money, regardless of what type of wallet you use.

Use http://www.weusecoins.com/en/ as a start.

People

this is what I was trying to tell you before about Bitcoin. Things like gold can be seized, like it was by FDR. The government can't seize bitcoins so easily because you can protect the "password" or key to them completely in your mind (or written down somewhere secret).

You can also cross the border with billions or more worth of Bitcoin without the government knowing. Try that with gold or cash. I'm not saying Bitcoin can completely replace precious metals, but they do have their place, especially in the fight for liberty :)