Forgot your password?
typodupeerror
Privacy The Almighty Buck The Internet United States Idle

Bitcoin Used For the Narcotics Trade 535

Posted by samzenpus
from the this-is-your-brain-on-virtual-currency dept.
An anonymous reader writes "A story on Aljazeera tells how bitcoin is being used to pay for cocaine, marijuana and other drugs at various eBay style drug websites. From the article: 'Two US senators are asking federal authorities to crack down on an online narcotics market that accepts "virtual" currency. The "Dark Web," an anonymous and secretive online community that trades in heroin, cocaine and methamphetamines among other drugs, has been operating unhindered for months.' Who said bitcoin is not used in the real world?"

This discussion has been archived. No new comments can be posted.

Bitcoin Used For the Narcotics Trade

Comments Filter:
  • by FooAtWFU (699187) on Monday June 06, 2011 @11:57AM (#36351174) Homepage
    Most of these alternative-currencies (Bitcoin, e-gold, etc) find themselves on the shady side of things pretty quickly - especially money-laundering and the like. This is not at all surprising, really.
    • by Anonymous Coward on Monday June 06, 2011 @12:07PM (#36351316)

      Most of these alternative-currencies (Bitcoin, e-gold, etc) find themselves on the shady side of things pretty quickly - especially money-laundering and the like. This is not at all surprising, really.

      It's going to be that way until we finally repeal the idiotic War on Drugs and admit that in a so-called "free country" it is wrong to ever tell consenting adults what they may do with their own bodies in their own homes. War on Drugs is a total failure anyway. Anybody who wants drugs can get them. It has done nothing to stop them.

      • by Plugh (27537) on Monday June 06, 2011 @01:09PM (#36352296) Homepage
        "It's going to be that way until we finally repeal the idiotic War on Drugs and admit that in a so-called "free country" it is wrong to ever tell consenting adults what they may do with their own bodies in their own homes."
        Amen, brother. If you're serious about wanting liberty in your lifetime, check my .sig... and join us. Drug policy [freestateproject.org] is important to many of us.
    • BAH! Who needs bitcoin when the regular banks got your back [bloomberg.com]?

      The entire market in contraband is too big to punish without trashing the economy even more... They don't want to stop drugs, they want to control them... It's the controlled substances act

    • by gad_zuki! (70830) on Monday June 06, 2011 @12:25PM (#36351612)

      Right, because its the currencies' issue. Its not like I've ever bought bags upon bags of pot with dollars and euros.

      What would be surprising would be currency that wasn't ever used for illicit things. It doesn't and will never exist. Especially with conservative philosophies that don't let us decrim or legalize mostly safe things like pot or ecstasy.

      Open your eyes, all these guys are doing is playing up "War on Drugs" bullshit so they can get larger budgets next year so that a SWAT team can no-knock your home and shoot you when you try to defend yourself thinking you're being robbed.

      • by s73v3r (963317)

        Nobody's saying it's the currency's fault. Its just that such a setup as Bitcoin has is quite attractive to those who would like a little more discretion in their spending habits. Bitcoin provides that. So it's no surprise that it would be a target for money laundering and illicit sales.

      • A few years ago, I went to a local casino (it was the only place where you could have a quiet drink cheaply in the evening), and it was highly entertaining to watch people there. One person was going around every roulette table placing a £50 bet on red. Someone else walked around after him and collected the winnings. A little while later, the first person ran out of money, and the second one cashed out. They both go home, and one can say 'I lost a pile of money at the casino' while the other can s
    • by Hatta (162192) on Monday June 06, 2011 @12:30PM (#36351688) Journal

      How does this work? Bitcoin is anonymous right until you receive the contraband. If you're making anonymous drug trades with someone on the internet, there's even less guarantee that they're not a cop than if you're working with someone you know. If you have to receive the drugs in person, the extra anonymity doesn't help you.

      And at this point, why are drug dealers the first to get on board with Bitcoin? Bitcoins are only valuable if you can trade them for something useful. If you can buy drugs with Bitcoins, that makes them valuable to the cusomer. But what will the drug dealer do with the Bitcoins?

      • by blueg3 (192743)

        Exchanges like Mt. Gox will trade dollars for bitcoins and vice versa.

        There was an article recently on a popular drug-purchasing website that is hosted as a Tor service and uses bitcoins. The drugs are sent to you in the mail. This of course gives you no anonymity at all. Only the money and the website are anonymous.

      • by moderatorrater (1095745) on Monday June 06, 2011 @12:55PM (#36352086)
        They'll trade the bitcoin for actual currency. The extra step here is that there's an organization that buys and sells bitcoin that can give them anonymity. It's essentially like using baseball cards instead of cash: the baseball cards' value fluctuates, but it's stable enough to get you close to what you want and there's a third party willing to buy and sell the cards when they're not being used in a drug transaction.
    • by Ecuador (740021)

      Ehm, I don't think you can put e-gold, a gold-bullion backed currency (that was used for money laundering) together with bitcoin.
      And we've had enough bitcoin articles. Ok, I know the people who started bitcoin do everything they can to give it value and become rich, but enough with the slashvertisement!

      • Re: (Score:2, Insightful)

        by Anonymous Coward
        More importantly, bitcoin isn't that cool anymore. The initial wave of guys got in and generated hundreds of bitcoins an hour. Last week, I set up my work laptop crunching via one of the more popular co-ops. Over a week, I generated 1 bit CENT. That's about 7 cents real money. I tried to transfer that bit cent, and was told that I couldn't, because there's a one bit cent tariff for all transactions. I know GPU is much, much faster, but we're looking at sinking multiple real-world cents worth of electricity
      • Actually I think you can. The point isn't whether or not the value of the currency is backed by something tangible and valuable. The point is the perceived need and usage of non-government issued currency. One of Bitcoin's motivators for instance was to hedge against the reckless, monetary policies that led to the most recent economic collapse of the western world. E-Gold was established for rather similar purposes. Certainly currency can be and is used for black market transactions, it doesn't really
    • alternative currencies find themselves doing illegal stuff?

      what do you suppose real currencies do? the exact same thing.

      This just in: it's actually harder to track with USD than it is via bitcoins.

  • by Anonymous Coward

    Your government is responsible for aiding this trade!
     
    I think we are going to see a lot of anti bitcoin smokescreen stories pushed down the pipe line at us. Until they tax bitcoin. Then you'll see "Baby heart transplant paid for with bitcoin" stories in the news.

    • by Anrego (830717) *

      The lack of tracability probably makes bitcoin more apt for this task, which I think is the real story.

      Overall, bitcoin has that same "cool concept used by too many of the wrong people" feeling as freenet.

  • Great. (Score:5, Funny)

    by fuzzyfuzzyfungus (1223518) on Monday June 06, 2011 @11:59AM (#36351204) Journal
    I, for one, do not want to have to explain to some thugtastic DEA jackboots that "hash-based currency" can be acquired by legitimately doing a bunch of math, as well as by other means...
    • by zill (1690130)

      I, for one, do not want to have to explain to some thugtastic DEA jackboots that "hash-based currency" can be acquired by legitimately doing a bunch of math, as well as by other means...

      Bitcoins are made of weed? Does the President know about this yet?

  • And here I thought it'd be porn, not drugs that would get bitcoin going.
    • by NevarMore (248971)

      Who the hell pays for porn?

      • by Abstrackt (609015)

        Enough people that they keep making it.

      • by Shikaku (1129753)

        Ads pay for porn as well.

      • by cayenne8 (626475)

        Who the hell pays for porn?

        There are a lot of people out there....either stupid or uneductated about things enough to have no clue you can find pr0n for free.

        For a fun experiment, I've been thinking of doing some kind of USENET scraping...to gather some porn for free....set up a web server and charge suckers for it, just to see how many try to pay me for free porn I get.

        I have to guess I'd get a decent amount of money....just got to target the code to be careful to NOT get anything illegal out there and

  • by ErikZ (55491) * on Monday June 06, 2011 @12:00PM (#36351226)

    Also, at what point did it become a good idea to buy illegal drugs over the Internet? What exactly do you plan on doing when your 10k in Cocaine doesn't show up at your doorstep?

    • by batquux (323697)

      It's ok, it says right on the item page that they definitely aren't cops and they only need your address for delivery purposes.

    • by mikael_j (106439) on Monday June 06, 2011 @12:09PM (#36351370)

      I believe the idea with Silk Road and similar sites is that they are reputation-based. So apart from just making sure that you and the seller are in the same country you can also check his/her reputation, someone with a very good or perfect reputation is unlikely to screw you over.

      Also, from what I've seen from checking out Silk Road it appears to be mostly smaller amounts of drugs being sold, 5-10 grams of marijuana, a handful of MDMA pills and similar quantities. So not exactly $10k worth of cocaine. Besides, most sellers are doing this to make money and if they want to stay in business they are likely to want to keep their good reputation (there's always the risk of someone deciding to abuse their reputation to scam people out of larger amounts of bitcoins or the police creating a bunch of fake accounts but overall the risk should be fairly low if you buy from sellers with a solid reputation, sort of how the drug trade works in real life only you don't have to come face to face with the dealer)...

    • by Jack9 (11421)

      Agreeing to buy and actually making the transaction are different things. People have been buying over the internet since the 90's. AOL chat was a prime place to ask "poke smot?" then escalate.

  • Hash Based (Score:5, Funny)

    by jeremiahstanley (473105) <miah@NospAm.miah.org> on Monday June 06, 2011 @12:01PM (#36351242) Homepage

    Nothing like using a hash to score some hash.

  • Are these web sites and deals happening inside the US? If not what are US Senators going to do about it?
    • by Jeremi (14640)

      Are these web sites and deals happening inside the US? If not what are US Senators going to do about it?

      I'd imagine mandatory filtering of Bitcoin traffic by ISPs will be suggested, at some point. Inevitably we'll end up with the Great Firewall of USA; fortunately Cisco and friends have plenty of experience implementing that sort of thing already.

  • Welcome to the first sign that the Wunch of Bankers that lord it over us have spotted a threat..

  • Bitcoin features (Score:4, Insightful)

    by sourcerror (1718066) on Monday June 06, 2011 @12:08PM (#36351340)

    Bitcoin has the feature, that it can't be inflated (claimed by their proponents). However, that's very good reason, why government might want to outlaw it: you're avoiding a tax, the "inflation tax".

    They just need some stories about some drug dealers, pedophiles, terrorists who use Bitcoin, and it will be pretty easy to crack it down.

    • Re: (Score:2, Insightful)

      by bmo (77928)

      >Bitcoin has the feature, that it can't be inflated (claimed by their proponents).

      More than that. If buttcoin actually becomes an actual alternative to paper currency, it has built-in hyperdeflation.

      There are 21 million buttcoins (roughly) to be mined, and that's it. Over time you have fewer buttcoins (because they can be destroyed) chasing after more goods (because of economic growth).

      This means that any leveraged purchases are a fools' errand - capital machinery, durable goods, houses, bought on cred

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        > This means that any leveraged purchases are a fools' errand - capital machinery, durable goods, houses, bought on credit, are the worst deals in the world because you pay with money that is worth more over time. Deflation serves only the hoarders and creates a braking effect on an economy.

        Yeah, this is exactly why Apple (or any other computer makes) has not sold a single computer in the 30 years it's been in business. People aren't stupid and realize if they bought a computer today, they'd be wasting a

      • by Anonymous Coward on Monday June 06, 2011 @12:57PM (#36352118)

        >Deflation serves only the hoarders and creates a braking effect on an economy, because why spend money today when it will be worth more tomorrow?

        BS. Deflation serves almost everyone. Deflation is the natural effect of technological progress and capital accumulation. Why spend money today? Because you want stuff. Take an industry with major deflation you may have knowledge of - computers. I see no one spends money today on a computer because they will be able to get a better one tomorrow - right. Fear of deflation and adoration of inflation are just nonsense promoted by the state and the status quo because it benefits *them*.

      • There are 21 million buttcoins (roughly) to be mined, and that's it. Over time you have fewer buttcoins (because they can be destroyed) chasing after more goods (because of economic growth).

        And that's one of the reasons we've moved from a hard currency economy to a fiat one - because hard currency economies are highly limited and difficult to grow. And hard currency economies aren't, contrary to popular belief, any more stable than fiat currency economies. When you literally cannot physically (or virtually in the case of Bitcoins) obtain the currency you need to make purchases or pay debts - the whole economy comes to a screeching halt.

        • by Akvum (580456) on Monday June 06, 2011 @01:26PM (#36352576) Homepage Journal
          Yeah, but bitcoin is infinitely sub-dividable, so that argument is irrelevant. Everyone will always be able to get enough to transact. The instabilities in hard money economies are due to fractional reserves creating inflations, or centralized debasement (coin clipping, etc). In reality, all economies are difficult to grow. Inflationary economies just front-load the prosperity, which is popular, as we are impatient. The real weakness of bitcoin is that it is only as strong as SHA-256. When that is broken, your bitcoins become basically worthless.
          • Yeah, but bitcoin is infinitely sub-dividable, so that argument is irrelevant.

            Right - being infinitely sub-divideable means you have an endless supply of them on demand. Oh, wait. It doesn't.

            Everyone will always be able to get enough to transact.

            Um, no. You can only get bitcoins if someone is willing to give you bitcoins (as charity, or in exhange for goods or services). But, the problem is, like other hard currencies, their built in deflation means their is an incentive to hoard and a disincent

      • by Vaphell (1489021)

        Deflation serves only the hoarders and creates a braking effect on an economy, because why spend money today when it will be worth more tomorrow?

        so what we have instead is economy greased with purchasing power stolen from savers and people on discretionary income, got it.

        In theory it's a nice idea to have money pool and economy going hand in hand but in reality governments have every incentive to underestimate the inflation rate. That way they can tax people in almost unnoticed way for additional percent or two, borrow more to bribe voters with 'freebies' and repay less in terms of real purchasing power down the road. I don't trust politicians and c

    • Inflation at a controlled rate is good for the economy. Deflation, which is what bitcoins are designed from the ground up to produce, is much more dangerous. In a deflationary system, your money is worth more tomorrow than it is today. Why bother investing that money in anything when the money will be worth more tomorrow than it is today? And if the bitcoin economy is increasing fast enough, you'll reach a point where there is no conceivable investment that is better than just stashing bitcoins in a saf

  • by xednieht (1117791) on Monday June 06, 2011 @12:08PM (#36351352) Homepage
    The $US dollar is by far the most popular currency used in narcotics trade.
  • Next story (Score:4, Insightful)

    by guruevi (827432) <evi@@@smokingcube...be> on Monday June 06, 2011 @12:09PM (#36351356) Homepage

    Dealers sell drugs to users using local currency, Senators pass a law to outlaw the $100 bill.

    • Yes, the government has already required banks to report any cash transactions using a lot of 100 bills or transactions over I think it was $3000 that are unusual for a client to the government. I think the penalty was $250k for each unreported incident and they nailed one East Coast back as an example. I was working for a bank and had to write the reporting code when that first happened. That was about 8 or so years ago if I remember. So they have not outlawed the $100 bill but recognized its important ro

    • by xaxa (988988)

      Dealers sell drugs to users using local currency, Senators pass a law to outlaw the $100 bill.

      €500 notes withdrawn over organised crime fears [telegraph.co.uk]

      The Serious Organised Crime Agency (Soca), which coordinated the voluntary industry move, said there is ''no credible legitimate use'' for the note in Britain.

      Presumably this just means the criminals will go to Ireland or some other Eurozone country, where there are legitimate uses for a €500 note. If you can smuggle that quantity of cash into the UK it won't be difficult to take it to France or Ireland -- there are no customs checks, just security (explosive/etc) checks if relevant to the means of transport (i.e. take the ferry, or your own plane/yacht).

      (€500 = US$730)

  • Yet another bitcoin story posted by samzenpus. I smell a rat.
  • by Jiro (131519) on Monday June 06, 2011 @12:12PM (#36351414)

    Again.

    Remember when we had the "mistaken pot busts" Bitcoin story where the first five paragraphs were just about Bitcoin, and the pot bust was not only buried in the article but attributed to an IRC chat?

    This one is slightly better in that it's not mainly about Bitcoin, but it's obvious that Slashdot is being pumped full of Bitcoin articles by Bitcoin promoters.

    • Re:This is an ad (Score:4, Insightful)

      by Jeremi (14640) on Monday June 06, 2011 @12:27PM (#36351652) Homepage

      it's obvious that Slashdot is being pumped full of Bitcoin articles by Bitcoin promoters.

      Well, duh. Slashdot is also pumped full of Linux articles by Linux fans, pumped full of video game articles by video game fans, and pumped full of science articles by science fans. News for Nerds, remember? Nerds are interested in BitCoin, because it's an interesting bit of software.

    • You think this is a promotion? I guess among drug users, but I don't think that's the majority of Slashdotters. Maybe I'm wrong about that of course. I just see this as an "oh great, the US government is going to crack down on bitcoin" story.

  • by Lieutenant_Dan (583843) on Monday June 06, 2011 @12:14PM (#36351442) Homepage Journal

    Last week it was about an imaginary bust of a Bitcoiner "miner" who may be using too much electricity, making law enforcement potentially believe that it was a grow-op.

    Today is a story about virtual currency that is barely used anywhere to be used on online drug trading. Not Bitcoin specifically. Paypal most likely ...

    Honestly. Having a video "story" is bad enough. Having the story linked to Bitcoin on a vague premise is pretty bad.

    Let's create a Bitcoin /. filter, so I can exlude these stories from my profile. Not sure how this relates to "Privacy". I'm thinking that there is a group of Bitcoin proponents working hard to get any publicity.

    • It relates to Privacy because one of the main "selling" points of Bitcoin is anonymity.

      • It relates to Privacy because one of the main "selling" points of Bitcoin is anonymity.

        Yes, this has as much to do with Privacy as me taking off my license plates off my car so that I don't have to pay the tolls. Pardon the car analogy ...

        They could have put on the Borg Gates icon on there since perhaps the Bitcoin software was running off a Windows computer?

  • by Anonymous Coward

    https://mtgox.com/trade/history [mtgox.com] (click "all time")

    In two months, the value per Bitcoin has increased from .5 USD to 20 USD, a 40 fold increase. Slashdot is being flooded by bitcoin speculators to increase prices. People are paying $20 for something worth 50 cents for no good reason. The price will collapse to less than $1 in the near future. People are throwing money away.

    • I dunno. if you mine and sell them, and don't buy any, you're not losing anything. A pair half decent video cards working 24 hours a day will net you ~2 bitcoins a day.
  • The only drug dealers accepting bit-coin for their drugs are the ones using their own product. I'm sorry to say, but bit-coin has ZERO value in what 99.99% of people refer to as the real world. It might make you a rich man in Second Life, but you aren't going to be buying a joint of Mexican schwag weed with this stuff outside of the internet.
  • Bitcoin has no viable value. I dont understand why anyone, esecially drug dealers, would take bitcoin. Why not just draw on some paper with crayons and say it's money?

    Bitcoin is not backed by any government, nor is it backed by anything of value. CPU cycles are not valuable after they are expended, and the work involved is not useful for anything else. So I really can't understand why anyone would give goods that ARE worth something in exchange for them.

    Just because it takes a lot of effort to make them

    • by chill (34294) on Monday June 06, 2011 @12:33PM (#36351746) Journal

      There are bitcoin currency exchanges where you can trade for $US.

      Money -- ALL money -- is only worth anything because people mutually agree it is. All of it is nothing more than a medium for exchange that is more convenient than barter.

      Backed by government can mean zilch in a very short order if no one trusts that government any longer. See Wiemar Republic and Zimbabwe for example.

    • by ErikZ (55491) *

      How is the dollar backed by the US government?

      Can you go to the US government and have your dollars exchanged for gold or land?

      • by inviolet (797804)

        How is the dollar backed by the US government?

        Can you go to the US government and have your dollars exchanged for gold or land?

        Excellent reply. I was hoping somebody would point out the hilarious fallacy of "backed by a government".

        Goes to show how effective the propaganda is: a dollar is, in reality, dysbacked by our government, in the sense that its value is continuously reduced by the fed via issuance of additional M3.

  • I'm pretty sure Marijuana isn't a narcotic. And I don't think cocaine is either.
    A narcotic would be like morphine or heroin.

    Narcotics are specific, not a generalization for all drugs.
    If you're going to post Slashvertisements, at least get some of your facts straight.

"Out of register space (ugh)" -- vi

Working...