If you trade in and out for cash, in person with a counterparty, from a self-hosted wallet that you never use to send or receive from any other wallet that's connected to an exchange... then yes. The use case for this is mainly moving money over borders.

except that person(s) you gave and received the cash from know who you are.

only if they're still alive

Or if they brought their phone with them

In this scenario the person transacting the bitcoin murdered their counterparty but the cellphone is still intact?

Either that, or they didn't ask the counterparty to uninstall google maps before the meeting.

It’s a pretty amusing crime plot in any case. If your goal is to find people to off who have money on them there are surely less complicated options.

in reality, no, they don't know who I am. Back when LocalBitcoins.com facilitated face to face trades for cash around the world, you just had to have a high rating from previous transactions. Now... how safe do you feel showing up to meet an anonymous guy in a bar with thousands of dollars in Benjamins? That's the downside of being anonymous. /edit: The downside of operating completely outside the system.

/edit 2: I should also clarify that I never cashed out my casino's BTC in this manner. That obviously wouldn't make sense because anything that touched a casino wallet would be traceable to that nexus. I only used it to bring extra spending cash and rent money to countries where it was hard or expensive to transfer USD through banks.

I bought and sold bitcoin in exactly that way (in person, in public) back in the day.

Never has anything even remotely untoward happen.

Just sit, have a beer, wait for confirmations to happen, and be on your way.

Are Bitcoin ATM's still a thing? There used to be one in a coffee shop near where I lived. If I deposited cash and wore a facemask and sunglasses, how would anyone ever know who did the transaction?

A couple months ago, I was incredulous when I noticed about a half dozen of them on google maps within a mile radius of where I am in San Jose. I haven't gone looking for them physically, though.

They require a phone number and an ID in some cases. Their exchange rates are normally not great either.

Bad exchange rates are the cost of money laundering, along with the eventual jail sentence.

This makes bitcoin sounds like a complicated technical reimplementation of hawala

https://en.wikipedia.org/wiki/Hawala?wprov=sfla1

It actually is exactly like Hawala, and I've traded BTC in and out with networks that had roughly the same human topography. That was the original killer app or crypto.

FWIW, we Jews (speaking for my family) mostly think the Rothschilds were pretty smart for working out the same type of system by placing a brother in each European capital and banking to kings, keeping a ledger instead of moving physical gold whenever possible. It seems obvious now, but it was "moving fast and breaking things" in the 18th Century.

That's the first time in my life that I see someone mention the Rothschilds without it being an anti-semitic conspiracy text. Is there a good resource you can recommend which talks about their (actual) history?

No, Bitcoin is like sending cash directly to the recipient. Lightning is exactly like cryptographic Hawala, with many hops along the way.

... lol. Going to a site to exchange bitcoin for cold cash seems like the worst idea ever if you want to stay anonomyous. Did everyone just forget about snowden?

Let's game this out. Bob and Alice are the first parties.

You trade in cash, in person, probably in a public place. Say that Alice then gets in trouble for the drug dealing they also do (or maybe the government just pings her for not doing KYC and being licensed to do financial transactions), it could be years later. The authorities seize Alice's computers and subpoena "localbitcoins", or the whatsapp/telegram/signal chat that you had to organise the meetup. They might even have a list of addresses that Alice used for transactions at this point. Alice may or may not have had good OpSec, Bob doesn't know.

From that there a myrriad options to identify Bob and Bob's addresses.

In your example you don't use an exchange, but that's not the only method of identifying Bob. Mass survelliance and metadata gathering noticed 100 phones within the location and timeframe Bob and Alice were supposed to meet. Bob had to take a phone to do the actual transfer of bitcoin (or any altcoin), so just leaving it at home wouldn't work. They also know the amount Alice transferred to Bob and the rough timeframe that it was completed and put into the ledger. Bob was also seen drawing out roughly the right amount from the ATM an hour before the meeting. Of the 100 phones, most haven't drawn out that much money recently.

So they can correlate a set of phones with a set of addresses. Even if Bob is not completely unmasked at this point. He has the money in but has to get the money out as well. Bob wanted as you say, to move money across the border. In order to do that Bob must cross the border[0] and meet with Charlie to do the reverse of the transfer. Only a handful of those 100 phones crossed borders shortly after meeting with Alice.

As soon as the money in that address moves again the cross reference with the locations of the tagged phones and discover that they know Charlie because he's done a KYC with an exchange and installed their app (even if he doesn't use that address for the transaction). They ask Charlie some pointed questions about whether he is following KYC procedures in his financial dealing and he caves and gives up the chat logs confirming your meeting, or maybe they just install NSO spyware on his phone and watch to find all the other people Charlie is dealing with.

So...

In a perfectly isolated one off instance maybe that's pseudonymous. In any real world transaction it's extremely unlikely that a state can't use it's resources to unmask the participants. In a one shot, the rules might be one way, but in multi-shot there are always factors that will serve to unmask the participants, and in reality you have to do those transactions over and over until you slip up and just combine them with a KYC exchange account and it doesn't even require that level of effort on the part of the state. OpSec is hard, as they say.

[0]: there is an alternative where only the bitcoin transaction crosses the border in return for something of value, either physical or digital, both have alternative paths that can be tracked in similar ways.

How is that helpful?

Get Bitcoin from crime

Wash into monero?

Pray the tumbler is legit?

Wash back into Bitcoin

Now what? Bitcoins from tumblers are suspect everywhere with kyc requirements.

Sell off books to a Russian oligarch or North Korea I guess?

You can still trade it for goods and services

Going back to Bitcoin is unnecessary but possible. You go from Monero to cash, wire transfer, or gift cards through a variety of unlicensed conversion services that advertise themselves all over the Internet.

> but possible. You go from Monero to cash, wire transfer, or gift cards through a variety of unlicensed conversion services that advertise themselves all over the Internet.

Those are probably run by the FBI. It seems like a no brained for the government to try to run such services given the wealth of information they would provide.

Having unexplained assets is not a crime and won't be at least in the US because of the constitution, worst case they could be subject to civil forfeiture. Assuming you did everything else right (full disk encryption, Tor on public wifi/LTE router that you alternate routinely, not using Google, etc) the anonymity of Monero means the government would have a very difficult time tying whatever you bought with the Monero to your actual criminal activity.

Parallel construction: if you do enough crime-adjacent things, the likelihood that you are also engaged in crime makes you interesting to law enforcement.

What is crime adjacent that isn't criminal activity?

Large amounts of money being sent through tumblers is definitely suspicious. Or spending more money than reported income.

Apparently, joining a police deputy gang, falsifying evidence trails and murdering civilians is OK, at least in L.A.:

https://www.reuters.com/legal/government/la-is-investigating...

I think pocketing any unlockable crypto-wallets you found along the way would cross the line. You could stick them into civil forfeiture and use the resulting cash to upgrade your department-owned car though.

Most famous right now?

Breonna Taylor (2020) - Louisville, Kentucky: Police officers entered the wrong apartment using a no-knock warrant, which led to the fatal shooting of Breonna Taylor, an emergency medical technician.

Eurie Stamps Sr. (2011) - Framingham, Massachusetts: Police raided the wrong apartment, and during the operation, an officer's gun "accidentally discharged," killing Eurie Stamps Sr., a 68-year-old grandfather.

As many have mentioned above, civil forfeiture cases for carrying cash are rare, but devastating to people who are originally from countries/cultures that don't trust banks or police.

And of course "swatting" such as https://www.courthousenews.com/texas-woman-sentenced-for-swa...

That's not what was meant with 'crime adjacent'.

Heh, it's a literal meaning of crime adjacent (presuming that the person in the actual target apartment was actually guilty).

I suspect anyone that was an early adopter of crypto is somewhat considered crime adjacent because so much of the early usage was silk road.

For a while after MtGox was hacked I used BTC-e (yes, I lost money in MtGox). It was later discovered(alleged?) that the operators of BTC-e were involved in laundering money for the MtGox hack[0]. I guess my very presence in that case would be considered crime adjacent.

[0]: https://en.wikipedia.org/wiki/BTC-e

So long as you pay capital gains and income taxes, unless you are suggesting tax evasion, which is a crime

Yes assuming you pay taxes. Which funnily enough Zhong did.

> You go from Monero to cash

Then you end up like the guy asking for advice on how to sue his banks for freezing the accounts that he'd been using to run his Monero to UKP gateway.

Spend Monero on physical goods via particl.io?

Mint some pixel art into NFTs and then purchase them with your anonymous filthy lucre wallet(s).

Cash out after selling your subjective value art.

That's deniable, but it's not really anonymous, is it?

This scheme is so obvious that authorities are monitoring such trades and people have been convicted for money laundering by self-trading NFTs this way.

As always, you can definitely get away with this for smaller amounts, but if you go big and/or repeat it for a long time, this has all the potential to come back to you.

on the recent darknet diaries episode the guy bought weed/drugs and sold them wholesale to get it back in to cash

Until you buy something you can touch.

And then all transactions up steam can get unraveled.

Only if you and everyone you ever deal with have perfect security. As soon as one person’s identity is leaked, that opens the possibility of a real-world ID being linked to a wallet.

This story from about a year ago also showed how that worked with investigators tracing it link by link:

https://www.wired.com/story/tracers-in-the-dark-welcome-to-v...

"Leaked" also includes cashing in or out of Bitcoin.

Or using a business which is required to report transactions, using a site which gets hacked, etc. I don’t think people sufficiently weight the risk of having a ledger which can’t be redacted – for example, I’d imagine there were a lot of people in Weimar Germany who did not think twice about donating to a synagogue or other organization which you would not want have wanted linked to your bank account a decade later.

This can be true for basically anything:

Maybe you own a car. In 10 years time a green authoritarian communist group starts to suspect anybody who owned a car, you are sent to a re-education facility.

Maybe you are environmentally conscious and bought solar panels. In ten years time an anti environmental fascist group comes to power. You are disappeared.

You make some negative comments about AI at a dinner party. The host has an Alexa home automation system. In ten years time when government is run by AI. You are assigned to sewer cleaning duty, a tragic accident happens.

Summarizing: It's not a really strong argument.

However, if you are doing things that can get you arrested today; That's another story, then you should be paranoid and not use bitcoin. Maybe Monero instead? Although, that's not watertight either.

> You make some negative comments about AI at a dinner party. The host has an Alexa home automation system.

Honestly, I feel uneasy when I know there is any active microphone recording.

Surely they are atleast building some user profile from keywords.

As computations get cheaper, commercial mass surveillance will get really bad.

Future proof security. I think that people discount that aspect of it. If your identity is cracked at any point in the future, perhaps using methods yet to be invented, all your transactions will still be there on the blockchain. I once heard someone refer to the blockchain as prosecution futures, and that is about right.

Exactly - and that’s especially true if laws or other things change. For example, suppose that you made a donation to the political party which lost a key election to an authoritarian – are you sleeping easy at night wondering whether they have a data mining team?

In your hypothetical scenario, I think I would sleep easier having tried to stop it, then to be in the same world but having done nothing to stop it.

There's no real alternative. You rely on the secrets technology we currently have, knowing it might not be future-proof for your entire lifetime, or you don't use secrets technology at all (and I guess live in fear of all possible futures?)

The chance of somebody storing my WireGuard traffic from a local public hotspot to be able to hopefully decode it at some point in the future is far less than someone sniffing dns and http traffic I send from the same hotspot today.

The value of breaking my communication now compared with in 10 years time is far higher too. My bank will have destroyed the records of my dealings in a decades time for example.

Bitcoin’s ledger is specifically designed to be kept forever though. You don’t need to target me today in the how if future payoff

I get the point you’re trying to convey but - at least in the US - you’re legally required to make donations to political candidates publicly anyway, so this isn’t really a regression over the status quo.

That's why you make your anonymous donation to the "Friends of John Smith" organisation, who is completely unaffiliated with John Smith and is merely interested in seeing him elected to office

This is the kind of thing that Monero and team solved iirc.

Pseudonymity has exactly the same problem.

Since the ledger is public, it can be analyzed for patterns from the individual transactions. The more transactions there are involving a certain party, the more likely an outside observer will be able to piece together identities for that party's overall network. KYC exchanges accelerate that process.

Crypto projects like Monero (XMR) do not have this flaw, as deducing the identities of parties from the public ledger is computationally prohibitive.

What if they use a mixer before major transactions and create disposable wallets to transact the funds that risk exposing their wallet?

It took 8 years for this high profile guy to be caught because he comingled funds in 2020

This article is not the investigative epiphany that it thinks it is