Silk Road forums
Discussion => Security => Topic started by: jackthetripper on February 19, 2012, 12:25 pm
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Just wanted to start this thread even though I know it has been discussed, a lot of people including myself could benefit from identification of and ways to circumvent these features. Here is what is on my mind:
1. Mt. Gox has a dialogue on their site saying that if you access it with Tor this may result in suspension of your account and having to submit AML documents. Even a document showing your address, bank account, etc. would be very unfavorable because they would probably file a report with the government. This is not an issue because I never access Mt. Gox with Tor, and can't see a reason to. But is does raise the question of at what point moving bitcoins through there would be flagged as suspicious and subject to a Suspicious Activity Report (SAR) or the equivalent.
2. Okay so as it has has been noted before (I'm sorry I can't remember by who), sending your bitcoins from SR to a wallet and then Mt. Gox/Dwolla does not obscure the transaction chain much, if at all. What is a good method for doing so, and how does it in fact work?
3. Say you have send your funds from SR to Mt. Gox, too bad Dwolla doesn't accept bitcoin deposits, hopefully with a stop in between, and you now have the money at Mt. Gox. I would then send it to Dwolla in semi-regular intervals, maybe weekly, no more than $1000. Move it to your bank account in a similar manner. If possible it would be good to have a fake business, but as discussed on another thread that is far from completely safe and is really only a way to report the income, if you are making that much, to legitimize it. Any real investigation of your front business is going to lead to more questions and I don't believe it will hold up under scrutiny. What you want to avoid as far as I can tell above everything is a bank SAR, which can be the result of the bank people becoming suspicious (a large cash deposit or withdrawal is one of the main ways). I read on Wikipedia that banks have AML people and software to detect money laundering, but if you just deposited a few hundred or a thousand a week I can't see how that could be differentiated from a normal business owner depositing earnings.
4. Is Dwolla red-flagged in any way? Like if your bank people see it appearing on your deposits/withdrawals all the time would they be more suspicious?
5. Another poster commented that upon finding out that he had undeclared income, the IRS simply asked him nicely to pay it. Wouldn't this be nice. If they flag and AML you is this a likely result? Or is IRS Criminal Investigative Division the more likely result?
Thanks for all the wisdom and intelligence shared by you senior members, and all the previous posters I quoted, and hopefully I have something to add to that.
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Buying and selling bitcoins is not illegal. You do not need to disguise it under a fake business.
For example, any kid who plays an online MMORPG can earn gold and sell it, and can even buy gold. This same concept applies to bitcoins.
All you have to say is you buy and sell digital currency. It doesn't matter what BTC address sends you the bitcoins to sell, as long as it changes overtime(sr has an option to change it).
This way, you can get AML ceritified on MtGox without having to worry about any legal issues. There's nothing illegal about being a bitcoin exchanger, just like there's nothing illegal about exchanging gold coins for cash on World of Warcraft.
Even if you get audited by the IRS, there's nothing wrong. Just tell them you buy and sell bitcoins and make money off the process. You buy bitcoins off people for cash/mtgox and you sell them to other people. This is profit. No law is being broken. As long as you report your income the IRS wont give a shit. This way you can safely be AML certified on MtGox, raise no red flags, and use dwolla safely.
Just be sure, that if the IRS ask you to go into detail about your process during an audit, that you actually have a legitimate plan layed out for 'how' you obtain your bitcoins, and 'how' you sell them. This is a very easy thing to do if you know how MtGox functions - I'm not going to do all the thinking for you.
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Keep your money in bitcoins, in a secure wallet out of the government's reach. America is a brand name and if you buy their currency you're supporting and empowering them. Plus, when you get busted with $200,000 USD in your lap do you think they're going to let you keep it? Don't be mistaken, that's their money. They created and printed it, and they wrote the laws governing it. If you step out of line they'll simply take it by force and use it to build more prisons, bombs, tanks, etc.
Keep enough USD to get by on, and the rest in bitcoins.
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Quite honestly I don't know the answer. I think the real answer is more research. This is an entire field within itself, so you better study it up.
On the pieces of advice you've received thus far, I disagree with them.
The IRS has some smart geeks working for them. Trying to pull "I'm a currency speculator and made millions" isn't going to work at all.
The reason is because of the math, specifically the fundamental principal of counting. Currency speculators, on average, get zero profits from their activity. This is true, you can confirm this with any financial expert who is worth his salt. Check the records of currency of commodity speculators and on average they make inflation adjusted gains. i.e. zero real return. Minus the costs of doing the transactions, which technically makes it a negative sum game, something you don't want to be involved in.
Now, do you really want to tell the IRS that you suddenly developed an interest in currency trading and made progressively cumulative gains? Forget it. They are simply not that stupid.
On the 2nd piece of advice, to keep it in Bitcoin, is just not viable. You want, all your capital, tied up in a volatile instrument like Bitcoin? That's a giant risk.
My advice on this, is to get your capital from Bitcoin to a stable currency in cash, or possibly a commodity like gold or silver since they are quite stable in the longer term. Keep it hidden in many separate secret locations.
Then, work out how to launder the capital. That's a separate step. You'll need your capital on hand in the form of cash of some type anyway, so you might as well do that first.
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My advice on this, is to get your capital from Bitcoin to a stable currency in cash, or possibly a commodity like gold or silver since they are quite stable in the longer term. Keep it hidden in many separate secret locations.
The gold and silver approach strikes me as a pretty good idea, and I'm sort of surprised that I haven't seen more discussion along those lines. You'd still have to convert it to some form of currency in order to spend it at the local supermarket (if that's your thing), but as a store of value if you were trying to build up some savings out of the proceeds of your SR activity - it seems like picking up some gold or silver coins might well be the optimal solution.
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http://www.youtube.com/watch?v=gxvi4m5xyzA
you can walk right into a bank sell your coins from your thumb drive for cash to a real person with no ID or questions asked in this network!
Fuck the government!
~Doc
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you can walk right into a bank sell your coins from your thumb drive for cash to a real person with no ID or questions asked in this network!
Bruce Wagner the mortgage scammer [ dkn255hz262ypmii.onion/index.php?topic=7536.msg69091#msg69091 ] again. ::) I'd recommend using extra caution with this guy and anything he says or is involved with.
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The reason is because of the math, specifically the fundamental principal of counting. Currency speculators, on average, get zero profits from their activity. This is true, you can confirm this with any financial expert who is worth his salt. Check the records of currency of commodity speculators and on average they make inflation adjusted gains. i.e. zero real return. Minus the costs of doing the transactions, which technically makes it a negative sum game, something you don't want to be involved in.
Whoa, whoa, yes that's naturally true. But that doesn't mean there aren't skilled investors who profit. There just happens to be someone who loses every time someone wins in that game. Taking an "average" of all of the "speculators" to mean that it cannot be profitable is incorrect.
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The reason is because of the math, specifically the fundamental principal of counting. Currency speculators, on average, get zero profits from their activity. This is true, you can confirm this with any financial expert who is worth his salt. Check the records of currency of commodity speculators and on average they make inflation adjusted gains. i.e. zero real return. Minus the costs of doing the transactions, which technically makes it a negative sum game, something you don't want to be involved in.
Whoa, whoa, yes that's naturally true. But that doesn't mean there aren't skilled investors who profit. There just happens to be someone who loses every time someone wins in that game. Taking an "average" of all of the "speculators" to mean that it cannot be profitable is incorrect.
Yes, but there are two other laws that then come in to trip you up.
The law of large numbers and the fundamental principal of counting.
It gets geometrically more unlikely that you're going to experience a series of successes. Trouble is, is that the name of game of capital accumulation is compound interest. If you don't compound, you won't make any. So you can't get out of the game.
People do try it. Dipping and out of the markets, market timing. But in practice they have horrible, horrible records, making far less money than the investor who merely indexed the commodity/currency/equity.
This is because of Louis Bachlier's Theory of Speculation. All markets behave like Brownian Motion, they literally fluctuate randomly. It would take too long to explain it fully, but it's true.
Of course you'll occasionally get big winners. But they are very very rare and in a zero sum game it is just pure luck.
I'm not saying you can't make good use of commodities or currencies, because you can. Just that you're better off participating in a positive sum game if you want to accumulate capital.
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Gosh you guys are smart, Pine and Crunchy Frog :) Did you get my pm's? Just wondering if it works, seems to me this forum does not function as well as the Road in some aspects. Catch ya laters.
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my 2 pence worth:
- i would stop buying as much stuff and electrical items for instance you routinely buy IRL thru CC's and cash, and find outlets to get the same
items with btc's; use email and register'd details in some sort of "shopping" acount different to what you'd use irl.
- try get btc's to prepaid cc's for example, where you know you have no other option to pay for certain things which btc's aren't accepted.
- buy A to sell B, take the proceeds to pay for C
;)
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I Love Pine!
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Interesting read!
+1
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I can personally attest to profitability in trading, as I spend 5 years trading for a proprietary hedge fund.
The vast majority of traders lose money, which is why a small minority of traders can make money. Markets adapt to trading systems as they are more widely adopted and have a self-destroying-prophesy effect. Markets are also not random, they are probabilistic. Human beings have a tendency towards bullishness in all facets of life about 62% of the time, positive versus negative. This occurs at all degrees of trend, from centuries down to minutes, and each plays out to effect the next degree up. If you can get an idea of where you are in these patterns you can make money.
Many traders throw in the towel and jump on the "random" bandwagon after they have decimated one or two principal bankrolls. These are the people who trade in the same manner as the vast majority of market participants.
Randomness doesn't explain a guy like, say, Dick Diamond. I have met him. He has traded profitably since before I was born. I have watched him trade in real time, make money in real time, explain to me why his trading system works where so many others absolutely fail. Because he is playing with probabilities, using secondary indicators that only add to the "odds". Trading is a lot like playing poker, and there is a reason that mostly the same group of people is sitting at the final rounds in the world poker tour every year. It is a skill.
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Re: anarcho47
The Red Queen Effect is a metaphor for why what I'm saying and what you're saying isn't necessarily a contradiction. Market efficiency is an extremely paradoxical topic. Note to others: There has long been a Holy War between the investment community and the academic community on the subject. Trillions of dollars are at stake, so there had better be!
The Red Queen's race is an incident that appears in Lewis Carroll's Through the Looking-Glass and involves the Red Queen, a representation of a Queen in chess, and Alice constantly running but remaining in the same spot.
"Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else — if you run very fast for a long time, as we've been doing."
"A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
As you work, buying and selling shares, currencies or commodities , the information you have collected is being incorporated into prices.
That is all kinds of data such as:
- Company/Newspaper reports (hard data)
- Psychology (soft data)
- Tacit knowledge (other data)
A very wide range indeed, it's that set of information that a human can act on, not just regular data you get in a newspaper.
Now, if you and your team work very very hard and research as much and as wisely as you can, you can potentially stumble upon profit-worthy information (usually something nobody else or few know, asymmetric knowledge).
However, inevitably what happens is that this is a temporary experience. This is because to make a profit you must buy/sell, and this information becomes factored into the price. Once it is factored in, there is no more profit to be made. Now the market 'knows' the data.
In other words, that the market is 'efficient' in any sense, is totally dependent on anarcho47 and thousands like him doing his job properly. Just like the Red Queen, they have to keep running even faster just to stay in the same place, otherwise they will lose.
The market is like a Mirror to the real world, factoring in sentient information into its Model of reality as quickly as it possibly can. It's not perfect, it frequently gets it wrong in fact. But there is nothing better than it. The computational power of collectively harnessed sentience via the price system is insane. I think once it is understood properly you either become a capitalist or a communist, it either seems magnificent or it intimidates you. No computer would be capable of such a feat, which is why utopian visions like the Venus Project are always doomed to fail if they attempt to replace it. Nobody really invented it either, which I find interesting.
Anyway I would claim it is extraordinarily rare to persistently find such profit worthy information to act upon over a period in time. You see, it can't just be Dick Diamond. He could simply be having the world's biggest lucky streak. Because not even insider traders persistently manage to beat markets. It has to be Dick Diamond and the majority of people who learned his techniques over long and different time periods. That's a really big ask.
Incidentally, market efficiency cannot be proven. It's even been proven market efficiency cannot be proven. That's why it's called the Efficient Market Hypothesis, not the Efficient Market Theory.
In any case, I think we can certainly agree that there is no free lunch. In practice to claim speculator expertise that persistently brings in the dough will attract the headlights of the IRS very quickly. They'll assume you're the average Joe, not Dick Diamond.
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Ah son of a bitch I wish we could actually talk about this stuff in person. I can't write in depth about this stuff for a plethora of reasons...
All I'm going to say is that the popularity of certain types of analysis, and what is recognized as "fact" where any intangible market is concerned, move in large cycles. The type of market philosophy you have just done a nice write-up on has grown in popularity over the past decade, and it was also popular during two different eras of the 20th century. Another broad-based form of philosophy (think Warren Buffet) regarding markets has been popular during other eras. Both have been "proven" in as much as they can.
Probabilities. It's all about probabilities and behavioral psychology/physiology en masse.