That “Secret” Bitcoin Deal You Made Could Come Back to Haunt You

That “Secret” Bitcoin Deal You Made Could Come Back to Haunt You from Schiff Gold

TDC Note – This is exactly what I was discussing in a recent article where I described the transactions BEFORE coming to your wallet AND the transactions AFTER leaving your wallet – they are all tied together on “one ledger with perfect fidelity

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This hasn’t been a great week in the cryptocurrency world. Facebook announced it is banning all ads that promote cryptos, including Bitcoin. According to Zuck’s people, Facebook has to protect users from “financial products and services frequently associated with misleading or deceptive promotional practices.” By that rationale, Facebook should probably ban all political advertising. At any rate, the announcement sent the price of Bitcoin spiraling downward yet again. It is below $8,000 as I write this.

The Indian government added fuel to the fire, announcing it wants to “stamp out cryptocurrencies.”  I say good luck with that. It will never happen. But I’m sure the government will make a lot of people miserable in the process.

So, anyway, a bad week for Bitcoin. And I’ve got some news that’s going to make it even worse for some of you crypto fans out there.

Remember that sloppy Bitcoin drug deal you did five years ago on the “dark web?” According to Wired Magazine, that just might come back to haunt you.

Of course, you may already regret buying those shrooms off the Silk Road, considering those four Bitcoins you plunked down for a night of hallucinations were worth upwards of $80,000 last year. Heck, even with the market tanking, they’re still worth about 16 grand. That’s a pretty pricey high.

And you may have an even bigger problem.

You see, it’s like I tell my kids. You put something on the internet and it’s there forever. That photo you posted of yourself on Instagram will live on long after you’re pushing up daisies. You know the photo. That one where you’re drunk in the fraternity house. Of course, when you’re about 80, that photo might be a fun conversation starter. You can show it to your new pals at the retirement complex.”You remember that time…?” You can even share your “wild times” with your grandkids. Of course, you may not remember that time at all. You might look at it and wonder what in the hell you were thinking. You’ll almost certainly wonder what in the hell you were wearing.

Anyway, what’s true on Facebook is also true on the blockchain. As the folks at Wired put it, “If you weren’t particularly careful in how you spent your cryptocurrency, the evidence of that drug deal may still be hanging around in plain view of law enforcement, even years after the Silk Road was torn off the dark web.”

Yup. Even though that night of mushroom-induced bliss long ago faded from your muddled memory, the po-po may bang on your door at any second, demanding you pay your debt to society.

The retroactive operational security of bitcoin is low,” says Qatar University researcher Husam Al Jawaheri. “When things are recorded in the blockchain, you can go back in history and reveal this information, to break the anonymity of users.”

Uh-oh.

All this time, I thought one of the great benefits of Bitcoin was its security and anonymity. That’s what they tell us, right? But we probably should have known better. It’s the internet, right? Nothing is truly secret on the internet.

OK, I’m being a little unfair. Cryptos do offer the advantage of anonymity, but you have to work for it. You need to know what you’re doing and be very careful in order to keep your transactions truly private. And let’s face it; back when you were poking around on the Silk Road, you were high on shrooms. This wasn’t the peak of your decision-making prowess.

Wired called Bitcoin security a “paradox.”

Because the cryptocurrency isn’t controlled by any bank or government, it can be very difficult to link anyone’s real-world identity with their bitcoin stash. But the public ledger of bitcoin transactions known as the blockchain also serves as a record of every bitcoin transaction from one address to another. Find out someone’s address, and discovering who they’re sending money to or receiving it from becomes trivial, unless the spender takes pains to route those transactions through intermediary addresses, or laundering services that obscure the payment’s origin and destination.”

You’re probably out of luck when it comes to hiding that shroom deal. What’s done is done. And the po-po probably doesn’t really care about that ill-advised purchase.  You’re more likely to be haunted by that frat house photo. Now, if you used the Silk Road to hire a hitman to off your obnoxious cousin Marty, you might have a problem.

I don’t know about you, but my privacy is important to me. I don’t want people in my business. I especially don’t want the government in my business. Cryptos do offer an avenue to keep transactions private  – if you know what you’re doing. You can also buy gold and silver in relative privacy. Of course, the IRS wants to know your business. SchiffGold’s Guide to Tax-Free Gold & Silver Buying makes it easy to understand exactly what the IRS requires are so you can buy and sell privately with confidence.

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Peter Schiff

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for more than twenty years, he joined Euro Pacific in 1996 and served as its President until December 2010, when he became CEO. An expert on money, economic theory, and international investing, he is a highly sought after speaker at conferences and symposia around the world. He served as an economic advisor to the 2008 Ron Paul presidential campaign and ran unsuccessfully for the U.S. Senate in Connecticut in 2010.