Gift Card Scams: An Easy Way for Scammers to Launder Money ...

My sister thinks she's getting married to a pro wrestler...

I apologize but this may be a bit long. Mind you, this started around November of last year.
My sister is severely mentally ill. She lives with my dad (who's a single parent) and doesn't really get out much. They're a HUGE fan of WWE and looks forward to the events. Her all time favorite is TJ Perkins. She used to spend most of her time on the internet and that's when she started looking up dating sites and looking up ways to contact TJ Perkins. Eventually, after a while, she found someone who claimed to be TJ Perkins. He began to talk to her and convince her the usual song and dance about sending them money or a gift card to help with their family or some other BS. She started buying gift cards with the money she was getting and sending him the codes. She even went to Walmart to wire cash to him until she got flagged for money laundering and my dad was contacted by the cellphone company saying she racked up a bill of a wopping $700 in international calls. He was LIVID. (Luckily, the phone company was able to help him out.)
They went to the police, (where the cop was HELLA fuckin rude and asked her directly if she was mentally ill in the worst kind of way.) and they basically told her she needed to stop because what she was doing was illegal. After the cellphone bill, my dad cut off her data and took her computer away so she wasn't able to contact them. My dad then had to take over her funds because she was literally draining her check to give to send to the scammer. He told her that if she needed anything to ask him and he would gladly get it for her. My dad tried to explain to her several times that she was getting scammed and that the person on the other end was not TJ Perkins and that he would never be asking for gift cards or money and that she was being used but it never stuck apparently...
Today I saw she was charging her phone in the bathroom and got a few text from a contact named, "my darling husband!!!" It said, "baby, send me the codes." And "baby, go get bitcoin atm" (I have no idea what the heck that is so if anyone knows, please tell me.) and "Baby, I need Amazon gift card. Now!" All of her replies are basically long messages of her saying she can't wait to get married and that she loves him and she's sorry she can't send stuff and doesn't want him to get mad at her and yell at her. (I guess he's calling her too and yelling at her when she doesn't do what he says.)
I was pissed scrolling through those messages of my sister just spilling her guts to this guy and only getting responses asking for codes. I didn't really know what to do but block the number since I had her phone in hand but I'm sure he's just going to contact her another way...
My question is, is there anyway we can ask the cellphone company to block any numbers that aren't on a certain list or maybe restrict her data usage? I guess maybe like a kids mode or something? I just have no idea what to do to help her understand...
UPDATE: The phone company can't really do anything about it. Blocking doesn't stop outgoing texts from the person that blocked the sender so honestly, I'm sure this guy has multiple phones and will text her with a different one. Changing her number won't help either since she would just send him messages through the new number.
Update 2: Me and my dad are going to try to talk to her again...I just need this to stop. It's stressing me out because I know she's one step away from sending him too much information and the whole family will be in danger. I just hope she'll listen.
Update 3: The actuall TJ Perkins reached out to help me talk to my sister! He was amazing and understanding and I feel like the message got through. Me and my dad will be getting her a replacement phone (the one she has is garbage) and changing her number tomorrow. She felt really bad and was afraid she was going to jail. I told her everything would be fine if she stopped what she was doing now and ignore any other calls or texts that come through. Thank you so much for all your help!!! You have no idea what this means to me and my family! ❤
TL:DR - My sister is getting scammed into sending gift cards to someone posing at TJ Perkins. I blocked the number but I know they will be contacting her through a different one. Can we do something to stop this?
submitted by shampoobeer to Scams [link] [comments]

My roommate keeps going back to a scammer even after I showed him proof he was being lied to.

An old friend of mine who I live with keeps sending money to someone and may also be involved in money laundering. For context consider he's diagnosed schizophrenic and ptsd and maybe wasn't super sharp to start with if you're wondering what factors may compel him to choose fake affection over none.
It started a few months ago after he broke up with his ex -- he got on a few different dating apps and I got an inkling as to what was happening after he started going broke twice a month on what I'd consider a fairly comfortable income. This is bad for me since it affects my financial situation once-removed and because his mom (who acts as his caretaker) was flatly left with the impression that his money problems were my fault since I had moved in recently. The phone calls from this woman follow a peculiar pattern wherein she'll call, my friend will answer to silence, then she calls back several minutes later -- resembles someone auto-dialing then dispatching someone with a female voice to talk to the mark if they're awake and not busy. One time he almost outted himself to his mom when she came over to sort out biz on payday, he turned his phone on, and notifications from different apps were going off for over two minutes. It would have been funny if it didn't have the potential to make my life harder.
The 'woman' in question claims to be a medical student and has a profile pic of a VERY attractive young woman (roughly half my friend's age) and the money transfers follow the usual m.o. of gift cards and wired money via walmart. At this point just about every friend of his and now his mom too have told him that the situation's unhealthy even if she isn't a scammer but he'll act like he's receptive, then get roped back into it somehow. Because of the schizophrenia he's very bad at figuring how to parse cognitive dissonance and I would guess the scammer is leveraging this to continually steer him back towards sunk cost. He also occasionally projects ire towards me when he gets roped back in. Also, according to my friend she's not even sending him naughty pictures but it's possible he's just trying to be a gentleman about it. O_o
More recently I caught wind of a new m.o. when I heard him mentioning bitcoin so I insinuated myself REAL quick -- apparently they wanted him to accept cash, then send it back via bitcoin for 'tuition'. Sounds like money laundering to me -- perhaps from other rubes in the scam? It took a while but I eventually convinced him that this is the biggest red flag yet in an ocean of them and he told me where she was studying so I could contact the campus cashier and independently vet whether they accept bitcoin (spoiler: they don't). She referred me to the campus police where I filed an incident report in the hopes of verifying this person is who she says she is.
Cut to yesterday and I still haven't heard back, the best case scenario for my friend is that he found a real woman who wants a sugar daddy but lied to him for some reason, and I think he may be getting roped in again since he was kind of cold and flighty throughout the day.
1) Who should I contact in legal terms?
2) What tools can I use to find proof that this person isn't who they're saying they are since I'm starting to think the fbi could literally arrest them for fraud and he'd somehow end up sending the money to their commissary instead?
submitted by ClouseauFoSho to legaladvice [link] [comments]

I ruin people’s lives for fun, this is my story. [Chapter 3]

Chapter 1
Chapter 2
Good morning. It is currently 9 in the morning, and I am just finishing up my coffee at a local shop. I always get the same thing: A large iced coffee with 4 ice cubes and 2 packets of sugar. That concoction makes it the perfect temperature to enjoy.
I tend to do everything by routine, because I like to think it makes me more organized if I do it that way. Life is just a whole bunch of patterns someone has yet to figure out.
I was looking more into Jason’s assets and accounts. I came across something that made me laugh. He has been paying Kiley $1,000 every week. So from my observations, Kiley looks like an escort.
I think that this is helpful, because now I know that she doesn’t have a trustful relationship with him. I mean the money was being paid to the website to hire escorts. I really don’t care about Kiley though. She isn’t important to the game anymore.
I have to go to work in about an hour so I need to finish this up pretty quickly. I wanted to make the process of fucking with Jason long. I went on the dark web for a minute to see if I could come across a device that could withdraw money via ATM from previous accounts that had been connected to said ATM.
If that made any sense, my plan would be to buy this tool, and steal money from Jason’s account. I know I used bitcoin for the last one, but I thought this would be more eventful. I wanted more hands-on experience if you know what I mean.
I forgot to mention that I saw that Jason had a permit for concealed carry, so I need to keep this in mind.
After searching on a couple of the markets that I have accounts with, I finally came across it. It was around $200. I just went ahead, and used the funds that were already on my account to purchase it. It says that it ships domestically, so it should be here in the next few days. I will continue with this update after I get done with my shift.
I have just finished my shift, and I'm exhausted from how pestering my boss is. That prick just loves his sales quotas.
I got a confirmation letter from the vendor to my private email saying:
Your purchase was confirmed and the shipping process will now begin … thanks for doing business.
Fantastic! Now we can get to the fun part. I wanted to look more into his odd transaction with a car wash in Florida. I looked up the car wash, and it was only 2 miles away from Jason’s vacation home. I went ahead and called.
Some women picked up, “JJ’s car wash … how may I help you?"
I replied with, “Good, good. I was just wondering if I could get in contact with the owner? I wanted to come over, and do an evaluation on the value of the land … Is he there right now, or could you possibly give me a phone number to reach him?”
She hesitated, and said, “Uhhh, I'm sorry, sir, I'm not really sure if I can give that info out. Let me ask my manager.”
I interrupted her with, “No, that won’t be necessary. Just give me his email, and I’ll send him the information myself. Thanks.”
She said, “Sure … it's [email protected][redacted].com”
I hung up saying, “Thanks so much for your help. It means a lot. Thanks.”
Some people are just so oblivious to the world that they’ll believe anything they hear. Well, I guess I shouldn’t be complaining because that email is the same as Jason's. He owns some little car wash near his house in Florida. I wanted to look more into this, but thought that for right now it's a waste of time. (Added "that". Apostrophe on "it's", because it's= it is.)
Well, I went ahead and drove over to the nightclub Jason goes to every Wednesday night to see what he was up to there. I disguised myself as much as I could. I mean there were a lot of people here so no one would notice me unless I was face to face with them. I had a hat on and a hoodie. I just looked down at the floor as much as I could. I followed Jason in after he arrived with his driver. He went upstairs where VIPS are only allowed. I kept an eye on him for a while. He then disappeared to a back room which had me curious. I needed to figure a way to get upstairs without anyone questioning my authenticity. I went to the back room where I guess the staff gets ready. I found this work shirt that was black and an extra pair of pants that were a size too big. I had a belt on me so that wasn’t an issue and I put on the clothes and now I looked like a waiter. I went to the bar and said I needed 6 “on the rock” martinis and handed her a tray to put them on. She asked, “You work here?” I said, “Yeah, new … these are going upstairs so make it quick.” She nodded and proceeded to make the drinks. She handed me the tray and I carefully made my way up to one of the security guards at the stairs. I looked at him and said, “These are to go up to Mr. Peterson?. He looked at me up and down and waved his hand towards the stairs allowing me to go. I walked up the stairs with the tray in my hands and walked through the back door that Jason had recently disappeared to. I saw a few ladies that were all intoxicated and a couple of men sitting on the couch. There was a nice electric fireplace next to a computer desk that wrapped around the corner of the room. It was a decently big room with a minibar as well. I walked over towards the men. I said, “Excuse me gentlemen but, I have 6 martinis ready to drink in my hand.” I could tell that they all have been drinking because of the way they were slurring their words. Jason spoke up and said, “Perfect thank you … here’s a tip” handing me a $100 bill I took the money and pocketed it saying, “Thank you .. if you need anything else please call down to the bar.” I walked out. That room was soundproof as well because when I walked out my ears were rushed with loud music from the dance floor. I saw another door to my right and my curiosity peaked and I walked through. It was this long hallway and a little red sign saying “Exit”. Nothing special here so I just walked out back downstairs. I went ahead a walked over to the security guard and asked him something, “Which one of those guys is the owner?” He replied with, “You should know this … Mr. Peterson just took over ownership a few weeks ago.” This caught me off guard and I said, “Oh right … thanks.” I was mind blown because of how many properties this guy owned. Where was he getting all of this money … I mean I know that he owns a security company but, 2 houses, 3 companies that all pay in cash, a personal driver, large bank transactions. All of this wasn’t adding up. I went online and did some research.
I have the suspicion that Jason is laundering money through his businesses. I don’t know who he is cleaning money for but, it’s probably someone who doesn’t want their money fucked with. This could be an issue because if I fuck with Jason’s life and his financial situation that someone else could be looking after him. I don’t fear anyone will find me because I make sure I do everything very securely. I should be getting the atm snipping tool soon and hope to make a move on Jason and uncover his dirt. I’m getting excited just writing this right now knowing that I could possibly ruin not just Jason's life but his whole operation. Before I do begin my adventure I need to make a couple of precautionary steps. I logged onto the dark web and found a trustful hacking service. I would never hire someone to hack unless I didn’t have the skills to do the task. I mean if somehow I turned up dead my plan would still carry out. So I found someone who could “ruin” his life. I’ve been chatting with him now to see what type of services he offers and I found one that fits my purpose. I also told him I wouldn’t buy unless I failed my game, which means death. He understood and told me how it would work. He said I would need to put the money in escrow and I told him if I don’t respond within 2 weeks that the money will be sent automatically. By putting the money in escrow it means I can’t take it out and he can’t accept the payment unless all conditions are met with a third party. I set up a zombie computer to be the third party. Usually the vendor or market your on will have an escrow system but, I wanted to make sure that he would certainly get the money if anything happens to me. So I set the zombie and sent the escrow away. The payment was $600 to do whatever was necessary to either ruin them financially or put them in jail. This hacker could make them be known as a child porn user by encrypting his computer with files that would have him arrested. I was thinking of this option or go to a darker market which would put a price on Jason’s head.
Now that this was all set up I could move on and take Jason’s money. I watched him after work for a few nights to see if he would use an atm. He was at a little food market having lunch and used the atm to withdraw $40. I know this because my little tool tells me. So I watched him from across the street to see when he left. He left after eating and walked back to his car where his driver was waiting. They drove off and I waited about 5 minutes before doing anything. Atm machines have cameras so I needed to cover my face before hacking his account. I checked which account he withdrew from before going inside since I had access to his computer passwords. The account he used had approximately $12,000 in it. I knew going into this that I would only withdraw a couple thousand because I didn’t want the bank instantly freezing his account even though after he noticed, he would call and tell them. So I set up a script that would take $10,000 through tiny transactions with bots and have them located from all over the world so it wouldn’t be able to trace back to me. It would then compile the transactions back to an offshore account that I made. I would set this into action as soon as I withdrew the $2,000 in cash from the atm. This would leave Jason with $0 in his one account. I knew that he had other accounts but, the one that I was targeting had the highest balance.
I put on a bandana and some dark sunglasses with a hoodie on and walked inside. I got myself a little drink and paid in cash making sure to keep my fingers off the handle. I then went over to the atm and placed the tool where you put the card in. It loaded up this menu on the screen and it listed a couple of names from the recent customers that withdrew money. I clicked the arrow down to “Jason Peterson” and typed in the box that said “Custom amount” $2,000. It then went to another screen saying “Please remove your card before money dispenses.” I removed the tool and out came Jasons 2 grand. I put it in my wallet and walked out to my car. I made sure to park in a parking lot that was decently empty with no cameras to catch my plate. I pulled out my phone and went to the Facebook marketplace. I was feeling a new laptop right about now so I started scrolling through. I found one that matched my needs and messaged the seller, “Hey, I am interested in your listing … could we meet today?” He replied back pretty quickly with, “Sure, let’s meet at the [redacted] Starbucks!” The laptop was listed for $250. I told him I would pay in cash and I would be there in 20 minutes. I went to the Starbucks and met with the guy selling it. He was a nice guy who told me he just upgraded so that’s why he was selling it. I asked him to turn it on to make sure it works, which it did. I handed him the cash and wished him well. I walked outside and got into my car. I pulled around to the drive-through and got myself a large coffee with extra cream and sugar. After I got my coffee I went home and got a call from my boss asking where I was today. I told him that I really didn’t feel like working today which he replied telling me to not come back tomorrow and I was finished working there. I had a pretty big smile on my face at this point because now my time would be devoted to ruining Jason’s life.
I poured myself a nice glass of whiskey to end off the night right. I mean this would be the perfect time to celebrate. I just got fired and have over 10 grand in my pocket. I don’t want to get ahead of myself yet. It has been a couple of days since I sent that money in escrow and if I don’t get my job done before the 2 weeks are over then someone else will do it for me. This was like a tiny challenge in the midst of the much bigger challenge. Look at this way. I want to take credit for ruining Jason’s life or all of my work will go to waste. I mean the dark web hacker isn’t watching Jason’s every move and reading him like I was. All he had to do was sit on his ass and type on a computer. In this day and age that’s all you need. Hell, that’s how I ruined Connor’s life. I told you from the beginning that I wanted to up my game. I had the proper funds now to really up my game. In the morning, I went to go to a local Walmart to pick up a few things. I wanted to make a homemade suppressor. I was looking at the prices on the dark web but, if I could save some money doing it, then why not right? So I looked up how to make a homemade suppressor and picked up the right supplies to make it. You need some PVC pipes, steel wool, a drill, and a few other things and you got yourself a suppressor. It didn’t take to long to make and it fits real snug on my .50 caliber sniper rifle. No, I wasn’t going to kill Jason because that would be too easy. I wanted to fuck with him a little longer before really getting down and dirty. Pull his strings like a puppet if you will. My plan was this. I would find a time where Jason was alone and I would call him. I would tell him if he wanted his money back that we would have to meet. I would specify that he and only him would come and if anyone else was to show that his funds would be long gone before he ever got there. I would then drug him with chloroform and take him to a secluded place where no one would find us. I would then tell him to give up all of the information on the people he works for or he and Kiley dies. I thought to introduce that I know Kiley that it would motivate him a little more. Just the strings in his life. If that didn’t work my plan would be to tell him that the police were raiding his house for child pornography which I downloaded on his computer. I would show him his files from my laptop remotely to prove it and if that didn’t work we would figure something else out.
I wanted to move forward with this as soon as possible. I grabbed my car keys and headed out the door. Today I wasn’t going to do anything with Jason. Today I needed to shop. While I was at Walmart this morning I grabbed some bleach and rubbing alcohol to produce the chemical chloroform which would make Jason unconscious. I also picked up some latex gloves for prints. I bought myself a burner phone at a gas station near my apartment too. Now that I have all of my supplies I headed over to a Starbucks. I ordered my usual large coffee with 4 ice cubes and 2 packets of sugar. I brought my new laptop with me and connected it to the free wifi. This laptop wouldn’t be coming home with me. I was going to use this laptop to connect me to Jason’s stock portfolio. After I hacked into it I would sell all of his stocks that were a part of any company he owned leaving him with nothing in return. Basically sweeping the owner's name tag out from under his feet. I would then corrupt the hard drive and throw the laptop in the dumpster. After this, it was time to burn everything he owned to the ground. I wanted to leave him and the people he worked for with nothing in return … absolutely nothing.
submitted by idonthavemuchtime12 to mrcreeps [link] [comments]

Here is your 30 second digest on A M A Z O N. The top posts from this sub over the past year. Food for thought.

This is a compilation of the top posts about Amazon this year. Some things are easily verifiable, some are works in progress, some are probably proven false. Please decide for your self and look into things on your own!
Amazon Made $5.6 Billion in Profits Last Year and Reportedly Paid Zero American Dollars in Federal Taxes 7862 pts
No surprise, Zuckerberg lied to congress. Facebook shared personal info with about 60 companies including Apple, Amazon, BlackBerry, Microsoft and Samsung. 5187
Bernie Sanders wants Amazon and Walmart to pay their workers a living wage or be taxed for the welfare, this is the headline we got from CBS 4501
Amazon Gets Tax Breaks While Its Employees Rely on Food Stamps, New Data Shows 2845
Exposed: Undercover Reporter at Amazon Warehouse Found Abusive Conditions & No Bathroom Breaks 2510
This is America: AT AMAZON, workers must pack an item every 30 seconds for gruelling 10-hour shifts, toilet breaks are timed — and ambulances are regularly called. Pee into bottles, Some Homeless, and on Welfare because of Low Pay 2047
Amazon paid no US income taxes for 2017 772
Amazon confirms that Echo device secretly shared user’s private audio 609
"You're Worth $1 Trillion. Why Do You Need Our $3 Billion?" Angry New Yorkers Confront Amazon Execs at City Council Meeting 587
Yes, Amazon (and Facebook and Google) are listening to your private conversations (and probably using the camera and other sensors, too) 420
Working in an Amazon warehouse is like prison, according to an author who went undercover at a fulfilment centre and found staff were peeing in bottles because they had no time to go to the toilet. 400
The Washington Post is a CIA operation… 384
[Discussion] With his fingers in so many aspects of American Society now, why doesn't Amazon's Jeff Bezos get more negative attention for monopolistic and troubling practices? 365
$3,000 per second for Bezos, poverty wages for Amazon workers — Amazon CEO Jeff Bezos's $150 billion fortune was squeezed out of hundreds of thousands of warehouse, service and delivery workers. 308
With the recent recordings from amazon devices qualifying as official evidence… 266
'Unions Are Lying, Cheating Rats': Leaked Video Reveals Amazon's Belligerent Anti-Worker Tactics — "Jeff Bezos is a villain, plain and simple. His insane fortune is the grotesque manifestation of workplace oppression." 240
Corporate welfare: Amazon headquarters to cost NY taxpayers $48,000 per job 238
Reporter went undercover and exposed Amazon's disgusting labor practices 231
The Microchip inserted during the manufacturing process by Chinese spies that hit over 30 U.S. Companies, including Amazon and Apple according to a shocking report released this morning by Bloomberg. 234
Amazon and Microsoft employees caught up in sex trafficking sting 232
Amazon sets its minimum pay at $15 per hour a week before elections, and the day after elections announces it is hiring at the inverse ratio fewer people for this holiday season compared to last year. 204
The man that was "scammed" by Amazon and was compensated with a $1000 gift card after being sent two boxes of rocks when he bought $12,000 worth of cameras is FAKE. 201
Amazon filed a patent to de-anonymize Bitcoin transactions and sell the data to law enforcement 191
Computer generated, wildly expensive nonsense "books" on Amazon are being used to launder money and Amazon doesn't care (xpost NoCorporations) 181
Facebook calls out Google, Amazon and Twitter for also harvesting user data - Facebook argues that other tech giants also track users' activities on the web 158
Whatever it takes to get Google Home or Amazon Alexa in your home. Hmm wonder why?? 158
Jeff Bezos Booed By Amazon Workers 157
The deal for an obscure $10 billion Pentagon contract: “everybody immediately knew that it was for Amazon” 155
Jeff Bezos scandal: Amazon executives caught up in a sex trafficking ring 131
Amazon Teams Up With Government to Deploy Dangerous New Facial Recognition Technology 127
Goldman Sachs closes deal for $83 million apartment complex same day as Amazon picks location for new HQ 129
'User Manual for Authoritarian Surveillance': ACLU Red Alert as Amazon Peddles Facial Recognition Tool to Police — "Once a dangerous surveillance system like this is turned against the public, the harm can't be undone." 122
Amazon patents Alexa tech to tell if you’re sick, depressed and sell you meds 112
CIA-Connected Amazon Turns Over a Record Amount of Data to U.S. Law Enforcement 104
Amazon's creepy plan to put a camera and microphone in every bedroom with launch of its £120 Echo Spot 'smart alarm' 99
'Always Listening' - Amazon's Alexa Stores Everything You Say To It; Here's How To Delete 100
Judge orders Amazon turn over Echo recordings in double murder case 🤔 100
In Latest Privacy Scandal, Facebook Gave Apple, Amazon And Others Unprecedented Access To User Data 89
U.S networks have allegedly started throttling services to streaming sites including Youtube, Netflix and Amazon Prime Video 82
Explosive Report Details Chinese Infiltration of Apple, Amazon and the CIA: In addition to efforts designed to sway US elections, China' intelligence community orchestrated a pervasive infiltration of servers used to power everything from MRI machines to the drones used by the CIA and army. 78
Amazon CEO Jeff Bezos took swipe at Google for "turning their back on the Department of Defense" - Hours later Youtube is down worldwide 72
Real time facial recognition, courtest of Amazon, being tested in Orlando 77
Google Home, Amazon Alexa Digital Assistant Patents Reveal Plans for Mass Snooping 71
Friendly reminder that FB and Amazon are always listening… 64
Amazon Alexa Bug Let Hackers Turn Echo Speakers Into Covert Listening Device Report by: Dahboo77 61
Russia has banned Twitch alongside with millions of Amazon Ips 61 Amazon just patented worker tracking wristband. Will it fly? 57
Why The US Military Shouldn’t Give Amazon 10 Billion Dollars 44
Amazon Go stores could watch, listen, and remember your every move 39
Woman says her Amazon device recorded private conversation, sent it out to random contact 37
The Amazon Business Model is A Job Killer: The Shift Towards E-Commerce. Artificial Intelligence (AI) and 31 Million Jobs Destroyed 26
Also Fuck AI...for now
submitted by meltingspark to conspiracy [link] [comments]

Crypto-Currencies Are Poised To Radically Change Finance … And Reshape Nations

Crypto-Currencies Are Poised To Radically Change Finance … And Reshape Nations
Article by Forbes: Kurt Cagle & COGNITIVE WORLD In the 18th Century, a venture begun in England established an outpost in the New World around Hudson Bay. The Hudson Bay Company was given license by the crown to exploit the bounty of the Northernmost parts of North America, and eventually a trading network was built out, trading fur, woods, and mineral resources. This network manifested itself primarily through a series of forts that protected general stores, extending as far south and west as Oregon, along the Pacific Coast, forts that would in time become cities like Portland, Vancouver, Toronto and so forth.
An example of Hudson Bay Company Scrip WIKIPEDIA The Hudson Bay Company used its own special scrip within its territory, the scrip holding value because it could be traded for British pounds as well as establishing more or less standard prices for goods. When Canada was founded in 1867, it established its territory by buying the land from the HBC, and making HBC’s scrip fully convertible to the new Canadian Dollar. In effect, a privately held scrip became the de facto currency of a nation. Empires, kings and potentates have long coveted the right to put their face on coins, but until comparatively recently, the value of those coins was determined primarily by the assayed weight of the metal that made them up. Indeed, the Dutch, during the 16th century, actually scored their gold coins so that a person could break it apart into octants, from whence was derived the term “Pieces of eight” so beloved in pirate tales. They also created coins from the silver mine of Joachim’s Valley (‘Joachimsthal’ in Dutch) which were in turn heavily used by first the Spanish territories then eventually English North America, the name frequently shorted first to ‘Thaler’, and then via Spanish as ‘Dollar’.
Pieces-of-Eight, so named because the Spanish dollar coin of the 1600s was frequently broken upon into eight bits or reals, which in time became known as pesos (pieces). JAMESTOWN REDISCOVERY Following the death of Louis the Fourteenth of France, the French economy was in tatters given the financial excesses of the Sun King. The Duke of Orleans, the regent of the new five-year-old King Louis the Fifteen, turned to a friend, Scottish financier John Law, for help. Law, for his part, made a proposal that had been tried on a smaller scale, but never really at a national level: the concept of creating a paper currency, backed by the government and in theory redeemable with silver. While the experiment worked for a little while, speculators made the currency unstable, which was then exacerbated by the government producing more Francs than it could support, causing the currency to crash and significantly diminishing the ability of France to compete in the colonization in North America. It also destabilized the French court by reducing the influence of the King over his aristocrats, many of whom had been severely burned in the crash, and not coincidentally laying the groundwork for the French Revolution several decades later. Despite this, as Europe went from Feudal vassalages to nation-states, the ability to control the minting of paper currency based upon its status as a promissory note became one of the key prerogatives of nations. It was one of the reasons, when the first American Confederation, created in the aftermath of the US Revolutionary War, realized they needed a stronger government, the one thing that the Federal government reserved to itself rather than allow to the states was the exclusive right to mint coinage and currency.
Currencies have long been the prerogative of nations, though that may be changing as electronic coinage hearkens back to most currencies’ merchantile roots. GETTY Fast-forward two hundred and fifty years, and you can see that history is in fact repeating itself. A currency system works by having a few essential characteristics: A note of currency must be unique and non-duplicatable. Currency must be readily redeemable — if not enough people will accept the currency as having a certain value, it cannot be used as a medium of exchange. Currency must be relatively stable — it holds roughly the same value over some time interval. These three conditions place some real constraints on currencies, though not always obvious ones. For instance, if you increase the supply of a given currency, you might think that it would dilute the value of that money. Maybe yes, maybe no. If demand is high for money, increasing the money supply may actually accelerate economic growth, though if demand for money is low, increasing the supply may simply cause inflation. If currency is only redeemable in certain places, then it has less utility as a store of value. If a currency has only half the value today that it had yesterday, then people will get rid of that currency quickly in favor of something that is more stable. It turns out, in fact, that most paper currencies don’t completely satisfy the above constraints over a long time period, and what’s worse, the relationship between money and value can be quite non-linear. This is because currency by itself represents buying power. A gallon of gas in 1971 cost twenty nine cents in most places. Today, that same gallon of gas costs $2.90. Ironically, a loaf of bread cost $.29 and $2.90 respectively as well. The average wage in 1971 was $10,000. Today, its $50,000. This is worth highlighting, though more from an economic rather than technical standpoint. Put in stark terms, the typical worker’s wages went up 400%, but the price of most goods went up 1000% percent over roughly the last fifty years (or, the money you earn is worth 60% less today than it was in 1971, relative to the cost of living). The actual utility of a gallon of gas has actually not changed much in that time, which means that what has changed is both buying power for a given amount of money, and the change in wages relative to the cost of goods. Why? That’s a topic for another time.
Electronic currencies, such as BitCoin and Ethereum, rank high in their ability to guarantee uniqueness, but are struggling with exchangeability and are still very heavily influenced by speculators, making them less than ideal for stable currencies. GETTY IMAGES So, where do cryptocurrencies play into all of this? At the moment, of the three points highlighted above, cryptocurrencies arguably are really, really good with the first point, are getting better (though still not great) with the second point, but really suck on the last point. Consider this. One of the biggest arguments in favor of cryptocurrencies is that they are hard to forge. It’s possible — throw enough computation power at it and you could in fact do it, but the salient point is that the cost to do so likely outweighs the value of the coin. Now the downside to that is that many of the current mechanisms for determining uniqueness (such as mining prime numbers) are also very expensive, not just in terms of computational cycles but in terms of energy costs. It’s one of the reasons why a few of the primary coins actually are too large by themselves to be used for currency — you have to divide a coin up to say a 1000 different micro-coins to get to the point where you can buy a cup of coffee and a sweet roll at Starbucks, and this in turn still requires effective uniqueness algorithms. However, even with weaker algorithms for division, such micro-coins are still orders of magnitude harder to forge than your average US $20 bill, which is far and away the most popular currency in the world in terms of forgery. However, this point is actually becoming less and less of an issue for the simple reason that paper currency itself is becoming obsolete, except among the very poor (who often have difficulty in being able to set up bank accounts). For much of the latter twentieth century, credit cards made significant inroads in eliminating paper currency, and most recently, the introduction of chipped cards, both credit and debit, have significantly reduced the incidences of fraud. The bigger issue today is online card fraud, though even there, the introduction of electronic wallets (and the growing liability that retailers are facing with each hacking incident via class action suits) are spurring much better encryption of data, as well as better control by consumers. This is not to say that credit card fraud isn’t still a problem, but it is a problem that shows signs of abating. Another, perhaps far more reaching consequence of the rise of credit cards, debit cards, digital rewards cards, gift cards and EBTs has been that it has been destroying the physicality of currency, and with it, one of the last vestiges of control that most nations have over their currency. The reason for this is simple. Today, it is possible to set up foreign exchange transfer accounts in which a given currency is in Yen, or Euros, or Pounds, and draw upon them as readily as you can a US funds account. You can set up a crypto account in much the same way, and can even, with some creative work, set up accounts that let you play currency arbitrage across multiple such accounts. If Amazon, Google, Microsoft, Apple or Facebook (or their counterparts in other countries) set up their own digital currency, you could do the same thing. Amazon is actually creating a highly synergistic ecosystem that is nearly a full bore economy in its own right.
In ten to twenty years time your paycheck could very well be made in private e-currency rather than a country’s native currency, which will send shockwaves in political circles. GETTY Put yourself ten years in the future. Amazon (as an example) puts out a cryptocurrency called the bezo (one bezo, two bezos, ….). You can continue to set up a US dollar account for Amazon prime, but you can also open up a bezos account, based upon a blockchain like construct under the control of Amazon. Prices begin to creep up when measured in US dollars, because the US economy has for the most part had net positive price inflation even during recessions, but prices in bezos stay fixed. Other companies look at this and offer the option of paying their employees in bezos. Some are resistant, but especially younger employees take the plunge, and after a while, older employees see that their net buying power continues to decline while the ones in the Amazon ecosystem are seeing wage power stability, and you see a shift as older employees begin to do the same thing. Other companies do this on their own, but discover that they don’t have quite enough people in their network to maintain stability, and so they reach out and affiliate themselves with the Amazon network. Banks have taken notice, and all of a sudden you see Amazon currency replacing the US Dollar in more and more transactions, many of them for millions or even billions of dollars. And then Amazon moves the Amazon Currency Network to the Cayman Islands. Overnight, the United States sees 35% of its tax base disappear. Too many people are no longer using US Dollars for transactions. The US Debt, which has been a ticking time bomb for decades, goes off as the US can no longer even pretend to service its deficits, let alone the total debt. States, given the conundrum of having a central Federal government that has become increasingly hostile and demanding (while providing less and less value for the tax money that their citizenry have paid) vs. working with a more stable currency and more autonomy, begin to think the unthinkable at a policy level: choosing to join a different political alliance based upon a common protocol for sharing currencies.
One very distinct possibility of the intermixing between private and public e-currencies is the possibility that it could very well exacerbate an already growing divide along geopolitical lines. GETTY Another scenario can be envisioned. Recently, Walmart announced that they had a patent on a new blockchain currency, with the implications that they would be issuing a currency within the relatively near future. Amazon and Walmart are seen as competitors in the general goods sector, and while there is some overlap they tend to service different regions (and their customers often have very divergent political leanings). Over time you end up with two competing currencies, the Bezo and the Walton. Each of which provides a premium within their respective networks and a double penalty within the opposite network — the double being the fact that in order to convert from Bezos to Waltons, you would have to convert one currency to USDs and then to the other currency, with fees at each transaction point (something often happens in existing currency exchanges, where you have to find a common currency to exchange between two different currencies that don’t otherwise have exchange rates). Over time, the economies diverge, with frustrations mounting as the Bezo and the Walton respond to different economic strategies, and changes in political power in Washington DC bring with it a distinct preference for one currency or the other, with all that this implies for policy. Attempting to peg either of the private currencies to the dollar ends up with a situation similar to that which the European Union experience in 2008, when economic policy that was right for the northern countries with strong industrial bases proved ruinous for the southern countries that were primarily agrarian in nature (and is in fact a part of the current problem between red and blue America). What is likely to happen in this scenario is the rise of compacts — agreements between states that standardize upon specific policies regarding economic action, taxation, representation, immigration, public programs, defense, ecological policy, education and so on. Put another way, the currency networks that emerge (and it is likely they will be networked, not just one single currency) will begin looking and acting more and more like autonomous countries. With this comes the reduction of power in Washington, DC and the federal government as states hew more closely to their compact alliances. Now, to be clear, these are both hypothetical scenarios, and I’m using Amazon and Walmart here just to illustrate the point. Nor are these the only scenarios that may play out. It’s also worth noting that what is at issue is not so much cryptocurrency by itself as it is the ability of currency networks to effectively capture the tax base of parts or all of a country. Will this result in civil war? Hard to say. We may very well end up in a situation where the US becomes a Confederation along the lines of Canada, with a weaker central government, a common defense agreement and stronger regional blocs. The US may split peacefully into several distinct regions based upon the degree of economic connectivity. It’s possible that smarter heads prevail and some agreement is worked out to keep the status quo. However, the likelihood of that decreases the more that mechanisms for separation get implemented, and eCurrencies, whether national based or privately based, have the potential to exacerbate an already stressed situation.
One of the major issues that most eCoins have is that they are still highly unstable, due to a comparatively small pool of investors, the potential for volatile speculation, and the potential that a government could make such transactions illegal. GETTY The primary mitigating factor from this happening now is the lack of stability of crypto-currencies, which is something of a chicken and egg problem. Stability ultimately comes from the number of participants involved, which in turn determines the degree to which speculation can take place within a currency. Speculation and stability are counter-weighted — most speculators prefer an asset class to be volatile, because such volatility can make for higher returns with less capital, though it can also lead to higher losses. You can speculate with stable currency (as George Soros managed to do successfully against the British pound in the 1970s) but it requires deep pockets and a great deal of leverage, and being unsuccessful can ruin you. Bitcoin and other crypto-currencies are still very unstable primarily because they lack both the installed base of users and because they are not yet fully convertible or redeemable. It is arguable whether any of the first generation of ICOs will ever meet that bar alone, though that changes once you begin seeing mergers and adoptions between ICOs and large financial or network concerns. This also moots one of the other major selling points that ICO promoters themselves try to make. No currency is going to survive if transactions in that currency remain anonymous, and keeping such transactions anonymous will become increasingly difficult over time. The reason for this is relatively simple — any transaction has real world implications, those implications can be tracked, and once one thread of a transaction begins to get picked apart, then it becomes possible to determine how these connect to other transactions. Government opacity (which is one form of anonymity) will keep many existing ICOs from ever being recognized as legitimate, and may very well be seen as perfect channels for money laundering and black market transactions, putting these ICOs under deep scrutiny. It is likely that currencies based upon (semi-) transparent block-chains (something you’re increasingly seeing developed by financial institutions) will likely overtake the anonymous block-chains currently being deployed.
The future of finance (and of bank accounts) may very well be that a typical account is, in fact, an index made up of different e-currencies, both public and private. GETTY In the longer term (fifteen to twenty years), it is likely that the average consumer will likely not interact much at all with ICOs directly. Instead, what I see happening is that banks (and bank-like-entities, such as credit unions) will controls portfolios of currencies and accounts will then consist of baskets of different coins on various networks. Consumers can then determine the mix of their coin holdings, and can designate the default currencies they wish to be paid in (or pay out) when they make a financial transaction. However, at the micro-level, these networks and baskets will be treated in much the same way national currencies do today, with the added wrinkle that these private currencies can push and pull on the national currencies at a level unprecedented until now. What happens when the Bezo replaces the Japanese Yen (or the US Dollar) as the primary instrument for carry trades. What if the Iranian eDinar becomes the preferred currency for pricing oil, or an international incident causes investors to buy up Chinese eYuan and sell the USD, raising the potential for price increases in the United States (or vice versa). What will almost certainly happen is that the distinction between international corporations and nations, already somewhat blurry, will erode even more with time. Businesses will increasingly find themselves having to establish comprehensive foreign policies, fielding security forces and dealing with issues that traditionally have been the domain of countries. At the same time, fundamental questions, including the deceptively difficult one of what constitutes citizenship, will become pressing sooner than we’d like to believe. The upshot of this is that Bitcoins and related electronic currencies are likely here to stay, will become progressively more influential in both political and economic policy as they become more stable, and will almost certainly introduce stresses and potential breaking points in economies globally throughout the twenty-first century.
submitted by GTE_IO to u/GTE_IO [link] [comments]

Why bitcoin is so successful.

  1. Systemic liquidity resistance.
    Many people who buy bitcoin aren't professional investors who set a "sell corridor", always sell at 90% or 110%, for example. the "HODL" meme that flies around here is a good example. some of these bitcoin investors are dreamers that want exponential payoffs and will hold onto the bitcoin despite the fact that they bought it at around 4.9k and it dropped to 3.2k (in September, 2017).
    some of these coin investors are people who bought or mined 10~50 bitcoins when they were cheap/easy to mine back then, when they were in their teens, and never looked at its price until they heard about it in the news again. some of these people probably have lost access to these bitcoins to be honest.
    some are people who went all in with their investment. these people have always wanted to buy stocks or derivatives but any exchange would require quite a bit of paper work so they never got around to it. you can imagine if they haven't even bothered to go through the exchange paperwork, they probably never bothered to get a lot of "financial expertise" through reading "professional investment guides". now bitcoin comes along and anyone can buy, they go all in, they simply can't afford to realize their loss when bitcoin dives, but when bitcoin rises, they are being rewarded for their "irrational behavior", they are gamblers.
    these people have a common characteristic: an unsymmetric risk profile, they don't care if the price drops to 0, but they believe the price will go to something like 10,000, so any new historical high reaffirms their belief and any dip is just a temporary setback in their opinion and some of these irrational investors would simply purchase more during the dip if they have the money. this isn't the case in the financial world where a lot of trades are automatically executed because unlike these bitcoin investors, computers aren't biased, AI and seasoned investment managers are almost completely unbiased and they are the product of "traditional financial theory", they don't believe in sustainable exponential growth.
    These people and their bitcoins provide a minimum liquidity threshold that not a single other investment instrument has: a healthy company can default for attracting too many short sellers, a bond can default, an exchange can default, a bank can default from a bank run, even a country can default. bitcoin will always retain some value, as a "systemic bank run" is simply impossible to achieve in the bitcoin world.
  2. "The People / Anti-establishment" movement. the success of bitcoin is closely resembled by a recent event: the election of Donald Trump. you know what would people say to you if you said "I think the POTUS will be Trump in 2017" at the end of 2014? people will laugh at you and call you a lunatic. well, the same would happen if you said "i think bitcoin will be over $6000 in 2017" at the end of 2014 (when bitcoin dropped like a rock to 300ish from almost 1k). Trump's success is a direct result of him tapping into "the people", i.e., people who are sick and tired of being governed by political figures who they perceived as crooks. Trump comes along and says things that no other politician dare to say, guess what, people wanted a change and voted for him over the establishment that Hillary represented (if Bernie had won the Democratic nomination, Trump would have lost in a landslide). You see how far people would go simply for "a change"? they would even vote Trump! (don't get me wrong, I support Trump myself but I am trying to illustrate a point). Bitcoin is a currency that is not regulated by any government, but simply by an algorithm. And to use the Trump example again, the exponential climb of bitcoin to its supporters is equivalent to, "Trump gets elected, and every person that elected Trump suddenly finds themselves richer by $10,000", guess who would easily get elected again in that scenario? Trump! Elections happen once every four years, but bitcoin is traded/used every single second, and people vote by buying/using bitcoin.
  3. Money laundering.
    The sad truth is, every bitcoin investor is indirectly helping out a criminal (e.g, terrorism, drug lord, hacking group) or an exile (e.g., Julian Assange) in some way. but rest assured, some anti-money laundering rules will be set soon i think. even though i think anti-money laundering rules will be set, i also realize that some academic opinions on this issue is interesting, for example, Dr.Rahn says that "In a world largely without “money,” the notion of money laundering as a crime becomes absurd."
  4. Resistance to hyperinflation, weak GDP growth and war.
    guess who buy bitcoins in addition to first world country "geeks"? people from war-torn countries or countries that are struggling/collapsing. before bitcoin, people from those places would buy gold but it is hard to purchase in bulk. bitcoin appears to be the equivalent of gold in terms of the "limited quantity" feature, however, bitcoin can be bought in a much easier / more discrete fashion.
  5. Resistance to negative news due to its value being proportional to the number of people know about it.
    Because even negative news means someone somewhere is talking about bitcoin. contrary to other investments in the market where any regulation restriction or "negative news" would bring down the price. But for bitcoin, it will be the opposite, because for example, if an authority(e.g., IMF or the US government) comes up with an anti-money laundering regulation against bitcoin, many bitcoin investors will not see it as a restriction, but the exact opposite: they will see it as an affirmative message that says "bitcoin is a real currency, and it will be huge, which is why governments are starting to set up rules around it, this means more and more regulated companies will have no choice but to accept it". a classic example is when China banned bitcoin, for any other public company that has operations in China, this would have been a huge blow that would have required monthly, if not years to recover from, but for bitcoin, it did drop for a bit, but it quickly recovered and made some more exponential jumps shortly afterwards. the bottom line is, the more people know about bitcoin, the more potential value it carries. But of course, once its popularity passes a certain threshold, negative news such as "Country XYZ bans bitcoin" would cause a dip that is a lot harder to recover from.
  6. Precious-metal-and-liquid-currency 2-in-1.
    look at any precious metal, or diamond, the resale opportunity is extremely limited for average investors, the bid-ask spread, and the limited ways to carry them around make them illiquid. but the upside is, precious metal will always carry a value so they have inherent resistance to inflation, sure the value can drop, sometimes significantly, but there will never be a time when people say a 2 carat diamond is worth nothing, because it is nice looking piece of object that is worth at least something.
    next, let's look at any currency, they don't last forever like precious metal, but the government behind any currency can simply print more money whenever they feel the need to, to not only cope with inflation, but also replace existing bills that can no longer physically circulate due to various reasons. with that being said, any currency would have an inherent insolvency risk associated with it, because countries, like companies, can just say "f*** it, we declare bankrupt". sure the chance of the USA or Japan does that is extremely slim, but there is still a chance that a $100 country XYZ bill will be worth nothing some day (to a non-collector of course) because country XYZ is no longer in existence due to natural disaster, war, debt, or some other reason.
    bitcoin has the best of both worlds: it doesn't have inflation, it will always be worth something and you can spend it easily.
  7. Digital circulation, i.e., smart.
    with more and more people carrying digital devices / smart phones, bitcoin taps into the digital revolution wave with its unique "no transaction cost" feature. once bitcoin's price stabilizes and becomes better regulated, all stores will welcome it. if you think the growth you have seen so far is unbelievable, imagine what would happen when bitcoin finally becomes a wide accepted currency, well, i mean, during the months that lead up to it. because maybe its price would have stabilized by the time walmart starts accepting bitcoin.
  8. Bitcoin is a company that is 100% owner's equity with 100% operating efficiency.
    no asset, no liability, no overhead cost, no pension plan, no retiree health plan. it is a company that doesn't have any accounting/administration/consulting expenses. it generates revenue through non-traditional means, such as forks and inherent deflation, it will also generate revenue through fees after all 21 million bitcoins have been mined. right now it is a startup that is going through high volatility, but once its price is stabilized, it will be the new Apple/google/microsoft, i.e., a large-cap company with steady income stream.
In addition: there are some other minor reasons behind bitcoin's rapid rise, such as security, flexible denomination (you can't get 0.005 dollar), natural resources based wealth redistribution, and lastly, it is somewhat decentralized due to being boarderless, but i would imagine a small group of people has the majority of bitcoin, some may have lost access to their bitcoins however.
Edit: I wrote this in a rush and I know I incorrectly combined liquidity risk and credit risk, but I think you get my point.
TLDR, i encourage you to read it but here is a good picture from the FAQ, the picture is nice but bitcoin may not be fungible:
submitted by Glancealot to Bitcoin [link] [comments]

As financial giants and crypto industry leaders convene with lawmakers in Washington to discuss regulation, cryptocurrencies are largely down

Crypto News

submitted by QuantalyticsResearch to CryptoCurrency [link] [comments]

Five biggest Bitcoin disasters of all time; read why should not invest in virtual currency

The frenzy around world's biggest virtual currency, Bitcoin, has reached a level where it's impossible for you not to think about investing in it. Every day Bitcoin is setting up a new benchmark, luring you to become a part of this unpredictable financial cycle. At the same time, some financial institutions such as JP Morgan Chase and Berkshaire Hathway have debunked the "bitcoin mania", calling it a "fraud" and warning people against falling for the "Bitcoin trap". Being the most popular and an unregulated, or independent currency, Bitcoin is vulnerable to online sharks - hackers - waiting for the right time to dig in their claws to steal money. A recent example: hackers stole over $80 million in Bitcoins by breaking into Slovenian-based virtual currency mining marketplace NiceHash on Wednesday. As per Coindesk, a similar virtual currency exchange, one third of the two third Bitcoins mined are lost forever. Reuters says more than 9, 80,000 Bitcoins have been stolen from exchanges since 2011, roughly around $1, 57, 780, 04900 as per the current price. The reason for disappearance can be anything like hacking, or hardware failure. So is Bitcoin a monetary revolution - and you must be a part of it - or should you keep a distance? Bitcoin advocates swear by its anonymous founder Satoshi Nakamoto's super complex algorithm called Blockchain, an online distributed ledger system that maintains the data related to every single Bitcoin transaction. Bitcoins are stored in an open online decentralised ledger where every single transaction is verified by the cryptocurrency miners spread all over the world, competing with each other for a bitcoin reward. Every miner can access the ledger and the system reflects each small development. They say the system is impossible to hack as it's not centralised like Federal Reserve Bank of the US, or any other central bank. The mainstream institutions pose the same argument saying since there's no solid system to back it up if things go haywire, so it's not reliable. In entirety, it seems like a zero sum game. But before you take the plunge, read these five biggest financial disasters associated with Bitcoin that pose serious questions on its reliability.
Silk Road that was full of rocks Ross Ulbricht, the pseudonymous proprietor of the website Silk Road, used Bitcoin for illegal transactions in drugs and arms. For two years between 2011 and 2013, Silk Road became a favourite online marketplace - completely anonymous from law enforcement agencies - for drug mafias, and a headache for authorities. People sold drugs worth millions on the website, and all transactions were done using Bitcoin. Drug mafias could easily buy any contraband imaginable at a single platform, just like Amazon or eBay. Within months, the website became the leader of the "darknet", with over 900,000 users and the annual turnover of $1 billion. Ulbricht was arrested in October 2013, and the site was shut down. But soon, it was surpassed by similar "darknet" websites that operated secretively, using domain names like .onion. Ulbricht was convicted for life on drug trafficking, criminal enterprise, aiding and abetting distribution of drugs and money laundering.
Instant rise and fall of BitInstant The chief executive officer (CEO) of Bitcoin exchange, BitInstant, Charlie Shrem, a 27-year-old young ambitious entrepreneur was fascinated by the idea of having a currency with no third party control after he heard about it from a friend at the age of 19 in 2011. After he bought a couple of bitcoins - at a dirtcheap price at that time - he started Bitcoin exchange from his home and soon caught the attention of young investors like Winklevoss brothers who pumped in over $1.3 million in his company. It was a meteoric rise for, and so was its fall. After he moved to a nice office with over 30 people working for him, the company partnered with giants like Walmart, Walgreens, and Duane Reade where anyone could buy Bitcoins through BitInstant. The business was good and growing with revenue reaching over $1 million in a month, but greed has no limit. Shrem started facilitating transactions on 'darknet' leader Silk Road, and soon he was in the FBI net. After he was arrested in 2016, he pleaded guilty in the court. He claimed he facilitated one customer, BTC King owner Robert M. Faiella, whose customers (or drug mafias) were using Silk Road. They both were accused of the sale of Bitcoins worth $1 million to Silk Road. Shrem was sentenced to two years in jail. This incident sent shockwaves in the Bitcoin world, and people started associating the virtual currency as a means to launder money.
Mt Gox's $460 million 'gift' to investors Tokyo-based Mt Gox was another large exchange company for the virtual currency that met the same fate as BitInstant. The company had already lost over 80,000 Bitcoins, as per the Daily Beast, when Mt Gox CEO Mark Karpeles bought it from Jed McCaleb in 2011, but Jed hid these details from Karpeles. Initially started as an online space for trading of cards for a game called 'Magic: The Gathering', Mt Gox soon shifted to Bitcoin trading. The company was in trouble from the start, but Karpeles kept the secret under carpet for long. February 2014 brought doom for Mt Gox when Karpeles informed the authorities that over 850,000 Bitcoins worth $450 million had disappeared; hackers must be super rich if you compare it with current Bitcoin price. After this, people across the world started believing that perhaps Bitcoin needs to be regulated like fiat currencies to rid such fiascos. Karpeles was found guilty of the improper use of electronic funds and embezzling a total of $2.7 million of customer funds. 'WannaCry' wreaked havoc in 150 countries WannaCry virus hit computers of major corporations in over 150 countries in May this year. Panic spread across the world as message saying "Ooops, your files have been encrypted!" popped up on the compromised computers. The cryptocurrency faced another backlash when hackers demanded "ransom" money in Bitcoins to open the encrypted files. The hackers sought $300 ransom in Bitcoin from every compromised computer, giving people three-day time failing which they threatened to delete the locked files. Bitcoin allows users to make anonymous transactions and remain anonymous. This makes the system sophisticated to crack in case of such attacks, and equally favourable to cyberattackers.
$80 million Bitcoin heist at NiceHash Bitcoin mining marketplace NiceHash reported on Wednesday that hackers stole nearly $80m in Bitcoins from the exchange. Ever since the company informed the law enforcement agencies, the operation has been stopped and users have been told to change password and other personal details. It was "a highly professional attack with sophisticated social engineering", NiceHash head of marketing Andrej P Skraba told the Guardian. The company has so far lost around 4,700 Bitcoins worth about $80.02 million at current prices. The official website of the exchange says the service is currently unavailable and that the matter is being investigated. "Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency," the company said in a statement.
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Evolution of Exchanges

Swap.Online delves into the background of centralized and decentralized cryptocurrency exchanges. As decentralization is our name for the game, we would primarily like to find out whether it was inevitable or not.

From Childhood to the Golden Age: DCEs and CEXs

The first centralized cryptocurrency exchanges had two main pre-historical roots of origin. Ideologically, they originated from the e-commerce exchange services of the early 2000s. Digital Currency Exchanges, or DCEs, were particularly popular in the U.S. and Australia. GoldAge Inc., E-Gold Inc., Liberty Reserve were frequently seen in the headlines mostly due to legal issues, as the U.S. SEC, as well as the Australian ASIC failed many times over to figure out whether the e-gold exchange was a form of banking, money laundering, non-licensed remittances or illegal entrepreneurship. These services exchanged fiat money on different digital currencies (1MDC, E-Gold, eCache etc.) and, in a way, fulfilled the demand of New World and EU citizens for anonymous transactions of digital and fiat money.
But, in fact, the first significant cryptocurrency exchange arose from a surprising source… The website of the online game “Magic: The Gathering Online”. This game’s name refers to a magical world, where the currency system is represented in the form of cards. Jed McCaleb, the programmer from San Francisco and future contributor for Ripple and Stellar, developed the Mt.Gox project with the purpose of trading these cards like traditional stocks. In January 2007, he purchased the domain name, but in 2008, he abandoned the project as a premature venture. One year later, he used this domain to advertise his own online game. In the year of 2010, he read about the concept of Bitcoin and decided to launch the Mt.Gox exchange and exchange rate service allowing to trade Bitcoin freely. The project was released on July 18, 2010.
Rapid commercial growth started when the product was sold to the French-Japanese developer Mark Karpeles in January 2011. It was the year 2011 when Mt.Gox demonstrated the main security challenges that traditional centralized exchanges will encounter all along their development path in the future. These included direct thefts from the platform’s wallets, attacks with multiple ‘ask’ orders, malefactor invasions resulting in price drops (one day, in the spring of 2011, 1 BTC was worth less than 0.01 USD) etc. By the way, the dramatic collapse of February 2014, with more than 750K BTC lost and the $65M civil suit in Tokyo court were still to come. During the years 2012–2013, every 3 of 4 Bitcoins in the world was sold via Mt.Gox, and it was a real success story.
The years 2011–2012 gave birth to the bulk of top centralized cryptocurrency exchanges. BTCC was founded in June 2011 as the first exchange for the Chinese market. At the same time, American developer Jesse Powell had spent a month visiting Mt.Gox offices to offer assistance in the aftermath of the first hack. He was unsatisfied with the level of business organization, and that was how Kraken was founded in July 2011. The infamous BTC-e platform for exchanging rubles for BTC was also launched in July 2011. In late 2011, the largest American exchange BitInstant was founded and started selling Bitcoin via WalMart and Walgreen. 2012 became the year of origin for Bitfinex, Coinbase (first Ethereum marketplace) and LocalBitcoins.

Pros and Cons of Centralized Exchanges

We are now six or seven years away of those days. Today, hundreds of centralized exchanges are offering the services of exchanging BTC, ERC-20 and another cryptos. We can even hardly classify them. Usually, specialists speak about three mainstream types of centralized exchanges.
Trading platforms. They connect buyers and sellers to each other, allowing them to publish trading orders and take some transactional fees (most commonly 0,3 per cent from the taker of the liquidity). For example,, BitFinex, BitStamp belong to this group. Usually, these platforms are characterized by a complicated interface, which is not suitable for newbies.
Cryptocurrency brokers. If a trading platform is a local market where you buy goods from their producers, the broker is a small player on the market. They sell coins at definite prices while setting high fees, but allow acquiring cryptos in a simpler manner. Moreover, most of them support a broad range of payment tools. Coinbase, Coinmama, Coinhouse are among the most popular brokers.
Peer-to-peer-services. They simply allow their users to publish announcements about operations with cryptos. The buyer and the seller directly negotiate the prices. It is even possible to find one selling crypto for cash in your neighborhood. The most remarkable example here is LocalBitcoins.
As one can see, now the range of services offered is truly broad. By the way, there is a list of common complaints regarding centralized exchanges both from traders and crypto theoreticians.
Safety. Even a single point of centralization can lead to the massive theft of users’ funds and keys. More than a million BTCs have been stolen by the time of writing of this article.
Regulation. If the center (or even one of the centers) of a CEX is physically located in some country, the position of this country’s government on ICOs and crypto related issues becomes crucial for the future of the project. Legal restrictions in this sector are now imposed in the U.S., China, South Korea, India etc. When your exchange is centralized, the officials can arrest your cryptos for no reason. Moreover, the administration of the exchange can be involved in fraud with your private information and money.
Speed. We have conducted some particular research on the speed of popular CEXs (Binance, Huobi, Poloniex, see p. 11). The results are sad: you can wait dozens of minutes waiting for the pending of your transaction.
KYC/AML. There is nothing to talk about in this regard, we suppose. If you must send someone your photo, a scanned copy of your ID or even proof of income wanting nothing in return but to withdraw your own funds, it is not OK.

Decentralization: The Solution

Decentralization, as the initial meaning and internal essence of blockchain, smart-contracts and cryptocurrencies, was first italicized by Satoshi Nakamoto and even Nick Szabo in 1990–2000-s. The rise of CEXs resulted in an obvious contradiction, because blockchain-based currencies are being operated via centralized mechanisms just like Visa or MasterCard, but much slowly. Is it normal? Where is the next stage of evolution or, does it even exist in the first place?
The answer was the main point of arguments in the crypto community during the year of 2017. In February, Vitalik came out with the suggestion about the nature of blockchain’s decentralization: “Blockchains are politically decentralized (no one controls them) and architecturally decentralized (no infrastructural central point of failure), but they are logically centralized (there is one commonly agreed state and the system behaves like a single computer)”.
The only possible expression in the commercial implementation of ‘architectural decentralization’ is the decentralized exchange of cryptocurrencies.
And the most advanced technology in this case is that of the Atomic Swaps — the direct peer-to-peer instant cross-chain transaction.
CEXs were the natural and inevitable stage of development for cryptocurrency exchanges. By the way, the DEXs are coming: we found them (namely IDEX, EtherDelta and Waves DEX) on the list of the top-100 exchanges on Coinmarketcap.
So, the Swap.Online team is on the right track. Get ready for ERC-20 ⇔ BTC, ETH ⇔ BTC, USDT ⇔ BTC, EOS ⇔ BTC trading directly from your browser with neither middlemen nor a centralized infrastructure.
See you on the mainnet on August 27, 2018,
Swap.Online Team
submitted by noxonsu to SwapOnline [link] [comments]

Please help edit this response to NY BitLicense proposal. If passed 'as-is' the proposed rules will shut my business plans down; yet the lawyers claim to improve the jobs market with these rules.

August 5, 2014
DFS Office of General Counsel - Dana V. Syracuse, New York State Department of Financial Services, One State Street, New York, NY 10004,
Greetings Dana V. Syracuse,
Money laundering, terrorist financing, and other criminal activities are of grave concern to both Virtual Currency operators and law enforcement organizations. Like old fashioned cash, Bitcoin related technologies can contribute to illicit activity. Neither the business community nor the public want Virtual Currencies to fall into the realm of black markets. Practical and informed regulation is needed in this industry to ensure a safe and accessible experience for all participants. Please know that the distributed computing technologies that make Bitcoin possible are extremely powerful to change the world drastically. We will all have a better outcome if regulators work amicably with the developers of these systems.
Because of the shear power of distributed technologies, we need lawmakers to produce regulations which are perceived by all to be fair for all and in the best interest of all. We need smart rule-making that specifically enables innovation, openness, and fairness. These are the traits that have made Virtual Currencies popular in the first place, and it is imperative that the rules governing them inspire the same confidence among all people. Practically speaking, virtual currencies handle worldwide transactions for free. Savings accounts, payments, transfers and trading are all essentially free when done using virtual currencies. As software and services are built on top, these services can and will be made available to the poorest among us for free. Smart, innovative, regulations will help all consumers safely realize that promise sooner.
Besides the coming help for consumers, virtual currencies are also perfectly suited for business much the same as web-pages are. Nearly every successful business today has a web presence in some form and no one can argue against the value that web pages have provided both to business and consumers. Every business should have its own digital currency for several practical reasons: to manage coupons, promotions, in store credit, exchanges, and gift cards. In order to fully utilize the benefit of Virtual Currencies, businesses also need the ability to utilize other practical functionality which is offered by digital assets. Many of these new features are currently in early design and implementation stages. Examples include brilliant work that will allow for automated accounting, automated repurchase of inventory, Cut and Paste business models, smart contracts, payroll, etc. A primary concern of the BitLicense regulation is that there are no built in allowances to promote ongoing innovations that promise to streamline a spectrum of business and financial processes.
While Virtual Currencies are an amazing equalizing force for both consumers and business, the distributed computing eco-system has already evolved to provide even more business and financial services. Now, whole systems of trust and business relationships are being developed and managed by open source computer code. These systems are fair, transparent, and help all participants get exactly what they were expecting out of any business relationship. Programmers are attempting to build a world where no one cheats because the computing arrangement over which deals are made prevent any participant from cheating. Ongoing development of the underlying distributed computing software systems is crucial to a favorable outcome for consumers in this world. Additionally, when all virtual currency and distributed computing related software is kept open source, these streamlined business activities become just as affordable to implement for Jan's Sandwiches as they are for Walmart and Starbucks to implement.
A practical example of how the New York BitLicense regulations might harm consumers is as follows: Imagine that a consumer has $1.73 left on 12 different store's gift cards. From personal experience, these cards get lost when the balance drops into that range because its more trouble than its worth to claim that last bit of value. However, with a trade-able store credit and the magic of Virtual Currencies, the consumer is now empowered to trade those (12) random $1.73 cards in for (1) $20.76 card to the store of his or her choice. Of course business owners should have the right to choose whether or not they want to participate, but this arrangement is obviously fair to the consumer who purchased the credits at fair value. Clearly, section 200.3 (c)(2) of proposed regulation is not sufficient to allow small businesses to offer many of the consumer enhancing services which Virtual Currencies easily make possible. Businesses need the freedom to issue their own virtual currency as easily as starting up a web-page, and it is in the best interest of consumers that they be allowed to trade any virtual currency freely.
FinCEN made a good common sense adjustment in their regulations on small businesses with regard to the buying and selling of precious metals. For example, as long as a business owner keeps their buying and selling at a hobby level of less than $50,000 per year, they are exempt from licensing. This is a very effective way to let someone design a business model and try it out; if they can make money, they can then seek investors and progress towards full compliance with standard regulatory policies. We can set the expectation that new digital currency business ventures shall be vigilant to prevent their services from being used to launder money or finance terrorists without the costs normally associated with a full KYC/AML program compliance.
At minimum, New York should allow for a Bit-Startup-License that costs a reasonable amount, $25.00 per year for example. It should be issued by FinCEN so that there is only one license required nationwide. It should be for businesses who have annual revenue of $250,000 or less and there should be an automatic inflation adjustment since we would want this regulation to be just as practical 25 yrs. from now. The simple, straight forward process of retaining customer identities on accounts could be as simple as keeping a drivers license and utility bill on file. A simple requirement to track large transactions over 10K per day is also manageable. By keeping all of the required processes low cost, simple, and practical, we can prevent money laundering and criminal activity without hindering the amazing innovations that digital currencies represent. As a bonus, we might actually create new jobs in this country where they are needed most. If a state must amend the FinCEN rules it would be most practical for all that they keep the amendments to federal regulation to a minimum; otherwise consumers will incur increased costs and lower quality services.
There is a huge cost of "lost opportunity" which is not considered accurately in the — RIS, a Regulatory Impact Statement which is required by New York law. We small and start-up business owners have friends and family that also see the vision for benefit that Virtual Currencies offer to all of mankind. We are working together to implement these technologies to provide innovative new services that will make people's lives better. We can work our day jobs and go home at night and learn and program and make these innovations happen. We can do this, and we can do it without big money. When regulations require that small start-up businesses must obtain large amounts of capital to hire teams of people to perform arbitrary regulatory tasks, the natural effect is to prevent these small businesses from ever starting up. The natural effect is to prevent these engines of job creation from ever getting off the ground. What in these regulations will help someone in Jarrell, TX start an international trading company that provides jobs to disadvantaged mothers in South Carolina and Texas and valuable services to the citizens of New York and the rest of America?
If there is no help, and if there is no consideration for cost of compliance for small businesses, then all should assume the obvious: These regulations are designed to keep power and money and opportunity firmly in the grasp of the clinched fists of those who have it already. People are desperate for jobs in this country. The people who have jobs are desperate to keep them. The whole of our current financial system is designed to systematically keep the average citizen in desperate conditions. It is designed to keep them working as cogs on a wheel working for the owners of the machines. There is pent up demand to change this, and when the time is right, change will come. The owners of the machines should realize that this is good for all. When people are free to realize their true potential, great progress is made that will benefit all. Would you rather be a king in 1292, or a lowly multi-millionaire today? Uninhibited development of digital currencies will make everyone's lives better.
Those who desire to keep a stranglehold on money will best serve their own interests by letting go and encouraging this renaissance. All of us will be better off if our current financial system embraces these innovations. Rather than attempt to stifle competition from digital currencies via regulation, the current financial services industry should compete with their own innovations that provide basic banking and investment services to individual consumers for free. People at the lower fringes of our economy are suffering. It is time for changes that are designed to help them succeed. Virtual Currencies, distributed computing, and automated business entities offer opportunity to all who are allowed to participate. To raise the barrier to entry in this field accomplishes no more than to push the poor further into poverty.
Furthermore, the BitLicense regulations have failed to accommodate new distributed protocols that are currently in development or that have been recently released. These distributed technologies apply to more than money now. Whole business models will soon be implemented as a distributed computer script; and once those scripts are started, even the "issuer" has no control from that point forward. If the script makes profit, it will provide whatever service it provides forever. It will pay fees, investors, and vendors as stipulated in the founding instructions which are fairly and transparently programmed into the business model from the beginning. It is mind-blowing what can be done not only in the financial sector, but for all business. Human ownership is no longer required. Competition and constant honing of these scripts will lead to almost all services being delivered to consumers at near cost and many services for free. Fairness and transparency will be built into these systems because trust and reputation are the only real requirements for doing business. Any person who claims an interest in advancing the quality of human life is wise to protect and foster open source software development. Ad hoc, status quo regulations will not serve the common good in this case. It is imperative that these systems remain transparent and fair. If not, the real criminals will find a way to go dark and the general public will be saddled with ongoing economic hardship round the world.
Despite the wild west and unregulated nature of Bitcoin, it has created many jobs and opportunity for a variety of people. The community has made every effort to protect its participants from losing money. As with stock market investing, some retail investors lose. The regulated economy does no better; when a company goes bankrupt, it is of little consequence to the holder of common shares when they receive a $2.51 settlement. Consumers are best served simply by warning them and educating them that the virtual currency sector is uninsured and that all invested funds are at risk. The proposed regulations admit that they do nothing to insure customer funds or the value of virtual currencies. Participants should be informed that to participate is to risk full losses. The proposed regulations do nothing to mitigate the risk of full losses, and therefore, the cost of implementing the regulations in their current form is not justified. These proposed regulations are appropriate only for a firm that does want to establish SPIC insurance protection for its customers.
Finally, with regards to the prohibition of the release of new virtual currencies; this is not consistent with judicial precedent and should absolutely be removed from the proposed regulations. Open source code is protected free speech. Individuals have a fundamental human right to communicate freely and privately with each other. These proposed regulations will infringe on many people's ability to freely communicate with persons in the state of New York.
Please consider withdrawing the BitLicense proposal at this time for the following practical reasons:
  1. Virtual Currencies are international endeavours and are regulated more efficiently at the federal level.
  2. These BitLicense regulations have no accurate consideration for the costs of lost opportunity from their effective suppression of low capital start-ups in the virtual currency and distributed computing industries.
  3. There has been no demonstration of harm done --due to lack of regulation-- to consumers in the state of New York or elsewhere.
  4. The application of existing law has been effectively used to curtail unlawful and damaging activities which use virtual currencies. Examples of good use of existing law include a ponzi scheme bust in Texas, the silk road bust, and the bankruptcy case for Mt.Gox.
  5. These regulations have no educated provisions for distributed trading and data exchange systems like the NXT Asset Exchange platform, Open Tranactions, Mastercoin, Ethereum, or Maidsafe.
  6. These regulations do not comply with previous court rulings. Two federal appeals courts have established the rule that cryptographic software source code is speech protected by the First Amendment (the Ninth Circuit Court of Appeals in the Bernstein case and the Sixth Circuit Court of Appeals in the Junger case).
Thank you for taking the time to read these concerns.
James Andrews
submitted by crypto-daytrader to Bitcoin [link] [comments]

Paying with Bitcoin at Walmart! MONEY LAUNDERING - How Does It Work? Money laundering fears for virtual currency Bitcoin - BBC ... How To Launder Bitcoin  Silicon Real Bitcoin used by terrorists to launder money?

P2P Bitcoin Exchange Fraud News: An Arizona bitcoin trader named Thomas Mario Costanzo, a.k.a. Morpheus Titania, has been convicted of using the cryptocurrency for drug dealing and money laundering. For years, Hong Kong’s most prolific money launderer was a teenager named Luo Juncheng, who originally opened a Bank of China account with a $500 deposit. During the next eight months, he made ... Most cybercriminals involved in money laundering activities prefer to use fiat money than Bitcoin, pointed out a recent research report written by British defense and aerospace company BAE Systems on behalf of the global provider of financial messaging services SWIFT. State money is the main choice of criminals Money laundering activities by cybercriminals remain a […] r/Bitcoin: A community dedicated to Bitcoin, the currency of the Internet. Bitcoin is a distributed, worldwide, decentralized digital money … Press J to jump to the feed. Press question mark to learn the rest of the keyboard shortcuts. r/Bitcoin. log in sign up. User account menu. 148. Walmart is concerned about the BitLicense Proposal. Close. 148. Posted by. u/ozme. 4 years ago. Archived ... Money laundering is not a simple concept. It's two simple concepts, because there are two different activities that are called money laundering. Here's how to do both of them.

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Paying with Bitcoin at Walmart!

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