Disclaimer: This is just a theoretical discussion, and nothing in this discussion which is against the law should be done in real life.
In the recent light of some
traders being arrested in the US, some safer methods of exchange would be necessary.
First off, one could argue that those caught deserved it because they were told upfront(?) that the other party was going to use the coins for illegal purposes. I know many serious traders would not accept such trades, but I also assume many do not care what the bitcoins will be used for and will trade with anyone.
The fact that you need a license to exchange more than 20K worth of btc in a 12-month period is a bit far out if you ask me. I don't think there should be any restrictions whatsoever.
How the feds have worked up til now is to pose as buyers of BTC, and revealing intentions beforehand (wanting the BTC for illegal purposes). Smartening up and adhering to the max limits and not accepting trades with shady people would be a good first step for any trader.
But if we look away from the trust element for a minute, and assume all parties at every trade can be trusted 100%, how could anonymous trade be conducted?
If you want to buy btc the following method could be used:
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1. You gather the amount you want to use in USD, let's say 1000 USD. You put this in an envelope, and then put it somewhere hidden, let's say in a hole in a three in a park, or beneath a garbage bin behind a cinema. Just use the imagination, and put it where the probability of someone finding it is low. It could also be rolled up, or camouflaged in some other way. The point is that you leave the cash somewhere, and that you can give complete specific instructions as to where to find it, you might even be able to observe from a distance and verify that the cash are actually received by the person you're trading with.
This would leave you, the buyer anonymous (of course, there could be surveillance cams etc, but you could use a disguise, or a middle man).
After the cash is retrieved, it will be counted by the btc seller, and the btc-seller will send the btc to the designated address and the trade is completed.
You delivered the cash anonymously, the seller does not know who you are or what you look like. The point here is the randomness of how the cash is delivered in the first place. There can be no stakeout, because there's no fixed meeting point.
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If you want to sell btc and receive cash, the following method could be used:
1. The more exotic and advanced option: Fetching cash by drone. A remotely controlled drone could land and fetch cash put in a designated net, and even haul it into a Faraday cage, thus preventing any tracking signals from leaping out. It could even hoover over a ground where the cash deal is taking place, having the person handling the cash to prove there's nothing nefarious going on, like poison on the bills, transmitters, etc. These checks could be done remotely through a camera on the drone. It could also be a rule that anybody had to stand 50-100m away when the drone lands or goes low enough to fetch the cash. The drone would then fly with the cash to its destination, and since this could be miles and miles and it flies fast, pursuing it by car would be impossible and I'm not sure if it would be possible to track it with sattelites, helicopters or airplanes. I guess it would be possible to give it a neutral heat signature, thus making it very difficult to detect. Other drones might be able to pursue it though. Some evading techniques, like flying under a bridge, or into a car garage or otherwise hide from any adversary above by entering some structure that's very busy, might also be a good tactic, then the cash could be offloaded, and the drone could fly off somewhere else, and land on the property of some known person we don't fancy, and the cash would be on its way in a truck somewhere else. But disposing of the drone could only be advised if the trade is so valuable that it could be justified.
Downside of this is that the drone possibly might be tracked somehow.
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So it seems like that being the receiver of cash is the tricky point, where it's difficult to stay anonymous. Delivering cash anonymously does not seem that difficult with a random drop point, but the one picking it up could always be caught.
So it seems like the easiest thing for law enforcement is to catch the sellers of bitcoin, because the seller always needs to receive cash. A buyer on the other hand is more protected because of the method with a random drop point.
The cynical trader might be able to use a third party, somebody innocent to pick up the cash, and while that person might be arrested at the trade, the trader would go free, but the runnerboy might agree to work with law enforcement and help them catch the trader anyway.
We've all seen spy movies, where suitcases are switched and so on, so some clever switching tricks, or entering a toilet stall, and taking cash envelope out of suitcase and push it to the man in the next stall, the accomplice, would be possible.
To avoid losing btc at the trade, for instance if the runnerboy is caught, is to always only send btc after cash has been received, or only send btc via a phone call during the trade. Runnerboy phones boss and says money is okey, then boss sends btc to buyer.
Having a limit of 20K USD in every 12-month period, working with brothers, sisters and nephews, I guess all of them have the same limit, you might even want to use some homeless people and have them help you, each running up to their 20K USD limit pr. 12 month period. If all of them have different ip-adresses and different nicks online, how could it be proved that there's really one boss trader behind it all. But seriously, that seems like a lot of work for very little gain. If we think the average profit is 5% of every trade, then every 1000 USD gives 50 USD, so to earn 1K, you have to sell for 20K, and that would be your yearly limit. Does not make sense.
It would be more sensible to allow anyone to trade for any sum they'd like, but then pay taxes of their income.
But the main concern remains, how to receive cash anonymously? It could be done through the mail, even through several remailers, but these could all be staked out and compromized, and every method I can think of is a bit sketchy. The reason it's difficult is because you need to physically fetch the cash, and that's the vulnerable point. You could always have people working below you that would take the hit if caught, but that would mean you both would have to trust them with large amounts of cash and that you would need to have some substantial capital to begin with. And you would also need to convinve the runnerboys to somehow take the risk for you. But this happens all the time with narco traffic, so I guess there will always be a supply of people willing to cooperate.
But in the end, adhering to the law, that's the only way that you're guaranteed to stay out of trouble. Some might argue that not even then, you're safe - but at least then they can't stick that much on your person.
Thoughts?
