This story demonstrates one of the features I most like about Bitcoin:
In order to transfer Bitcoins out of a “wallet”, the name for the digital file which contains the encrypted information necessary to spend the currency, users need to know that wallet’s password or “private key”.
According to Forbes’ Kashmir Hill, that hurdle is causing the FBI difficulty.
“The FBI has not been able to get to Ulbricht’s personal Bitcoin yet,” wrote Hill. An FBI spokesperson said to Hill that the “$80m worth” that Ulbricht had “was held separately and is encrypted”. At current exchange rates, that represents slightly more than 5% of all bitcoins in circulation.
It looks like Bitcoin is pretty secure against state seizure. Mind you, that doesn’t do Mr. Ulbricht much good as he’s currently being held in a cage. But the Federal Bureau of Investigation’s (FBI) inability to take Ulbricht’s supposed $80 million worth of Bitcoin is good news for other people facing state theft.
Think about countries such as Greece and Spain that are seizing personal fortunes and freezing assets in bank accounts. If you want to conceal your personal wealth from the state money grabbers converting it to Bitcoin seems like a pretty good option. Here in the United States things are worse. Your wealth can be stolen under civil forfeiture laws if a police officer simply suspects that wealth is tied to a drug-related crime. Under civil forfeiture laws the burden of proving any wealth isn’t tied to a drug crime is on the accused. Bitcoin may be an effective defense against civil forfeiture laws and a dying state’s last ditch attempt to raise money by stealing directly from the bank accounts of citizens.
Admittedly, Bitcoin fluctuations can be pretty wild. But everything has its risks. You risk losing wealth if Bitcoin’s exchange rate drops but you risk losing wealth if you keep cash on hand or in a bank account. I recommend divesting wealth. While divestment doesn’t protect all of your wealth it stands a good chance of losing everything if the one protection strategy you’ve chosen fails.