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Feds Confiscate Record $29 Million BitCoin Booty From Dread Pirate's Hard Drive

 When three weeks ago, the FBI arrested Ross William Ulbricht - the creator of the now shutdown Bitcoin-only "alternative" marketplace Silk Road also known as Dread Pirate Roberts, some were surprised that the Feds only confiscated about $3.6 million worth in Bitcoins from Ulbrecht. Proving all doubters wrong, and that creating the first "libertarian" marketplace not subject to any rules and regulations, not to mention fiat monetary constraints, actually does pay quite well, moments ago it was revealed that Federal prosecutors had found an additional $29 million, or 144,336 BitCoins, belonging to the Dread Pirate. According to Reuters, the booty was discovered on "computer hardware" belonging to Ulbricht. The repossessed electronic money, whose encryption technologies seem to leave a bit to be desired, has now been impounded and will likely remain on the FBI's hard disks indefinitely.

1 Comments in Response to

Comment by Ed Price
Entered on:

Confiscating Bitcoin funds is different from actually accessing the funds in spendable form. I don't see clearly in the article where it says that the funds are in spendable form. Anyone that has a copy of the wallet - that might be secretly stored in a cloud on the Internet - and knows the passphrase, can access and spend the bitcoins.

Anyone who finds, steals or confiscates a Bitcoin wallet off a computer, and opens it with the kind of bitcoin program that created the wallet in the first place, can see the number of bitcoins that the wallet holds. They can calculate the value of the wallet. But if they don't have the wallet passphrase, they can't access the coins to use them to trade for fiat currency, or for anything else.

Passphrases are essentially long passwords. The greater the length of the passphrase, and the more random the characters and the variety of characters, the stronger the passphrase is. By the same token, the stronger the passphrase is like this, the harder it is to remember when using it to do business.

Now, if you don't write a long passphrase down, you just might forget it. If you DO write the passphrase down, somebody just might find it and access your coins. In extreme cases of Government abuse, even if you memorize the passphrase, Government just might get it out of you using truth serum (don't think that this is beyond them).

There are different ways for making and hiding complex passphrases that make them more difficult to find them, yet easier to "remember." Here is one method.

Use a random character generator to generate a long list of, say 10,000 random characters. The list might look something like this, only much, much longer:

Next, select a small section from the list - fgzR5aoHABfzgvophdFiKwgm1XLYW0amgJ2BGY0sz1sAyKUlvYyRowRJFfdWJ0FCn - to use as your passphrase. Count the number of characters in your passphrase; in this case it is 65. Then, write down on a little piece of paper, the first 5 characters of the passphrase - fgzR5 - followed by the number 65 - fgzR565. This is your passphrase key. Hide several copies of your key, or memorize the whole thing and don't make any copies.

DO make multiple copies of the random character list. Make several computer files of it and several hard copies, and store them in several different places on different computers, and around the house and office. After all, this random character list holds your passphrase. If you lose it, you lose your passphrase - and all your bitcoins.

Whenever you want to access your passphrase, simply search for the first 5 characters of your passphrase key among the 10,000 random characters of the list. Those first 5, along with the following 60 characters, are your passphrase. In the unlikely event that the first 5 are duplicated exactly somewhere else in the list, you might have to search twice.

Odds are that nobody will be able to figure out your passphrase among all the possible combinations and sizes of passphrases in the random list. Yet you can access it easily with just the first 5 characters.

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