How the Police Can End Bitcoin and Cryptos...And What Can Be Done About It

FEAR OF THE UNKNOWN
I’ve been buying and selling bitcoin since 2012 and a police officer since 2009 (see my introduction on how I Transformed from a Big Government Statist Cop to a Small Government Libertarian Police Officer). So a few years ago when I was moved to the Frauds office, it was no surprise to me when I came across frauds that involved Bitcoin. I knew what Bitcoin was and I didn’t have that negative knee-jerk impulsive reaction to it that most cops have. “Bitcoin is used by drug dealers and criminals,” they would say. Well so is cash and fiat currency.

It’s always been an uphill battle trying to explain Bitcoin to my colleagues. Even when the Kentucky Chief of Police decided to be paid in Bitcoin back in 2013, I still couldn’t convince my colleagues that Bitcoin was anything other than a criminals currency of choice. Just yesterday I was speaking to a group of detectives about how blockchain technology is the biggest thing since the invention of the internet. I was accused of being an alley to criminals while another detective shouted, “but what about Silk Road!” He wasn’t interested in my reply.   

CIVIL ASSET FORFEITURE
Recently, the Toronto Police Service seized a very large quantity of Bitcoins and they had no idea what to do with it. After a few phone calls to other police services and watching a few YouTube videos, they finally figured out that they needed a wallet. Beyond needing a wallet, they still don’t know what to do with it. Realizing they had a serious deficiency in knowledge on this topic, they arranged a symposium on “Law Enforcement and Bitcoin.” The main presenter for this Canadian police symposium was the U.S. Department of Homeland Security. Needless to say, they didn’t really have too much to offer on the topic other than, “it’s really hard to investigate” and “it’s used by criminals, the boogeyman and zombie Nazis.” Okay, he may not have said zombie Nazis, but I can’t be certain.  

Now I don’t know what happened with the bitcoins that were seized but here’s the issue. There’s a finite amount of bitcoins, 16 million to date have been mined and only 21 million in total to mine. The fact that there’s a finite amount of bitcoins is one of its strengths. Unlike fiat currency, it can’t be printed and duplicated until you’re a Zimbabwe millionaire or living in the Weimar Republic. However, as police services keep seizing bitcoins (and I’m talking about tens of thousands to hundreds of thousands to date) these bitcoins are very often taken out of circulation forever. Keys and passwords to wallets are lost, hard drives corrupted and wiped clean, Bitcoins lost forever. The police may even unknowingly be seizing bitcoins that are on mobile wallets when they seize cell phones. Any bitcoin and cryptocurrencies on these devices are wiped clean and the hardware is then auctioned off if not returned to the owner.    


WOULDN’T THIS JUST RAISE THE VALUE OF BITCOIN?
Supply and demand says that as the police reduce the supply of Bitcoin through seizures that the price will rise. But what happens if the supply of Bitcoin is reduced so far that even a Satoshi (the smallest divisible amount of Bitcoin) isn’t small enough to make an everyday purchase? Well, Bitcoin can be updated to allow further subdivisions but what happens when the police have seized and taken out of circulation so many Bitcoins that Bitcoin no longer holds the trust it once did? Capital may start to flow to other cryptocurrencies.  Or out of cryptocurrencies altogether.    


THE CHAMBER OF DIGITAL COMMERCE TO THE RESCUE
Just a few days after the Law Enforcement and Bitcoin conference, I attended a Financial Technology meetup in Toronto. There were over 1,200 people in attendance. It was the largest meetup ever on the topic of cryptocurrencies. In attendance were popular names in the Bitcoin world like Tone Vays. The keynote speaker was Alex Tapscott, the author of “Blockchain Revolution.” Of most interest to me though was Perianne Boring, the founder and president of The Chamber of Digital Commerce located in Washington D.C. One of the initiatives of the Chamber of Digital Commerce is the State Working Group.  

As stated on their website, “The State Working Group provides education and advocacy on state-related issues affecting digital currencies and blockchain-based technologies.” Most notably, the State Working Group recently worked to pass a historic “blockchain friendly” bill into law in the state of North Carolina. This law is now being adopted by many other states.

Now I know there’s a lot of contention in the Bitcoin world over whether or not there should be regulations regarding Bitcoin but as Perianne put it, there will be regulation whether we like it or not. So it’s up to us, the Bitcoin community if we want to have a say in the regulations that will affect us.  

The State Working Group division of the Chamber of Digital Commerce will also visit if requested, your local police service to help institute policies and to give guidance and education. I urge you to pick up the phone and contact your local police service to enquire what routines and procedures they currently have in place when dealing with Bitcoin, offer your expertise if you have any, encourage them to seek assistance from the Chamber of Digital Commerce and even try to arrange a meeting between the two.  

If the police are left to their own devices when it comes to Bitcoin and other cryptocurrencies, they’ll continue to take Bitcoin out of circulation and assume that any and all Bitcoin they come across is a result of illegal crime and therefore open to asset forfeiture (i.e. seizure). It’s up to you to ensure that your local police have the knowledge on how to deal with Bitcoin and other cryptocurrencies

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