No Hiding Place in Bitcoin, Real Mining for Virtual Cash, and the Wrong Sort of Fun

As the highest-value bitcoin transaction occurs, a Welsh resident searches a landfill for his £4m hard drive.

AccessTimeIconNov 29, 2013 at 4:50 p.m. UTC
Updated Apr 10, 2024 at 3:18 a.m. UTC

Welcome to the CoinDesk Weekly Review 29th November 2013 – a regular look at the hottest, most controversial and thought-provoking events in the world of digital currency through the eyes of skepticism and wonder. Your host … John Law.

How to be anonymous: avoid bitcoin

As the first currency of the Internet, bitcoin has many attributes of its host network. Namely, it can be perfectly anonymous and perfectly transparent at the same time.

No, it is not necessary to have any record linking your name to what goes on in there – but good luck hiding anything.

Knowing enough about what someone does is just as good as knowing who they are, and often much more useful. In this world, what you do is much more important that what you’re called.

Hence, we know that nearly $150m in bitcoins was transferred on 22nd November. This was the largest transfer in the history of the currency (by value).

Moreover, it is most probable that this was an internal 'housekeeping' move by Bitstamp, the second-largest dollar bitcoin exchange. All this data, both the certain and the speculative kind, is entirely public and can be discovered by examining the block chain.

Do we know what internal housekeeping financial transactions were made by banks, hedge funds or Richard Branson on 22nd November? No. You can be very sure they’re very happy to keep it that way. Financial types cherish their secrecy.

But isn’t bitcoin supposed to help money launderers, terrorists, drug traffickers and other criminal types move their money without attracting attention?

On this evidence, bitcoin comes in second to a friendly chap with a pinstripe suit and a brass plate on the front door.

Admittedly, anyone moving that much money through the banking system will trigger tripwires, but if you know where they are and who’s looking – which you will – it's easier to look innocent.

With bitcoin, everyone 'sees' and you don’t know who’s looking, nor what they’re looking for.

Were he to run a dodgy operation requiring a major cash transfer, John Law would probably not do it in public. He would probably ask the existing criminal overlords how they’ve been doing it all these years.

Not that it seems that hard. By purest coincidence, $150m is almost the exact amount the US Government is thought to have handed over to terrorists in Afghanistan by funding the companies they control.

Admittedly, the details aren’t entirely clear and it would take digging through various levels of official secrecy and obfuscation to find out.

Perhaps if the US used bitcoin next time, it’d be easier to spot (and thus stamp out) this sort of support for terrorists. Just a thought.

How green was my wallet?

via Shutterstock
via Shutterstock

A tweet just flitted across John Law’s Twitter feed: “It’s nearly midnight. What are all these people doing at Newport municipal tip?”

This being Twitter, it could be a joke – but it could be true, and John Law rather suspects it is.

For the Welsh landfill site is the last resting place for a hard drive that once lived in a Dell laptop belonging to one James Howells, IT type and early bitcoin fan.

Not much of a fan, though: having mined 7,500 BTC in 2009, he got bored and forgot about them.

The laptop died and was thrown away – all but the hard disk, which Howells kept for its data. This summer, he found the hard disk and threw it out. A week ago, he remembered.

Hence the sudden interest in the landfill. Normally, finding an object the size of a packet of playing cards six feet under somewhere in an area of decomposing Welsh waste the size of a football pitch would be madness in a funny hat.

But with £4m at stake, the odds are a lot better than you’ll get from the lottery, and there’s all the exercise and fresh air too. Well, exercise.

Plus, if you’re going to mine bitcoin the old-fashioned way, you can’t do better than Wales.

The really good thing about bitcoin in this situation is, assuming the disk has survived in some sort of readable state (John Law would place that bet) then it’s ideal buried treasure.

A smart approach for Mr Howells would be to announce a 10% finder’s fee, and then go back to doing IT things somewhere warm, dry and not so smelly.

If the dosh was in cash, or diamonds, or gold-plated unicorn poo, then the finder could just pocket the lot and run for the hills.

But bitcoin lives in encrypted wallets, so without the Howellian key, it’s just an obsolete, odiferous hard drive with an eBay value of tuppence. You must give it back to get the dosh.

John Law expects the drive to come to light, especially if there’s a plumptious reward.

All it would take is a thousand people who think they’re in with a shout of, say, £400,000, and the whole place would be turned over in a weekend.

Admittedly, the council has said it won’t let people in – but it’ll take more than that to keep the good people of Newport from their rightful payday.

It is a little sad for Mr Howells that he didn’t have a backup (him being an IT type and all) although, to be charitable, he’d already whipped the pictures, documents and other things off.

It is hard not to giggle when one sees that the BBC concludes its report on the affair by asking Mr Howells what he thinks about bitcoin now.

Oh, he says, It’s going to continue to appreciate in value:

"I still believe in bitcoin. I believe its value is going to go much, much higher and it's still in its early days. As soon as access to bitcoin is opened up to the general public , I think a lot more people will be using it, hence the price will increase further."

It seems the qualifications for being a broadcast pundit on bitcoin is to have accidentally lost four million quids’ worth of the stuff because you didn’t even know they were there.

Salaryman, beware!


One is the valuation, of course: that’s going to get messy, so good luck if you’re in for the ride.

Another is that there’s a bitcoin payroll service. No, really there is. Canadian company Wagepoint is adding bitcoin capabilities to its local service, with the US coming early next year.

And, like any payroll services company, Wagepoint will manage a company’s wages and ship regular remuneration to its employees – but in bitcoin.

One day, this will make sense. One day, a bitcoin will be worth much the same this month as it was last month. One day, you’ll be able to pay your mortgage, buy your pasta and give your children their pocket money in bitcoin. On that day, getting some or all of your salary in bitcoin will make a lot of sense.

That day is not today. Only a drug-crazed okapi in a purple waistcoat would think otherwise. John Law is not that okapi.

So, why? And how?

No, not how you run a bitcoin payroll service, that’s simple enough. In any case, it’s not really a bitcoin payroll service, in the sense that it moves bitcoin from an employer to an employee; it’s an automatic conversion service.

Wagepoint scoops off a percentage of the worker’s net wages after the employer has paid them to Wagepoint, converts them through a deal with a bitcoin exchange, and passes the bitcoin along to the employee’s private wallet.

That’s nothing here the employee couldn’t do for themselves, with the exception that Wagepoint has done a deal with the exchange for a better rate than an individual employee could get off the peg.

None of which explains the 'why'.

“It’s like stock options,” says the company – only it isn’t. Stock options are tied to the book value of a company in a generally-accepted way, and are part of the great wonderland of corporate finance and taxation that everyone understands. Bitcoin is none of those things.

Of course, there’s nothing to stop companies handing out bitcoin to its employees. Rather fun, in a way.

But in the name of okapis in rehab everywhere, please do it in a way that makes sense in light of bitcoin’s grotesque volatility, uncertain legal status and general experimentation.

The payroll is no place for any of that stuff. If you want to bung a chunk of your salary into bitcoin, then go ahead – but please, don’t do it automatically.

Wagepoint disagrees. It describes its Wagepoint Pay service as a “FUN, incredibly awesome, fully automated and cloud-based payroll software”.

Ah, "FUN". In capital letters. That explains it.

John Law doesn’t think you can have automatic fun. Automatic is for stuff that isn’t fun – that’s rather the idea.

That’s why you have direct debits for your insurance and your water bill, but take your cash to the bookie on a Saturday afternoon to judiciously place them on the nag of your choice. That’s how to have fun.

You may disgree, but one thing is certain – it beats digging through somebody else’s decomposing underwear in Newport on a late November night.

The things bitcoin makes people do.

John Law is an 18th century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took three hundred years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.