In case you haven’t noticed, Bitcoin is going through some pretty intense tribulation right now, with tens of thousands of unconfirmed transactions, thanks to a “stress test” and, on top of that, forking issues due to invalid blocks being mined and propagated by large mining pools. What exactly is going on there? Let’s have someone else explain it for us:

Three months ago I discovered a miner with ~1% of the hashrate that was processing transactions with no signature validation at all. If I had sent that miner a transaction where I spent a million of other people’s bitcoins they would have mined it and the half of the non-verifying miners would likely have given it 6+ confirms for any SPV client; and thats the more fundamental issue here which no amount of version checking would help with.

Well that certainly doesn’t sound good. Maybe it should be fixed…�jstolfi weighs in:

The core devs tried to activate BIP66 through a very soft fork, so that clients would not even know that it was happening (otherwise they might get alarmed at the word “fork”). So they just let the new rule to be silently activated as soon as 95% of the miners signaled that they had upgraded to the new version of the software (v3). To make the transaction as smooth as possible, they allowed the players (clients, relay nodes, and miners) running both v2 and v3 to talk to each other even after the transition.

But that plan backfired because some v3 miners got a block B from one of the few remaining v2 miners and started to mine on top of it, not realizing that B was invalid under the v3 rules. For a while, that was the longer branch. That branch was perfectly valid for clients still running v2, and was assumed to be valid by some v3 wallet apps that did not do full checking of the blockchain. Meanwhile, other v3 miners, realizing that B was invalid, ignored that branch and started growing (more slowly) their own branch. The ‘bad’ branch was already 6 blocks long when the core devs (who fortunately were watching the blockchain at the time) managed to warn those miners that they were mining an invalid branch. Those 6 blocks were then discarded, and the ‘good’ branch soon overtook it. Fortunately there were no double-spends, and all transactions that were confirmed in the ‘bad’ branch were eventually confirmed in the ‘good’ branch too.

The same problem occurred again a few hours later, and this time the ‘bad’ branch only got to 3 blocks before being abandoned. It is not known whether there were double spends this time.

To guard against possible repeats of the incident, possibly with double-spends, the devs had to issue a warning to all clients (even v3 ones, depending on the software they are using) to wait 30 confirmations (5 hours) for safety.

Thus, what was supposed to be a “stealth” fork became a major PR disaster.

IMHO, the devs blotched the fork. They should have programmed a delay of (say) 2 weeks between the “95% majority” event and the enabling of the BIP66 rules. Then they could have sent a waring to all v2 players, especially the remaining v2 miners and relay nodes, that they should upgrade before BIP66 went into effect. But that would have been bad PR… ha ha.

One thing is the ‘consensus rules’ that say when a block is valid. Another thing is the algorithm that miners use when building the blocks that they try to mine. The ‘v3’ label refers to the former only. By stamping ‘v3’ on their mined blocks, they only indicated that they agreed to the version of the ‘consensus rules’ that enforces BIP66 after the triger event.

The software that those miners were running would indeed have checked the BIP66 rule, if it got a chance to do so. But the software only checked the transactions to be included in the block that they were mining, and not those of the parent block that they got from another miner.

The v3 ‘consensus rules’ say that a block is valid after the trigger event only if the transactions satisfy BIP66 (among other conditions) and the parent block is valid. But the v3 rules don’t say that miners have to fully check that the blocks that they issue are valid. It would be better for bitcoin if they did, but miners have the ‘right’ to create their blocks any way they want, even post blocks full of random bits.

The miners should want to post valid blocks rather than invalid ones, because invalid blocks don’t pay anything; but they must win the race against other miners to earn anything. They figured out that they would earn more by gambling that the previous block was valid, and mining on top of its hash only, than by downloading it and verifying it first. If the previous block was v3-valid, their block would be v3-valid too. If the previous block turned out tobe invalid, well, bad luck.

The Bitcoin Core release that includes v3 does verify the parent block before mining on top of it; but miners are not required to run BitcoinCore, and the v3 ‘consensus rules’ do not require anyone to run a particular version of the software.

An interesting detail is how the big pools steal the hash of the most recent block from other pools, even before it gets out to the relay nodes. That is why they couldnot even check its version stamp.

All they have to do is subscribe anonymously as members of the other pools, and they will get that information as soon as the pool manager receives a mined header from some other member. The pool’s interest is to make sure that the block just mined is valid, and to put all its members to mine on top of it as soon as possible, while it its still sending it out to the relay nodes.

To be precise, a miner gets bitcoins for being the first to mine the next valid block. They are not required to verify anything (and it is not possible to check whether they are indeed verifying anything.) They only verify enough to maximize their expected gain.

In particular, when they steal the hash of a recently mined block from some other pool, they are quite confident that it will be a valid block. So they don’t bother to check it, and that gives them a few precious seconds of advantage in the block race.

Usually that is a safe assumption; it failed in this case because of the switch-on of BIP66 and the “victim” of the theft rbeiong out of date.

Bitcoiners are blinded by greed? No way that’s possible!

The post Fork you, got mine appeared first on Buttcoin Foundation.

A combination of events have coincided to form a perfect shitstorm, once again proving that Bitcoin is nowhere near ready for the big leagues. An entity known as “coinwallet.eu” has been performing stress tests on the Bitcoin network, flooding it with thousands of transactions for unknown reasons. As of this writing there are approximately forty thousand unconfirmed transactions, more or less requiring blocks to be full in order to catch up. Greedy miners pumping out empty blocks doesn’t help this situation much. For the equivalent of a few hundred dollars the Bitcoin network can be choked to death with a whopping 2�transactions per second.

Meanwhile, miners are generating invalid blocks, failing at the one job they have. A recent change to the Bitcoin client software has led to some… issues.

For several months, an increasing amount of mining hash rate has been signaling its intent to begin enforcing BIP66 strict DER signatures. As part of the BIP66 rules, once 950 of the last 1,000 blocks were version 3 (v3) blocks, all upgraded miners would reject version 2 (v2) blocks.

Early morning on 4 July 2015, the 950/1000 (95%) threshold was reached. Shortly thereafter, a small miner (part of the non-upgraded 5%) mined an invalid block–as was an expected occurrence. Unfortunately, it turned out that roughly half the network hash rate was mining without fully validating blocks (called SPV mining), and built new blocks on top of that invalid block.

Note that the roughly 50% of the network that was SPV mining had explicitly indicated that they would enforce the BIP66 rules. By not doing so, several large miners have lost over $50,000 dollars worth of mining income so far.

All software that assumes blocks are valid (because invalid blocks cost miners money) is at risk of showing transactions as confirmed when they really aren’t. This particularly affects lightweight (SPV) wallets and software such as old versions of Bitcoin Core which have been downgraded to SPV-level security by the new BIP66 consensus rules.

Essentially some miners are farting out blocks that don’t fit within the new standards and other miners, in a rush to fuck you and get theirs, are grabbing these invalid blocks and building the blockchain upon them, leading to forks as some clients reject these broken blocks and others keep on truckin’, regardless of the validity of their transactions. It’s now advised to wait for 30 confirmations instead of 6, because, much like VISA and Mastercard, you have to wait an entire day for your card to be approved.

The flood of test transactions on top of this is like diarrhea icing on a shit cake.

The post Bitcoin is Broken (But We Already Knew That) appeared first on Buttcoin Foundation.

tatertatertatertot

“bitcoins.” and then he
laughed. but who laughs last? (the one
who laughed at bitcoin.)

nobodybelievesyou

frictionless money
futuristic and secure
sorry for your loss

Purplekeyboard

Every Bitcoin tale
Begins with, “Fuck you, got mine!”
Ends, “Fuck, you got mine!”

Unistrut

Bitcoin price falls down
Hold the line! Trust Satoshi!
Tears fall, like your coins.

kadonka

reassuring words
with eerie robot cadence
hi i’m roger ver

Paradigmist

hey, I liked your post
have a penny for your thoughts
WHOA, WHAT JUST HAPPENED?

serpentine91

To the Moon we go
Oh no, the price crashed again
Back to Mom’s Basement

PoopToucher3000

it’s that time again
please post the number for the
suicide hotline

Not to be outdone, SA forums goons got in on the action:

Trig Discipline

“cryptocurrency”
means “even you can’t find it”
sorry for your loss

at least tulip bulbs
grow into pretty flowers
bitcoin’s just hot air

Sweevo

all this mining heat
dries my strawberries nicely
help i have heatstroke

bucketmouse

eternal cycle
screaming, smug, crying, giddy, sad
cryptocurrency

theflyingexecutive

dread pirate roberts
will rot for life in prison
please send magazines

The post Bitcoin haiku appeared first on Buttcoin Foundation.

In between Butterfly Labs buying Buttcoin and the FTC saying “buttcoin,” we made the move to our new home here at the Buttcoin Foundation. We did, however, suffer a grievous loss during the move: many of our posts highlighting the best Bitcoin mining rigs were lost. Today this changes.

Some of these may be repeats, but here is the Buttcoin Foundation’s entire collection of amazing mining rigs.

The post Mining Rig Megapost appeared first on Buttcoin Foundation.

In case you needed more proof that bitcoiners don’t understand humor, SA Forums goon surebet went wading through the�shitheap at Bitcointalk to find more “jokes” written by them. He is a braver man than I.

One evening the bitcoin blockchain came to a halt, it turns out Chuck Norris had mined all the remaining bitcoins, and the difficulty was larger than Graham’s number.

Q: Why is there no gold at the end of the rainbow?
A: The Leprechaun took it and traded it for bitcoins!

lol bitcoin its orange .
orange not give happines
but always gives money
how my jokes cans makes you laugh right ?

Why did the bitcoin cross the road?

To get to the china bubble

Knock Knock.

Who’s there?

Bitcoin.

Bitcoin Who?

A peer-to-peer decentralized crypto-currency that utilizes open source software and public ledger called the blockchain to provide proof of work in solving the encrypted transactions ultimately increasing security and control in your personal finances.

How many Bitcoins does it take to screw the banking system?
Moon.

Jack and jill went up a hill, both with half a bitcoin.

Jill came down with 1 bitcoin, that fucking whore.

Schrodinger’s cat knows your private key. Maybe.

How do you make enough time for all the work and play with your computer?
– You don’t. You mine with the GPU.

How do you know it’s P2Pool?
– Balance still 0.00000000 after months of mining.

How do you know it’s Bitcoin?
– All your inputs are less than the minimum fee per input.

Why did the Bitcoin cross the silkroad?

To commit computer hacking, traffic in fraudulent identification documents, and money laundering conspiracy.

Is that an Antminer in your pocket, or are you just happy to see me.

A Gavincoin and an MPCoin meet in a bar. Says Gavincoin to MPcoin: ‘fork you!’ Says Mpcoin to Gavincoin: ‘No, fork you!’

A Bitcoiner jumps into a cab…

Cabbie: Where to, bud?
Bitcoiner: Just take me for a ride.

A Shitcoiner jumps into a cab…

Cabbie: Where to, bud?
Shitcoiner: What makes you think I’m goin’ anywhere?

A Dogecoinger jumps into a cab…

Cabbie: Where to, bud?
Dogecoiner: Very far. Much fast. Wow.
Cabbie: Wow, as in Bow?
Dogecoiner: So clever.

The post Bitcoin is still the punchline appeared first on Buttcoin Foundation.

Erenthal:

uncurable mlady:

Erenthal:

Furthermore, it seems that Karpeles and other Bitcoin superstars have been around much longer than anyone knew.

Erenthal:

Nenonen:

Sweevo:

Alan Smithee:

Nenonen:

Nenonen:

pylb:

triple sulk:

The post Karpeles Did It and the Fine Art of Buttcoin appeared first on Buttcoin Foundation.

Bitcoin Jesus 2.0 Roger Ver’s been denied re-entry to the United States recently, since he’s a whiny jerkwad who threw a fit over taxes and renounced his citizenship. He can’t come to various Bitcoin conferences in person, so in the vein of fellow Bitcoin criminal Charlie Shrem, he’s going to attend conferences via an iPad on wheels.

To celebrate this development, goons spent the afternoon thinking up better names for this arrangement than “Double” or “iPad on a stick”.

Powershift:

prick on a stick

snake on a rake

knave on a stave

Barnyard Protein:

con on a baton

My PIN is 4826:

dick on a stick

fake on a stake

Tanith:

Fraud rod

shrem-stem

Graft Shaft

Alan Smithee:

shitheels on wheels

Dex:

rolling blunder

vOv:

tripe on a pipe

Nenonen:

spergway

ayn rand hand job:

freep on a leash

Exinos:

Sovereign stickizen

PleasureKevin:

free man on the stand

Thanks to all the goons above whose work I have shamelessly stolen in the name of the Buttcoin Foundation.

The post Roger Ver’s head on a stick appeared first on Buttcoin Foundation.

On October 28th the FTC released a statement opposing the defendants of the Butterfly Labs case (Darla Drake, Nasser Ghoseiri and Sonny Vleisides) intent�to pay for their attorney fees with frozen funds. If you remember fondly, Butterfly Labs stole that cash from consumers, so the FTC is saying they shouldn’t be allowed�to�use said stolen funds to support/defend themselves. Note that this is just them opposing it, since they aren’t actually ruling on anything. That’s the courts job.

Meanwhile, the Western Missouri District Court just published a new�2 page order saying Butterfly Labs needs to stop acting like a huge asshole or else they’re going to be called into court for�a separate case to talk about their behavior.

So whats been going on? According to the report:

Disclosure: This was between pages 1 and 2, so that line is where the page split. The quote is continuous, just like your mom.

Basically, BFL is being a child, and everyone else is being the adult telling them not to throw their spaghetti at the waitress, then call her fat. There are�no specifics, but we’d like to assume its the same “YOU DON’T KNOW THE TRUTH” stuff, only against “THE MAN”, but without anyone around to point out to them how stupid that tactic is.

Between not being able to pay for their attorneys with stolen funds and possibly having 2 cases against them in the same court, Butterfly Labs�is completely fucked.

Butterfly Labs is currently being operated by a court approved Temporary Receiver (TR). That means that whoever the court places in that role manages the company until the court makes a decision to return control back to the original owners, or something else (in this case, die slowly yet hilariously, like a man falling into an open sewer and suffocating on jenkem fumes). In this case the TR is Eric Johnson of the firm Spencer Fane�and, looking at his bio, is absolutely qualified to do so. The court, if it finds Butterfly Labs innocent (since this is all just a big misunderstanding after all) will give Butterfly Labs back control and resume operations. Presumably then, the orders will be shipped and everyone will be happy until their miners become obsolete in 2 days.

Except that’s not going to happen because Butterfly Labs is clearly guilty. And with the Temporary Receiver and Court being harassed by these idiots, how do you really think this is going to go down? Well, until it goes the way we hope it does, the company cannot do refunds, take calls, or really do much of anything. This affects 20,000 people waiting for orders that will probably not be fulfilled, and with this distraction refunds will be delayed.

And again, to be clear, some of the tasks of a Temporary Receiver is to run the company so that it can make money to get itself out of the hole. This�includes closing entire sections of a business because it costs too much money or finding assets. The FTC is alleging Butterfly Labs stole up to $50 Million in consumer funds and that could mean there might not be enough for refunds.

So the receiver�and the court are�working on a limited time frame here to do their respective jobs, and Butterfly Labs is harassing them, plus the FTC’s lawyers, and potentially stalling this case out so they can take a court ordered “sit in the corner”-type punishment.

So if you do not get your refund, or if its severely delayed, blame Butterfly Labs for acting like gigantic assholes, turning their company into a legal clusterfuck of both existing (but run by a court) and not existing (its probably going to die in court). If Bitcoin is the honey badger, and the honey badger has no fear of anything, maybe its time for Bitcoin to learn some fucking manners and not attack everything simply because it’s “The Currency of the Future”.

The post Butterfly Labs Has Become a Legal Clusterfuck appeared first on Buttcoin Foundation.

I want you to read the following block of text without thinking about how well your day is or isn’t going. This will induce spastic cringes so powerful your sleep apnea will be cured.

The title of this Reddit post is “I just forced a business to accept bitcoin whether they wanted to or not.” The author is unknown, since, as you can see in the picture below, the [deleted] tag is where the name would be (We think its this guy), presumably after the negative shit he got from this post. Here’s the full text:

So today I took my kids to the pumpkin patch. It was a family farm and there were about 100 kids there. So it was nice, kids found their little pumpkins and were happy. Then I go to pay. Well I waited for 15 minutes, but nobody came to take my money. I walked to their house and there was a phone number there to call if nobody was around. Called it twice, left a message. Still nobody came out to take my money. I waited a total of 35 minutes and I don’t believe in stealing, but I’m not about to sit in a car for 30 minute car ride home with a 3 year old and 5 year old screaming at me as to why I left their pumpkins there, so I took them without paying.

Got home, found the farms email address and emailed them payment in bitcoin from coinbase. If they accept bitcoin next year, I’ll go back and buy more pumpkins. If not, fuck them, they will probably be out of business anyway since nobody was manning the register for a full 35 minutes(or longer)

Just in case there was any doubt, here’s the original post.

There are many things fucked up about this story. Here’s a short list, and feel free to add in the comments below if I missed anything:

1. Has this guy never been to a restaurant with a shitty waitress, and, instead of waiting for her to take your card, you just went up to the front desk and paid the guy at the register? There are ways around the problem of no one manning the register. One Redditor commented

brycey06
they didnt have a mailbox you could put your money through?

He could have just left the money there, as well. I don’t think anyone would steal the cash, especially if the guy had left a note saying “You weren’t here, I saw a price list, here’s your money, Love, Dave” or something. But if you think it might have been stolen, he could have left the cash in some odd nook and�cranny, and emailed them to say�”You weren’t there, the cash is behind the rosemary” or whatever. There are multiple ways to be a good person.

2. What the hell were his kids doing this whole time? He said he waited 30 minutes. During that time, were the kids with him? If so, did the kids see Dad here steal the pumpkins? What the fuck kind of example is that?!

pm_me_pasta
Good example to show your children.

“No one’s here so we’ll just steal the pumpkins, kids!”

You could have made this a lesson in ethical behavior that they would have remembered. Oh well.

This guy is right. You could have tried to pay and taught your kids “This is the right thing to do”. I thought that’s what you libertarian and/or Freeman of the Land types were all about: Integrity, respect, honor, pulling yourself by your bootstraps, etc. You threw your battle-hardened ideals out the rear window for some pumpkins? The fuck kind of movement is this?

3. The farm did not accept Bitcoin, yet you paid in Bitcoin. User “pm_me_pasta” summed it best:

pm_me_pasta
Couldn’t agree more. From the farm’s point of view:

“Hey mom and pop pumpkin farm, no one was attending your register so I helped myself to some of your stuff. Don’t worry I’ll pay you later in Japanese yen.”

Assuming this is a working farm, they don’t have time to figure out what a Bitcoin is, let alone get payment for it. I know CoinBase, its where I keep my BTC that I have no idea what to spend it on, but sending and receiving payment are two completely different experiences.

If your sending, say to your bank account, it takes me 3-5 days to get it transferred. If I’m sending it to Silk Road to score some smack, its 10 minutes. If your sending it to that farmer, he has to set up a CoinBase account, then his bank info (With Routing Number, Bank Number, Account Number, etc.), then wait for the bank to be verified, which can take 2 days for them to do that thing where they send you some pennies and you see what the exact amounts were. Then converting it from BTC to USD takes 3-5 days.

That’s 7 days to receive payment. YOU COULD HAVE JUST KNOCKED. Which brings me to my next point.

4. WHY DIDN’T YOU KNOCK? There was 100 other kids there, it was a well kept family farm. You mean to tell me you went to one spot and waited for half an hour, and that’s it? I understand, they should have been there, that is a point against them, but they had to have been somewhere! Its a family farm! Go to their front door, they won’t mind you bothering them! Your giving them money! And even if you are bothering them, like they’re having a family emergency or something, you ask where you can leave the money. Or your just leave the money by the register with a note of what you took. Or you leave without pumpkins, and tell your kids you’ll come back later. But you don’t steal! Why the fuck did you steal the great pumpkins?!�Did Linus put you up to this?

“Did you get the pumpkins, lil’ bitch?”

5. There was a phone number, you called twice and left a message. With all we have established, you could have, from that point onward, been polite enough to say in the message anything we have suggested here. But assuming your a smart guy, which, from what we’ve seen, you aren’t, there is another option: Just leave.

Leaving could have fixed two problems:

1. I wouldn’t have had to have written this!

2. Your kids could have learned a lesson.

But you didn’t want to waste gas! That’s why you stole, because your kids were miserable without the pumpkins!

Your kids went to a farm with “a hundred other kids”, had a blast, and might have a great memory of their dad getting them some pumpkins to carve later. But when they find out�that you stole them, that memory is going to be tainted.

The reason we think user “peilthetraveler” is the original poster is because of this comment:

peilthetraveler
Yeah, probably should have just left the pumpkins, I would’ve had to suffer with 30 minutes of screaming kids, then I would’ve got home and been so pissed that my time was wasted i would’ve got on yelp and dragged their name through the mud, plus since its a small town, got on facebook telling everyone how bad the customer service was, cost that farm hundreds of dollars worth of business(maybe more because once I told everyone there was nobody manning the cash register all the “real” thieves would’ve come out of the woodwork to get the easy pickin’s) and then we all suffer greatly.

At least my way, they got their money, my time and gas wasn’t wasted for nothing and kids are happy. It was the lesser of 2 evils.

This guy makes it sound like he’s in control of everything here: If he does get his way, the kids love him, he didn’t waste his gas, and they have pumpkins, which kids love, cause its like legal stabbing.

If he doesn’t get his way, though, no problem, since he can do a negative review on Yelp and cost them hundreds! Then go on Facebook! And then we all suffer greatly, cause where else am I gonna steal pumpkins next year! I’m such a sadist!

“Bend over.”

Also, he implies that if he had bitched about the farm and its lo 30 minutes+ of unmanned register control, the “Real Thieves” would steal straight from the unmanned register, because that’s a thing that happens.

2 points I want to make here:

1. You stole. You may pass it off as “I paid in Bitcoins, whether they like it or not”, but they don’t accept it. Like I covered earlier, its hard to get that money if you’ve never been set up to accept Bitcoin before. And to any business, revenue is important. So they have lost money on you taking product, ergo, you stole. You had 30 minutes (Or longer, since you weren’t being rushed) to put money down, and you didn’t. You can claim “Bitcoin!” until your blue in the face, but meanwhile the farmers you stole from are�out whatever they charge (Lets say $5 a pumpkin), which does add up, over time. To offset that, they may need to charge extra on a few other units, because that’s how stores offset the costs of stolen merchandise.�You robbed them, and they’re the bad guys?

2. When I said earlier “Just leave the money on the counter with a note”, I mean that. No one is going to steal that money. There’s 100 loudmouth kids there. Assuming they didn’t all get there on their own in a massive horde of toddlers, their parents are there. And the average Joe that would take their kids to a pumpkin patch has enough moral lessons and ethics to see a note on the table or just cash and not take it. The only people who would do that are lowlifes who steal. And, as we have seen in point one, that’s you.

This guy�had no control here. He took the worst possible avenue. And things weren’t going to go that horrible “I’m going to post on Yelp, and I hope they lose $10 billion trillion quadrillion dollars because I had to wait for 30 minutes while they milked cows or something” direction either, because it doesn’t work.

When Amy’s Baking Company was on Kitchen Nightmares, its Yelp rating was one of the things they bitched about the most. Its what got them on the show. Yet look at it now: 3 star rating. Its never been a question of it being a shitty place, its not. It looks nice, the food is decent at worst and fantastic at best. Gordon Ramsey said it was a pleasure to be there when he did his inspection of the place. The problem wasn’t the food, it was the owners shitty attitude and behavior! And yet, despite the beating they got, they’re still open. That is one of the worst examples of Yelp being used to “Take down” someone, and they’re still fucking here. If the whole fucking internet, with all its lethargic muster, couldn’t bring down Amy’s Baking Company, then you can’t bring down “Fuckin’ Pumpkin’ Inc.” because they weren’t there to complete a transaction. And, again, your the asshole here, because your the one that stole.

6. What the hell possessed you long enough to get onto Reddit and brag you ripped off a family farm. Did you seriously think that was going to go well?

In the words of Bill Maher:

“I can’t even think of a suitable analogy for that disconnect. Its like thinking getting a handjob will clean your garage”

Those are just some of the quick thoughts I jotted down. If I missed any, let me know below, so I can steal them and update this article pretending they are my own.

The post Is It Stealing if the Vendor Doesn’t See You Take It? appeared first on Buttcoin Foundation.

Cigarette Smuggling: Its not just the thing your cool Uncle did for you in high school (besides letting you watch scrambled porn in his wood-paneled den). It is a huge, ever growing, worldwide industry that you probably didn’t even know was a thing. Not that its your fault: in the United States, anyone�18 or over can get them, pretty much anywhere, and turn their lungs into ash (you still can’t legally get fucked up on wine coolers, though). How bad could it be?

Havocscope puts the worldwide illegal cigarette smuggling trade at $50 Billion, with $10 Billion in the United States alone. Or if you’re in the tech industry, that’s 10 Instagrams!

How?! How is something that is legal pretty much everywhere (Sans smoking bans in specific places like bars, restaurants and Idaho) make so much money?! How could Boston be in a situation where it is selling a legal, regulated product, and yet 40% of the cigarettes sold there are black market? In NYC, the rate is estimated to be as low as 48%, and as high as 60% , bringing yearly losses of $419 Million dollars for the state. How does a regulated product you can buy pretty much anywhere bring about such a huge loss? More specifically, who would Ron Paul blame for all this?

The answer is simple: Taxes. People buy smokes from “Alternative sources” (Reservations, states with lower taxes, the kid behind your old high school{go lions}) to avoid paying whatever the higher tax is in that state. See, here’s the thing: Each state has its own special tax on cigarettes. Some states have the infamous “Sin tax“, or that thing old people believe discourages other people from doing things that are bad for them, like drinking, smoking, masturbating, and buying junk food, thus�driving the price of that thing up (It doesn’t work, by the way).

So how does cigarette smuggling work? First, you get smurfers who will run to pharmacies around the state Well, as the Boston Globe explains, in places like Boston or New York (which, thanks to sin taxes, have put historically high taxes on smokes), smugglers will buy from either Native American reservations/factories on their land wholesale, or from states with lower taxes, like New Hampshire or Pennsylvania (Pennsylvania accounts for 60% of smuggled cigarettes in the US).�They then get them to the states with higher taxes. In Massachusetts, if you get caught with under 12,000 packs, its 1 year in jail. Over 12k packs, and its 5 years. Both penalties have fines up to $5,000. Meanwhile,�A Washington Post article from 2004 said that a whole truckload of cigarettes could net $2 Million off 800 cases, or 48,000 cartons. (Adjusted for inflation between 2004 and now, that $2M is more like $2.5M.) Bloomberg says that in the Carolinas, a load of 200 cases headed to New York can net almost $500,000.�So some people are seeing the $5K fine vs. the $500,000 profit, and are saying “Eh, who gives a shit.”

The difference for consumers is generally half the price of legal cigs. In New York, a legally bought pack of cigs can cost $13, whereas a smuggled pack can cost $6.

This sounds like an industry ripe for disruption (God I feel dirty after saying that).

Enter DutyFree, a company�with a beautiful website and a dirty job. They claim to have been in business since 2009, and their (self reported) stats are staggering. Just look at their front page:

Their claims are as follows:

-They�have saved consumers $3,440,000.
-They have sold 76,500 cartons.
-They can keep the cost, per pack, at around $4. (However, when you buy from them, its a carton. 1 carton = 10 packs = 20 Cigarettes per pack, on average.)
-They sell major brands, like Marlboro, Winston, Camel and more.
-BONUS: TAXES R THEFT!

They’re like Dollar Shave Club, only if Dollar Shave club was selling a heavily regulated, cancer-causing product illegally! Yes, this is illegal too, we’re not advertising them so you can get your smokes for free! We’re saying they’re going to jail soon! How? Lets explore:

On their FAQ, the VERY FIRST question is “Who are you and can I trust you with my money”. Their answer includes the fact that they sell on Silk Road, the Libertarian utopia where you can get drugs sent to your front door, as well as other hidden service marketplaces. This was Silk Road slightly over a year ago:

“Yeah, we used to sell there, but then it got shut down by THE MAN.”

Silk Road was shut down once (A second iteration has been running for a while now) for being a drug trafficking site, so the fact that they “Proudly” sell on there is a pretty big red flag.

The whole site is a giant red flag. That’s why everything here is red.

Now, lets go through all the laws they’ve broken so far:

–The PACT Act, a law that was signed by President Obama in 2009 to make the sale of cigarettes illegal online. This buinsess is tailor made to be a “Fuck You” to this law. If they’re caught, that’s a year in jail and their money gets sent to the Postmaster General to help fund operations finding this shit in the mail.

– The�Contraband Cigarette Trafficking Act of 1978�makes it illegal to sell over 10,000 cigarettes in a single transaction. The penalty is 3-5 years. We’ll go with 5, since they’re blatantly advertising how many cartons they’ve sold (75,00 cartons, or, at 200 cigarettes per carton,�150,00,000 cigarettes sold.)

–Being on Silk Road or any other marketplace is tricky. When Nod was arrested, he was charged with Conspiracy to Distribute Cocaine, Heroin and Meth, a violation of�Title 21 USC�841 (a)(1) and (b)(1)(C), and Title 21 USC 846�(Note that he was only charged on one count, despite there being 2 violations.) Yet Silk Road users could also be charged because each sale brings a commission that goes to SR’s management, ie financing a criminal enterprise. There’s also SR’s tumbler feature which mixes BTC to make it untraceable (However, since SR2’s�massive loss earlier this year, I believe they’ve stopped this and rely on 3rd party escrow), which is definitely�laundering�(I say definitely because its a major piece of evidence in the Ross Ulbright trial). Its tricky, but in the end, Nod’s crime would net him 10 years, minimum. Laundering cash is either giving all the money you laundered back, or a $10,000 fine. Between the two, that’s an extra 10 years + $10,000. In USD, not Buttcoins.

Total so far: $10,000 fine (Again, in USD, not Butts), and up to 15 years in jail.

Now how does this tie into BTC? Its all they take. They had bank accounts, but they were frozen. And, like any legitimate business, they have an excuse:

Why would banks ever hate doing business with shady overseas criminals? They’re just holding the money, right?

What happened before was THE MAN froze their accounts, because this is clearly illegal. But now, with Bitcoin, they are unstoppable! No one can find them, because they’re so secure, with their 256-AES encrypted digital money and that’s it!

Except their website is on the clearnet, or the internet everyone knows and loves, and not hidden away like on a Tor hidden service. You know. Easier to find. And with that, easier to see who bought what, when, where it was shipped to, etc. But, hey, you saved $20 bucks this year! Thanks, Reddit!

Also, focus on that last bit. “We’re pretty proud to be introducing new people to this great currency, people who wouldn’t bother buying it otherwise.” This is a pretty big problem with the Buttcoin proselytizers: they are their own worst enemy when it comes to advertising.

You actually think introducing people to the currency of the future through an illicit market is really the best way to get new cult members? Do you actually think that if there was someone who had no idea what Bitcoin was, the best way to introduce them to said �”Currency of the Future” would be through a service hawking illicit cigs? Because, bear in mind, a survey done in February 2014 said that 76% of Americans are not familiar with Bitcoin, and 79% have no desire to ever use it. Bloomberg reported that 6% of their respondents thought Bitcoin was an Xbox game; another 6% thought it was an iPhone game. 80% of respondents said they’d rather have gold, because at least it has value. Worst of all, 38% think that Bitcoin has hurt the US dollar! Its unfounded, but that’s not the point. The point is the public, by and large, thinks of Bitcoin in a negative light, and to be “Proud” of introducing people to it through a shady service like this only cements that idea in their head! How the fuck do you not get this?!

Lets move on to other examples of how stupid they are. On each cigarette package, there’s supposed to be an excise stamp, or a label�that lets the government know that specific product’s taxes (usually tobacco and alcohol) have been paid for. Usually, smuggled cigs don’t have that label on it, so its easy to identify which ones are legal vs. illegal. Our Canadian friends�might recognize this label:

This is what a Canadian Excise Tax looks like, with all the details pointed out. Here’s one�you might see in a Canadian store:

Here’s what they put on cigarettes in Pennsylvania:

Like all things from Pennsylvania, its simple.

See the main connection between them? No? Well, look at one sold by DutyFree:

Oh, yeah. It’s in fucking German.

In their FAQ, they say all their shit comes from Europe. BUT THEY PAY EXCISE TAX!!! YOU CAN VERIFY IT!!!

Except one thing: Excise tax in the US and Canada is usually in�English. Also, the packages are in English, too. I seriously doubt anyone is selling imported Marlboro’s from Moldova just because they like the packaging. Its the same shit. The difference is the countries, and that difference can equal 15 years in jail and $10,000 to THE MAN. Even if you are paying excise tax, and the label is on it, it doesn’t matter, because once it gets stateside, its clearly not the pack you find at EVERY STORE EVERYWHERE.

In fact, putting excise stamps is probably a detriment, because you can really only get official stamps from those specific countries. So buying from these guys is:

A) A guarantee you’ll get a visit from either the cops, the IRS or the ATF for evading taxes/buying drugs from�overseas. And when they see the Moldavian excise stamp on your package of Ukranian cigs, they will use that against you in court.

B) A Complete and total guarantee that “A” will happen, because its a clearnet site. They will be found, and you will be found through them. Silk Road was supposedly 100% anonymous, but they had CAPTCHA’s that exposed their IP address anytime it was used. The CAPTCHA was a clearnet product. This is too, and they will be caught because of it.

C) A clear indication that you’re a cheap fuck, because you refuse to pay taxes over here and instead pay a little less to help al-Qadea.

Oh, I forgot that shit. The main reason the government doesn’t want people buying smuggled cigarettes is because terrorists are using the revenue from this to buy God knows what!

And, yeah, we get that “Terrorism” is a convenient excuse for anything in the media this past decade, but how about the fact that the IRA, Hezbollah, the PKK, CNDP and FARC have all used it for funding their campaigns. This isn’t the Fort Dix incident; these are serious groups doing real harm, and they’re doing it, in part, with funds from cigarette smuggling. That’s why its important. But now you can get cigarettes with Bitcoin, so all that goes out the window!

For a group as fervent as Bitcoin aficionados, they sure do throw their values and common sense out the window when another thing they could buy with cash becomes available for their internet dollars.

Were not saying these guys are propping up terrorists by selling this stuff, but at the same time, we have no idea who they are! If you look at the first FAQ question from before, you see a link that says “OTC web of trust”. This is what pops up when you click on it:

Blazedout419 is a guy I can trust!

To be fair, they seem to be clean and have actually sold product. And its really not fair to accuse them of funding terrorism, when clearly all they want to do is not pay insane amounts of taxes on a product they love, using the currency they love. Its kind of sweet, actually. Love knows no bounds, and this time its going to get a bunch of people arrested and fined. And because they accept Bitcoin, they will never�be blamed for running an illegal business. They’re merely helpless victims sitting on piles and piles of cash.

But at least they have shipped their product, making them slightly better than Butterfly Labs.

The post Buttcoiners Becoming Buttleggers: How One Cigarette Smuggling Operation Will Get Everyone Involved Arrested appeared first on Buttcoin Foundation.