Why Bitcoin is Not Cash – Computerphile


The difference between Bitcoin and cash, is that cash is fungible. At least if it’s a coin – if it’s a gold coin. It’s really no different from any other gold coin and so one is as good as another. That’s not quite as true with notes because notes have serial numbers but let’s ignore that for the time being. Now, there’s other things that’re fungible. like ears of corn, or in the old days, sheep. In Roman times, if twenty sheep wandered from Marcus’s farm into Crasus’s farm, then the corp could just simply tell Crasus to give Marcus twenty sheep back. And any twenty sheep, it didn’t matter. But nowadays, of course sheep have got electronic passports clipped into their ears. So if that were to happen between two Italian farmers nowadays, then Marcus could go and get exactly the right twenty sheep back from Crasus. So here’s an example of how technology has made sheep from a fungible asset into a tractable asset. Now Bitcoin’s the same, because every Bitcoin carries with it pointers to its entire history. So you can see everybody’s who’s owned that Bitcoin or parts of it ever since these parts were originally mined. And so you can see where the parts of Bitcoin were stolen at one time or another or probably went through money laundering schemes or probably were used in the drugs trade or various other objectionable qualities that might cause the authorities to want to call them in and have a close look at them. What about the money laundering thing, then? How does that work? At present, in England, you can’t get a good title to stolen goods um But until 1995, you could because there was a law called “The Law of Market Overt.” So if I stole your horse, and I went and sold it in Cambridge Market between dawn and dusk then somebody who bought it from me in good faith would end up owning the horse and all you could then do was to sue me or get me hanged or sent to Virginia. Now this was abolished in 1995 because it was being abused but the rule survives in the law of money and banking. Now, if you go to a Barclays Banking ATM, for example, and you get out a twenty pound note, then even if that twenty pound note was stolen last year in a bank robbery, that’s not your problem. That’s Barclays Bank’s problem. because you got it from a regulated financial institution. And so your title to it is certain Similarly, if you go to John Lewis’s, and you buy a toaster for 30 quid, and you pay with a 50 and you get a 20 pound note in your change Then you own that 20 pound note because it’s another rule that says that if you get something, for value, in good faith, right? Then, so long as that something is money you get good title to it So the Bitcoin people have been lobbying for at least five years to have Bitcoin to be declared money. Because if Bitcoin becomes money then they think that many of the problems around stolen Bitcoins and Bitcoins that were used in the drugs trade and so on would go away. So we’ve been looking into this and it turns out that it isn’t quite true. Now no government has yet admitted that Bitcoin is money But even if a court were to find that Bitcoin is money, as courts, for example, found that carbon credits could be treated as money for some purposes; then it doesn’t get the Bitcoin criminals off the hook. And the reason for this is that to get good titles for something that was once stolen you have to do it in good faith. Now, what’s the meaning of “in good faith?” Somebody might argue that you can’t a Bitcoin in good faith because everybody knows that so much bad stuff goes on in Bitcoin. But even if you don’t buy that argument there’s another problem which is that many people in the Bitcoin world have set up what they call “Bitcoin Mixers” or even “Bitcoin Laundries,” where the idea is you take along your stolen Bitcoin or the Bitcoin you got from selling hashish on the sheep market, or whatever, you put this black Bitcoin into a pot and nine other people come along and put in their white Bitcoins into the pot and you shake the pot very, very hard and you kind of hope that you get ten white Bitcoins out. Now the law is quite clear on this, that if there’s money laundering then you can’t have good faith. And so if you put one black Bitcoin and nine white Bitcoins into a pot and you shake it then if Bitcoins are held to be money what you get out is ten black Bitcoins. Sorry, guys. Asking for Bitcoin to be money was the wrong thing to ask for. Because if Bitcoin had simply remained a commodity, you know, like pig iron bars, or whatever, then this magic wouldn’t happen. The stolen pig iron bar would still be a stolen pig iron bar. You would put the one black Bitcoin and the nine white Bitcoins into a pot and then you’d shake them and some unlucky sod would get the black one out. In that case, of course, economics kicks in because then nobody’s got an incentive to take part in a money laundering scheme. Now, the interesting thing about this is that if Bitcoin becomes money or is treated as money for some purposes then this is a really mortal threat, to those cryptocurrencies which provide built-in laundries, such as Monero and Zcash, Now in Zcash, for example, most of the time it works just like Bitcoin and there’s a fully traceable blockchain of who passed on a coin to whom. But you can, if you want, take your Zerocoin and you can put it back in the mine and have it remined and get one out that’s nice and shiny and new, in the sense that it’s indistiguishable from all the other coins mined in that round. Just the same as if you’d been re-casting a gold bar. You’re taking a gold bar to a crooked foundry or a bent goldsmith and got it turned into something that was untraceable. But the affect of this according to the law of money and banking, is actually to poison every single coin that comes out of that mine. And this would lead regulators to ask themselves whether or not they should simply instruct regulated Bitcoin exchanges not under any circumstance to change cash or other cryptocurrencies into currencies such as Zcash or Monero on the grounds that these were designed for the purpose of money laundering. and therefore there was an issue of obstruction of justice.

100 thoughts on “Why Bitcoin is Not Cash – Computerphile”

  1. Title says "Bitcoin is not cash" which simply means cash and bitcoin are different things, it doesn't say anything negative about bitcoin. It implies that the video will be about the differences between cash and cryptocurrency. The video is expressed in a completely objective and descriptive way. There is nothing in the video that says " This is what I think of bitcoin". Yet the comments are full of people being offended and taking an offensive stance against the video.

  2. This guy is part of the problem. Making up bs claims that these cash alternatives were meant for nefarious purposes when legitimate businesses are popping up all over the place that deal with or accept cryptocoins as payment. Get over yourself and go work in China, these coins are great for Americans.

  3. It makes me wonder where the term "privacy" fits into the argument of good faith. It could make sense for somebody to be participating in a laundry, mixer, or Zcash because they are using it to provide privacy. It would appear hard to argue in my opinion that every single person who uses Zcash is using it in bad faith, but if all it takes is one person in bad faith to label all others in bad faith, then that just seems absurd to me.

  4. Just ignore for a second that traditional currency dwarfs crypto in the use of money laundering, crime in general, war, terrorism etc. There's no contest there. Such a silly argument.

    You can only trace the transactions not the actual bitcoin. Another silly argument. And that doesn't account for untraceable cryptos like Monero.

    It's simply a much better way of trading value without needing banks.

    As long as enough people agree on it's value and trade it for goods and services that's all that matters in the real world.

    Nobody cares what ill informed professors paid off by the state are pontificating about cryptocurrency.

    This is a currency for people who want more control over their own lives and less control by authoritarians and banks.

  5. The mention of ZCash reminded me of two things:

    (1) Unlike Bitcoin, ZCash is ASIC-resistant.
    (2) I have absolutely no idea how ASIC-resistace is accomplished in ZCash or other cryptocurrencies with the same property.

    Could you do an episode on that? I'm pretty sure I'm not the only one who would find that interesting 🙂

  6. Bitcoin might not be perfect, but it's currently the only money being completely independent from every single corrupt government and central bank.
    Accusing bitcoin users of being drug dealers, child pornographers, terrorists is unprofessional.

  7. You can shove Bitcoin up your A$$, you can't beat physical currency; it's been around for thousands of years, then along comes a technology that's only been around a few decades, thinking it's going to ✌️"revolutionise"✌️ the way currency works (doesn't EVERY technology protagonist think THEIR idea will ✌️"Change everythinggggggg!"✌️?)

    Yeah….no. Sorry.

  8. Crypto is not the future. Crypto is utter garbage for mentally disturbed naive technophallic children

  9. Using a mixer implies intent. When one transacts in Monero, one's intention, other than to transfer value, cannot be inferred from the transaction itself. The transactor does not opt into RingCT. At best, the choice of coin could be questioned, but even this won't hold up in a future where the highest volume coins all employ various forms of compact range-proofs and aggregations. All Professor Anderson has really said is that fungibility in cryptocurrencies, like fiat, must never be optional, which is obvious.

  10. That's not really true. You can track the movement of bitcoin, but you can't really track individual bitcoins. It makes no difference whether I transfer to you some bitcoin that I stole or some bitcoin that I mined, because there is no way to tell the two apart. Your bitcoin is just a number in a ledger.

  11. This is such an interesting aspect of cryptocurrencies that I had never thought of! Loving the series! Just put out a video on the trust aspect of Bitcoin and how it connects to gun control in America of anyone's interested

  12. Bitcoins aren't serialized, only addresses are. This was a pretty uninformed video to be quite honest fam.

  13. Well….you might say the main purpose of notes, the value, is fungible, but I suppose you're right, since they have the serial numbers, one is not quite like another. Thanks for broadening my perspective on that, I have thought for a long time one of the best examples of fungibility was the dollars and cents in my pocket.

  14. Although I enjoy Professor Anderson discussing issues like this and believe he is far more knowledgeable than I am. I am detecting a level of bias against cryptocurrencies, which although isn't affecting the facts presented, it does make me sorry if some relevant issues are being left out.

  15. Y'all, he ain't saying crypto is bad. He's saying that pushing to have the government treat it as money is a bad idea. Anyone that's actually on board with the idea behind this stuff should 100% agree with that statement. It isn't an attack on bitcoin, take a step back, think about what's being said, and relax.

  16. Professor Anderson once again showing he has some bias against Bitcoin by referencing some archaic British law and applying it to an international concept.
    Not to mention that every modern currency has with it built-in laundering schemes or avenues of exploitation.
    The analogy of 10 coins being put into a Bitcoin mixer and 10 individual coins going out is so far removed from reality I understand it to be comedy.

  17. Computerphile, you need to have more informed people talking about this space than Ross Anderson, he is either shilling against cryptocurrencies or doesn't do any research on the tech and its developments. His last video was a complete mess ignoring many BIPs in place or in the pipeline, plus the complete ignorance to the lightning network. And now he seems completely unaware of the greatest development in the space, MimbleWimble.

    Your videos and experts are on the whole extremely talented and deliver an open unbiased insight into tech. But Ross Anderson does not meet this standard. I am sure he is a specialist in another field and I suggest he sticks to that if he isn't willing to spend the time and effort to keep up to date.

    Just to illustrate the FUD he is spreading, these "Bitcoin People" (whoever they may be in an open source project) are not advocating cryptocurrencies to be considered "Money" as each one needs to be evaluated on its use case. Next is that Ross Anderson completely omits information that contradicts his claims, most notably the fact that the USA legally considers Bitcoin a commodity, and while countries like the UK and Germany have legalised it as "Private money", Australia has legalised Bitcoin as "Money" since the summer of 2017.

    DO YOUR RESEARCH INSTEAD OF SPREADING LIES!

    EDIT: P.S
    Can we get back to the serial numbers on cash now Ross? Ooooh you forgot to go back to that bit did you? What a COINcidence! I am all for debates and discussions but you seem to lack the ability to see the two sides to a coin. You have a lot of books back there, are they just for show?

  18. This video was fairly decent, better than other cryptocurrency videos from Computerphile. If anyone wants to hear about cryptocurrencies from an expert, but it's actually true and simply explained at the same time, follow Andreas Antonopoulos.

  19. Why is it the black bitcoin that comes from ciminal activity? Wow, I didn't know you were so racist…

  20. …and what about GDPR and bitcoin? The blockchain contains personal data, yes? It carries its own ledger with it. What happens when a customer asks for all their personal data to be deleted when a company has just taken a payment in bitcoin?

  21. No Monero and Zcash aren't meant for money laundering, they are meant for privacy. There will be an impasse at some point where it either freedom of speech and privacy, or a false sense of security provided by AML/KYC. Just because I don't want anyone to know how much crypto I actually have doesn't mean I'm laundering money.

  22. Then the idea of mixing is displayed quite badly imo. What really happens is that those black coins are sold to several middlesman and then onto a fresh account that can't be connected to the original account owning the orinigally black coins. That's pretty much how money laundering works with cash, too. Following your argument that'd make all money involved in money laundering black money. You'd buy some art with your money from your illegal activities, sell it again and the money you got from selling would still be black money? That's the "9 white bitcoins" in your analogy that are thrown in, partially by unknown people.
    The whole argument boils down to this: If bitcoins were money, coinmixing would be illegal. And that's fine. However, it does not break Bitcoin as a whole.
    For Zcash, they just provide built-in money laundring. It's like if a bank said they exchange your dirty money for new, white money. That's illegal, but only for the bank, not for cash as a whole.

    Btw 2:14 The toaster example: I don't see how that connects to anything… What exactly is the "black bitcoin" analogy here?

    Lastly, the argument that bitcoin is used for drug trade etc is really not justified as that's exactly what happens with real money. And yes, I can see a coin's history, but I only see a bunch of user an transaction IDs. I'm not able to tell for what is was used.

  23. Monero isn't just for money laundering. Just because I want privacy doesn't mean I'm doing something illegal.

  24. This video is amazingly technically inaccurate regarding Bitcoin mixing and specifically how Monero works. I have come to expect more from this channel.

  25. And he's not quite right about Monero. Your Monero isn't laundered with each transaction. The Monero token simply does not have a traceable history.
    Which means that there is no way to label a particular Monero token as stolen unless you just assume that Monero tokens are guilty until proven innocent.

  26. Ah yes, the self proclaimed Lawyer, Lawmaker, or Economists, blaming the government on why their investments in Bitcoin or any form of crypto failed

  27. Imagine I buy old jewelry and use chemistry to create pure gold powder and then I give 1kg of gold powder to the bent goldsmith. He turns my powder into a bar with 1kg. The goldsmith also sometimes re-casts stolen gold bars. Does my 1kg of gold belong to the victims of the thief?
    Also, are bitcoins something that have a, hm, unique color? If a blue one is created, it'd be the only blue one. If you turn it into a piece it would be a blue piece. If someone got a blue piece you would know that it's a piece from exactly that unique blue coin. Or is bitcoin more like accounts in a bank? If a (part of a) bitcoin is transferred from one account to another, is one value decreased and another increased? If it's like this then you can't trace the bitcoins.

  28. Ross made a mistake here in assuming that the current system is just, and that bitcoin evades this alleged justice. Can someone please tell Ross to stick to math and computers, and avoid dabbling in politics, since he's woefully dangerously evilly misinformed. (Although, at least as a devil's advocate, he is useful in informing people that Bitcoin needs to be more anonymous.)

  29. Monero and Zcash are NOT meant for money laundering! They are meant to keep nosy institutions like big government out of your private life. You should thank those coins for being available. You or anyone else, completely innocent, might need that service through no fault of your own one day.

  30. Tell me how cash has any value? It's not backed by anything, neither is crypto. If anything, cash is printed with an insanely high valuation. For example, the US $100 bill costs 12.3 cents ($0.123) to produce in a matter of seconds, where as 1 BTC costs almost $3000 to produce and can take upwards of a year with a $10,000 investment in hardware. The key difference here is that the people reap the profits, not the centralized corrupt government

  31. So the problem with bitcoin is that it isn't fungible and therefore there are always tainted bitcoins, but you call fungible cryptocurrencies "cryptocurrencies which provide built-in laundries", so every cryptocurrency user is a criminal. One could say cash provides a built-in laundry since you can't distinguish clean coins from tainted ones.

  32. Why Zcash is designed for money laundering. It does not make sense.
    The so called privacy coin users want the transaction to be untraceable, but is that mean everybody using it does the money laundering. of course, no.
    So if I use SSL or PGP for my email, I am a criminal?

  33. So much for privacy or innocent until proven guilty. Of course the English would say if its private it must be used for nefarious purpose. I wish that bitcoin and the internet both had encryption and anonymity baked into the protocol layer.

  34. Good info, bad moral. How does a stolen note even end up in an ATM?! They're not "designed for money laundering", they're designed for privacy. Just look at the arguments over the recent hard-fork in Monero, wherein some of the forks believe that even vanilla Monero is too centralized because it has the ability to fork! Monero caters to the paranoid. Moreover, I guess we'll just have to treat a $250b mostly-traceable market (present sum all cryptos, $850b last December) as the largest crime-mob to ever exist since a few people value privacy from over-zealous technocrats and political elites… And just to break the idea that bad-faith currency cannot exist, take a look at counterfeiting. If I make a good-faith transaction with an individual and receive counterfeit notes and then later discover they're fakes, I lose all the given notes and receive no reimbursement for my losses. When push comes to shove, rational players would rather have bad-faith goods than no goods at all.

  35. If somebody might argue that you cant get btc in good faith because everybody knows that so much bad stuff goes on in btc, somebody else might argue the same thing in case of money…so i am one of those who doesnt buy that argument. And i dont think the law states "if theres laundering you cant have good faith" because theres a lot of real-money-laundering and you still can get good title on money on good faith basis. Somehow this whole thing seems not very thought out.

  36. The good faith thing is a bit confuising to me. If a man in Portugal buys canabis from Colorado, is he buying in good faith?

  37. Money laundering happens a lot more with USD. Saying that Monero is "designed to launder" is incorrect, as this is not it's intended purpose. Saying that "by design, it is easy to launder" would be correct. You make it sound evil, when all it wants to achieve is privacy. Privacy is NOT a crime. Privacy is NOT evil.

  38. Are there references for the claim at 0:55 minutes?

    From what I understand bitcoins are just values in account balances. So if I had 2 BTC in my account received from 2 sources, one from each source, then when I transfer 1 BTC to another account no one can tell exactly which of the two got transferred. Or perhaps 0.5 from each got transferred. Well talking in these terms doesn’t even seem to make sense. Perhaps because bitcoins are fungible? Perhaps even more so than gold since it exists only as an account of value.

    While I can see how one can track the source of funds of a bitcoin account, it is not because bitcoin is not fungible but because the ledger of transactions records the flow of BTC value through the accounts.

  39. Dollars are the same as the sheep, you just declared that the serial numbers don’t matter. If the chips in the sheep don’t matter, then they’re fungible too.

    You know how the FBI knows that none of the cash DB Cooper stole has ever been spent? The serial numbers.

  40. Pylon tokens looks very awesome a green energy project already in use in homes and shows a steady growth and doing a lot of live converantions atm for the public in al countries

  41. STEEM and DTUBE are the future of scoial media. STEEMIT pays you in BITCOIN to post social media content. STEEM is uncensored and anything you post is forever in a blockchain! you can not be censored

  42. Zcash and monero are not specifically designed for money laundering. They are designed to be private , stop trying to bad mouth crypto currencies.

  43. What about atomic swaps and decentralised exchanges, these cannot be regulated, so its either all cryptocurrencies are illegal or not

  44. What I don't get is the sheer amount of computing power it takes to run the blockchain and keep mining bitcoin. That computing power obviously translates into electricity usage. Once all the bitcoins are mined, does it still need such huge resources to keep it all working? Or have I completely misunderstood how it works (probably!)?

  45. Money laundering: the word government uses to money they did not taxed. Taxation is theft, government forcefully take money out of you and if you don't pay they will use FORCE at you. Government is the thug

  46. Hi everyone I have a degree in economics. The reasons why btc is not money are simple:
    Does not store value
    Is not a unit of account
    It’s not a médium of exchange.
    What I mean is the value of btc is express as his change rate in USD and not btc.
    Also define it as money would imply central banks and monetary policy would not work, it’ll change our monetary aggregates affecting our economy.

    Thanks!

  47. Is it Sweden that has recently backed the latest crypto currency to hit the fake market ?
    Bitcoin and all other crypto currencies are the equivalent to the dubious "bond" scams that lead to a massive financial crash. There is always a huge financial scam before a major war.

  48. There are legitimate reasons to hide transactions besides illegal laundering. Would you want your landlord knowing how much money was in your bank account?

  49. I agree with a lot of this talk, but I don’t think the only purpose for privacy tokens such as Monero and Zcash is fraudulent. Much research has showed that the overwhelming preponderance of the transactions have nothing to do with shady behavior. (I don’t own any privacy coins, but I think there’s importance in privacy)

  50. Assuming that the term "laundering" is legitimate is very unintelligent. Assuming that the laws are just (ie: "obstruction of justice" used in place of "obstruction of laws") is also very unintelligent.

  51. I don't think trackable is the opposite of fungible.

    He gives the example of a gold bar with a serial number. Gold is still a fungible commodity (all commodities are fungible) because it is standard.

  52. Remember the referendum about how they would make having privacy illegal ? Yeah, neither do I : Buy bitcoin and stick it to the control freaks.

  53. It's an interesting question. I would like to hear the opinion about IOTA, since everything is transparent, but through the quantum proof system a bit more complicated. But there will be also local snapshots, but you could keep the whole system database, if you want to, which makes it possible to trace everything, but keeps it more or less anonym, until you connect an address to your ID or something (an Order etc.)

  54. Wow, a video about money and fungibility that is interesting as heck and not dull and boring! Well done, this is a great video, would like to see more of this stuff please!

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