Is Bitcoin the New Pirate Currency of Choice?

Online Pirates are the latest criminals to turn to Bitcoin to fill their coffers, by Ellen Seidler

Last week the Creativity Tech blog reported on the RIAA’s warning about the growing popularity of the peer-to-peer “crypto-currency” Bitcoin among online pirates.

The bitcoin, you may recall, is the purely digital currency which is traded and derived ultimately from the value of complex data work completed by computers online. They are not backed by a government or bank. The RIAA asserts that the use of bitcoin as payment for pirated content has made it difficult if not impossible for government to track and to seize such assets from infringing sites as they are able to do with traditional national currencies.

The virtual currency,  has drawn increasing scrutiny  from government officials for its potential use by criminals.  Mary Shannon Little wrote about this worry in a recent Huffington Post piece:

Even before FinCEN’s regulations, the FBI last year issued an internal report warning that the anonymous bitcoin payment network was a growing haven for money laundering and other cyber-criminal activity including terrorism financing, human trafficking, kiddie porn, illegal internet gambling, and theft of the bitcoins themselves from their anonymous owners’ virtual wallets. In the report, the FBI notes that because bitcoin combines cryptography and a peer-to-peer architecture to avoid a central authority, law enforcement agencies will have more difficulty identifying suspicious users and obtaining transaction records.

While the long-term viability of Bitcoin may be uncertain, for now it does appear that online pirates view the “currency”  as a new way to exchange money beyond the reach of regulation.  As the RIAA’s letter pointed out, the Pirate Bay began accepting Bitcoin donations in April and from the looks of it, the notorious pirate website is not alone.

 

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Just this week I received some emails (below) from an online pirate movie forum x264-bb that I’ve written about in the past.   The first email announced that the website’s PayPal account was terminated and the second informed users about the x264-bb’s new “donation” procedure using Bitcoins.

 

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Apparently the pirate forum’s users are not responding positively since site administrators sent this email update today:

Dear XXXXX,

We do understand its additional hassle to purchase Bitcoin for donations, however it is the safest method and best one currently for safe keeping of donated funds.

For PayPal or Credit Card users, if you have any problem with the guide on the Official Bitcoin Donation page, don’t fret! This is an extremely straight forward guide available for PayPal & Credit Card users here: http://bitcoinwithcard.com/buy-bitcoinspaypal-credit-card/

Please check it out, any amount of donation works now for donation!!! We need your help right urgently right now!!!  Without funding, we will not be able to push through this crisis! Come on now, please help us if you can! [emphasis added]

Discussion @ Official Bitcoin Donation Page: http://www.x264-bb.com/x264-bb-news-center/227827-read-bitcoin-donation-available-now.html

Thank you from the bottom of our heart!

Warm Regards,

x264-United aka djXpire

Forum Administrator

www.x264-BB.com

Awww, poor guys.  It seems they’re struggling a bit now that PayPal has pulled the cash rug out from under them, but even users of the pirate forum seem cautious when it comes to paying for Bitcoins.

 

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Ironic, but you can apparently pay for the Bitcoins using PayPal or a credit card?

Meanwhile one of the administrators tries to convince users that supporting the pirate movie forum via Bitcoin donations is really a great way to go:

Bitcoins is something that Paypal nor any financial institute can control. 100% perfectly safe for the website to keep funds and keep the website going for a long time to go!!!

 

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Here’s another exchange between a forum administrator “x264-United” and a moderator “”Reisin” who suggests Google Checkout as better alternative.

 

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Reisen: Fileparadox went with google checkout, maybe we should consider it as an alternative.
My biggest worry with bitcoins is the fact they are pretty unstable (silk road for example, although it bounced back).
Paypal’s biggest appeal was its simplicity for end user, with bitcoins is a bit more complicated and this might scare away some people who dont wanna spend their time getting into subject.

In the other hand its independence as DJ mentioned and being under google’s radar, since google already dipping their fingers in everything. I wouldn’t be surprised if one day they would go sheriff of the internet full time, its something they already trying anyway.

x264-United: Reisen, warez indexing sites are losing Google Checkout as well…. 
Instead of discouraging donors, please be more positive and encourage members to pick up a new “knowledge” for donation.
This is by far the safest method now!!!

Bitcoin’s lack of traceability aside, the fact is that pirate forums are in the business of making money and when they can’t get paid via payment processors like PayPal they’re forced find alternatives.  Bitcoins are already popular with online criminal enterprises like the recently busted Silk Road so it’s  not surprising to see the crypto-currency gain favor among web pirate operations as well.

Perhaps online pirates’ cozy embrace of the same cyber money favored by drug dealers, pornographers and other web criminals will erode the idea that online pirate entrepreneurs are not criminals. In this case it’s safe to say that a pirate should be known by the company he keeps…

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