Checkpoint Charlie with Crypto

Kent Dahlgren
4 min readMay 28, 2022

Let’s play make-believe.

Let’s pretend the US has broken up into rival factions, and you need to move $10 million to family that are located in the People’s Republic of Tennessee (henceforth: the fictional PRT).

Background:

The (fictional) PRT was originally a “MAGA 2024” faction that emerged after a few core leaders took DMT, emerging from a camping retreat to announce they are now MAGA Maoists wearing red caps (because the DMT elves told them to).

The PRT has imposed martial law, actively seizing all citizen funds and assets, leaving your extended family in a vulnerable position.

PRT border security is diligent, but the PRT borders are porous, and border security coverage is spotty.

Tactic: you could buy 50 of these “Trezors,” asking 50 different people to courier them to a number of pre-arranged destinations.

Each of these “Trezors” have a “wallet” that is “storing” $200,000 in cryptocurrency.

$200,000 x 50 = $10 million

To be clear: the “Trezors” aren’t actually holding any actual crypto; these are a great example of what’s called “cold storage.”

Definition:

“Cold storage is a way of holding cryptocurrency tokens offline. By using cold storage, cryptocurrency investors aim to prevent hackers from being able to access their holdings via traditional means.”

There are two kinds of addresses with crypto:

- public (the address you share with the public for receiving funds)
- private (the address you use for spending the funds)

These Trezors aren’t actually storing the crypto; they represent a secure way to protect the private address (the way the funds can be spent).

So if a dozen of your couriers are lost to the famous swamp gas of central Tennessee, all is good: you can recover the funds, provided you stored the private addresses elsewhere.

And if the PRT border patrol finds and seizes the Trezors, they won’t be able to access the funds unless the courier has access to the device (not recommended).

But there’s a few nuances to this that are really fantastic.

The Trezor includes support for one or more “hidden wallets,” which would work in the following manner:

Let’s say that you give all of your couriers access to the “wallet,” and they are free to spend $5,000 for travel expenses, provided they keep receipts.

But the (entirely fictional) PRT finds and seizes a few of these Trezors, and demands the couriers gives them access to the device.

That’s cool: they have no way to know there’s one or more hidden wallets that are also holding $195,000 in crypto, and unless the courier has the passphrase (bad idea), they aren’t going to access it.

In advance you set up a way to confirm receipt of funds, such as people posting a meme with a few pre-defined words on public social media, (which serves as a simple example of steganography).

You passively monitor a few social media accounts and annotate which person confirmed receipt of funds, and which have not.

So a month later when it’s revealed that one or more Trezors were seized by the PRT, you can just “recover” the funds, by accessing the private address in an alternative manner, gearing up to try again.

Cool, huh?

And let’s go further:

Let’s assume that you want your family to be able to use this electronic currency anonymously, so you use one of the “CryptoNote” currencies, such as Monero (there are others, but Monero is one of my faves).

People think that crypto is anonymous, but that’s nonsense: crypto uses a blockchain, which is a public ledger, and forensics for analyzing transactions on these public ledgers are advanced enough for cops, feds, and intelligence to quickly figure out who sent what quantity of funds to whom.

So what’s great about some of the more privacy-oriented crypto is they are a lot more difficult to figure out, from the perspective of forensics (note: the feds have paid $$$ for firms to develop tools for cracking that particular nut).

These Trezor devices are small, and they don’t need power, so they could be sewn into clothing, stored in the seams of vehicles, etc etc.

These run a couple hundred dollars, and it makes sense to get a few of them if you can pull it off, so if you really wanted to troll the PRT, you could do something else entirely:

You could buy 5 Trezors, loading each with $5,000, and asking five people to courier them into PRT territory.

But by disclosing to known big-mouths, you could seed the rumor-mill that there’s actually 2,000 of these flowing across the PRT borders, each holding $500,000 in a hidden wallet, for the purposes of erecting a “walled garden economy” to disrupt the PRT from within.

That would be USD $1 billion, btw.

It doesn’t matter if you ACTUALLY do it or not; by seeding the rumor mill with plausible evidence that the rumor has merit, they would be forced to run amok trying to find and stop this flow of money, (even if it’s not real).

I talk a lot of shit about crypto, because its enthusiasts believe it’s the answer to all riddles (they are wrong).

But crypto introduces a lot of powerful capabilities that are now available to normal folks, and it’s my recommendation you consider investing a couple hundred bucks into a Trezor and take a look at the more privacy-oriented currencies that are built upon the Cryptonote protocol.

Links and sources:
https://trezor.io/#comparison

https://blog.trezor.io/passphrase-the-ultimate-protection-for-your-accounts-3a311990925b

https://www.reddit.com/r/TREZOR/comments/pgmzj9/trezor_hidden_wallet_recovery/

https://en.wikipedia.org/wiki/Steganography

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Kent Dahlgren

Product management fix-it guy. World-famous people skills. Extremely small hands. (edit) marketing lady says I’m also supposed to say “CEO of software company”