There are a large number of laws that create a paper trail when substantial amounts of cash are used.

If you withdraw more than $10,000 in cash, your bank has to report it to the government.

If the bank thinks you're 'suspicious', they have to report it to the government.

If a business accepts more than $10,000 in cash it has to report you to the government.

The US is actually more lenient in this regard than some countries, where large cash purchases are (or will soon be) banned outright.

Apologies for my curiosity. But which countries ban (or are about to ban) large cash purchases?

Very much appreciated if you have references or pointers.

Italy is one (limit is 5000 Euros):

http://www.zerohedge.com/article/italy-banning-cash-transact...

Italy has already been mentioned in the replies.

Sweden is another one. Actually they are currently discussing/planing to completely ban cash transactions: http://www.bbc.co.uk/news/world-europe-10538032

Thanks for the link.

I'm not surprised regarding Italy (where I had to produce a passport and get myself registered in order to use an internet cafe), but Sweden does surprise me.

I doubt that cash that is used in most illegal activity comes from banks that report suspicious activity.

No it is about $3000, if the bank employee thinks something is "suspicious". $10K is always reported, anything lower than that is at discretion.

What? In the U.S? When did they change it? I don't recall ever seeing that.

I don't really understand how bitcoin advoids a paper trail - you can see every transaction for all history.

There are ways to anonymize bitcoins.

https://en.bitcoin.it/wiki/Anonymity

Dollars printing is controlled by the government. You can regulate the total amount of cash in circulation.

Additionally, each tender can be traced thanks to its number, making it possible (but difficult) for the forces to track where tender comes from.

It may be worth noting that Bitcoins are also uniquely identified and can be traced back through all transactions.

It doesn't seem like that's 100% the case, as you can generate a new bitcoin address for every transaction.

Unless there's some way to associate addresses as coming from a single wallet, which I do not think is the case.

Actually as far as I know this is solved by using "exchanges" outside jurisdiction of feared country, where you can send some bitcoins and receive other.

> he was behind 7 proxies

Using proxies seems like the digital equivalent of using middlemen for cash transactions. If I use enough middlemen it will be really, really hard to identify me reliably. Any differences I've missed?

Just that it doesn't cost anything to use proxies whereas middlemen generally take a cut from the transaction in real world.

This may be nitpicking, but the amount of cash printed by a government has very little to do with the actual money supply of a curreny.

I refer you to this Wikipedia article for details (http://en.wikipedia.org/wiki/Money_supply). Specifically the table indicating the types of money.

Bitcoin doesn't require you to transfer a piece of physical property to whoever you want to give it to.

Nor do dollars. Your statement is a non sequitur.

Actually cash dollars require it and digital dollars have a lot of restrictions.

"digital dollars have a lot of restrictions."

But, importantly, not the one he responded to "transferring physical property".

The comment I was responding to:

> How is this different than us dollars in cash?

Electronic forms of currency are not "cash".

1. US dollars in cash has a serial number on it, the government can trace it easily because they could ask banks for the certain serial numbers to report it as a blacklist(easy, they are automatic OCR machines for it).

2.Cash is becoming less and less important, the gov prefer the credit card electronic version when people tell everything they buy(when,where and what) to the gov. Electronic currency is the future because of convenience so they do not want people to break free from the Gob(BTW as they were in the past).

3. There is no limit in the number of Bitcoins you could use before being controlled,as there are with cash.

4. There is no limit in the number of US dollars the gov can print to dilute them as they are with Bitcoins.

5. US dollars are losing value, Bitcoins are getting more appreciated.

Ad. 1 all bitcoins operations are stored in a public ledger - the government does not even need to OCR that.