Bitcoin Entrepreneur Charlie Shrem Thinks About Using Virtual Currency in Prison

Charlie Shrem’s new home for the next two years – Lewisburg Federal Prison Camp in Pennsylvania – doesn’t accept bitcoins yet.

Photo: i k o/Flickr

Photo: i k o/Flickr

Bitcoin entepreneur Charlie Shrem arrived at federal prison to serve a two-year sentence for his involvement in a drug scheme with his virtual-currency exchange and an online black market.

The 25-years-old reported to the federal facility in Lewisburg, Pa., where he “will serve his time in a minimum security camp that is adjacent to a high-security penitentiary, said Shawn Barlett, a prison spokesman. The camp holds 466 inmates, according to the U.S. Bureau of Prisons website,” writes Fortune.

Charlie Shrem was considered to be one of the bitcoin’s most prominent advocates at the time of his arrest, dealing a blow to the virtual currency’s reputation just as it was attracting interest from mainstream investors and merchants.

“Well, I’m off to prison now!” he tweeted on Monday, adding “follow my twitter for tweets from the inside.” He continued: “Bitcoin may have indirectly landed me in prison, but it’s still my passion.”

However, Mr. Barlett, the prison spokesman, said that prisoners have no chance to use any social networking sites as they have no access to the internet, although they may receive restricted email.

As for the prison commissary, accounts are funded the old-fashioned way – via money order, Western Union or Moneygram, the prison website claims. Mr. Shrem’s attorney wasn’t available for comment on his incarceration.

The 25 years ols convict was the founder of BitInstant, a New York exchange that allows users to buy and sell bitcoin. He was arrested last year and indicted on charges of money-laundering and other crimes that may lead him to 25 years of incarceration.

He later pleaded guilty to aiding and abetting the operation of an unlicensed money-transmitting business. The New York native continued to advocate for bitcoin even after his arrest, even as he remained confined to his parents’ Brooklyn home.

He has recently took to his blog saying: ““I don’t look for sympathy, I did the crime and I will do the time.” He says that the prison facility where he’s headed “seems like a nice place, it offers outstanding recreational facilities including a walking track; a basketball court; softball fields and exercise equipment.”

By the way, the bitcoin advocate is already thinking over how digital currency could hypothetically be used as currency in prison.

“As it turns out, running a Bitcoin system in prison is illegal — the Bureau of Prisons strictly forbids “possession of money or currency, unless specifically authorised”— but it’s still a fun thought experiment,” he says.

Noting that bitcoin is revolutionary not because it is digital, he says the currency could work even without the backing of technology.

“All you really need for a bitcoin-like currency to work is the ability to keep track of transactions in a central ledger, which is double-checked frequently by users.”

“Without a computer or cell phone, prisoners would need to run a ledger completely offline from behind the prison walls. In other words, we’d need a physical notebook to keep track of all the transactions. Instead of swapping physical cans of mackerel, we’d simply write down the amounts in the notebook,” he adds.

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