Poll: Should Governments be getting Involved in Bitcoin, An Anonymous Currency?
Bitcoin started back in 2009 as a cryptocurrency and was the very first currency to work without a central bank or administrator. Bitcoin funds are not tied to people, rather online wallets or addresses, each with its own unique code, this makes the currency almost completely anonymous. That is of course until governments around the world started getting involved.
Louis Ong, 37, a United States citizen was recently sentenced for running what authorities are calling an illegal bitcoin exchange. Mr Ong would buy bitcoin off customers for cash in exchange for a fee. Legal bodies believe that such customers could be engaged in illegal activities like drug trafficking and use services like that provided by Ong to launder their money.
Investigators sent undercover agents to Ong to make a trade, repeatedly telling him that they had acquired the money by selling drugs despite being told by Ong that he did not want to know where they got it from. He would later say in court that he wanted to have “plausible deniability.”
Most Bitcoin exchanges in the United states and Australia require users to verify their identities before participating in Bitcoin trades, especially at Bitcoin ATM’s which have recently been made to require an Australian phone number, a drivers licence picture and a facial picture to proceed with the sale.
It is now very rare to find vendors on sites like “LocalBitcoin” who will sell you the currency for cash without needing I.D.
It has been reported that bitcoin has also been used as a form of tax evasion as the currency is decentralised and doesn’t belong to a single country.
Scenarios like this have left a gap in the market for other cryptocurrencies like “Monero” who claim to be one hundred per cent anonymous.
The university of Sydney states that a quarter (25%)of all Bitcoin users are involved with illegal activities while just less than half (44%) of the transactions are used for illegal purposes. That is a pretty high number.
The Foundation for the Defence of Democracies states in their report that only 1% of bitcoins are used for illegal transactions. This could mean that the other 99% are used as investments and kept in their wallets as the currency’s value changes but this still begs the question as to why everyone should be regulated for the actions of a few.
One could describe Mr Ong’s actions as being similar to that of a Fence, who acts as a middle man between a thief who steals an item, and the eventual buyer of that item. The thief goes to the fence because the fence knows the item is stolen and buys it anyway.
However the case of buying bitcoin is slightly different as people genuinely want to invest in the currency, or they might want to try to minimise their tax legally, they might be going through a divorce and not want currency linked to them that might come under threat, they might come under threat from thieves or hackers who link an address to their name.
Lets not forget the fact that the internet is a massive place where new cryptocurrencies are already working to correct Bitcoins mistakes. If government regulation is to win on this one, Bitcoin will just be replaced by the next trending currency (probably Monero) for illegal aid.
What do our followers think of Bitcoin as an anonymous currency, should it stay that way? Or is government involvement justified due to the crime statistics shown above? Is there any point in governments regulating a currency that can so easily be replaced to serve criminal purposes?
Can you think of any other scenarios where an anonymous currency can be justified?
Please feel free to participate in the attached poll question.
Oh, and If you’re wondering about the fate of Mr Ong, he received a three year suspended sentence and a one million dollar forfeiture.