Virtual Currency (including cryptocurrency)
I have written, spoken, taught, and developed course material regarding virtual currency, especially as it pertains to cybercrime, money laundering, anti-money laundering (AML), law enforcement, and regulation. I compiled some thoughts and resources on my website, and thought I would also post an article to Medium (my first).
First, remember that virtual currency is privately created currency, it is not an official currency like “fiat currency” issued by a government (e.g. U.S. Dollars or Euros). I used to call them “digital currencies” before there was any regulation, but the term “virtual currency” is better, and is what the Financial Crimes Enforcement Network (FinCEN), New York State Department of Financial Services, and Financial Action Task Force (FATF) have decided upon (although it seems that FATF may be migrating to the term “virtual asset”). The term “virtual currency” makes sense when you consider that the term “currency” means official currency of a government, thus if a private party issues something and calls it a “currency” it cannot be a “real” currency but instead a “virtual currency.” The term “virtual asset” makes sense if you consider that the lines between a currency, commodity, investment, and property are blurred with these products.
Here’s some quick points on virtual currencies.
1. The first virtual currency was invented in 1996. Thus virtual currencies are not as new as many think.
2. Since then, we have learned many lessons about virtual currency, including how criminals abuse them.
3. “Cryptocurrencies” such as Bitcoin are one type of virtual currency.
4. Bitcoin is the first “cryptocurrency” virtual currency. Many have been created in its likeness.
5. “Decentralized” cryptocurrencies such as Bitcoin create new challenges. But it is always worth considering how “decentralized” a currency really is.
6. The use of virtual currencies as an “investment” creates separate concerns. There will be highly sophisticated investors, including those who can create and move the markets. Then there will be unsophisticated investors. Also, criminals will establish Ponzi-type schemes.
7. There’s been lots of innovation and change. It will be interesting to see what develops.
I have written a number of articles on or relating to virtual currency, and I had an amazing opportunity to learn about virtual currencies in their early days. More on that, my particular perspective, a list of my articles on the topic, and resources I find myself citing to frequently, at my webpage which is, https://johnbandler.com/book-and-articles/virtual-currency/
Hopefully this was informative and interesting.