Crime didn't originate with cryptocurrency
Charles Ponzi committed his financial crimes in the U.S. in the 1920s, luring people into investing in a fictitious investment (when in actuality he was paying early investors and himself with money invested later) that cost them $20 million. That would be over $245 million today. He didn’t invent the scheme that bears his name, nor did it die out with him — Bernie Madoff is serving 150 years for his plan that bilked people out of $65 billion. That’s dollars, not digital.
The Born brothers Jorge and Juan were Argentine grain traders when in 1974 they were kidnapped for a $60 million ransom that today would be equal to $293 million. The Montonerros were paid in fiat, not digital currency.
Pablo Escobar’s fortune was estimated at $30 billion — $58 billion in 2018 dollars. Legend says he burnt two million in a fire set to keep his daughter warm when they were fleeing authorities. The drug lord amassed his fortune by cornering the cocaine trade. Not through an ICO. And let’s not forget that digital currency can’t be used as a heat source.
Official misconduct
General Sani Abacha ruled Nigeria for five years in the 1990s and took somewhere between three billion and five billion dollars — dollars — through bond deals and by taking it from the Central Bank. Most of it remains missing.
Hundreds of billions are estimated as having been stolen by a Russian cyberthief Alexandr Panin who infected close to 1.5 million computers that collected passwords and bank and credit card account numbers.
We all marveled at the story of Jordan Belfort, “The Wolf of Wall Street” portrayed by Leonardo De Caprio, and his 1990s penny-stock pump and dump practices. He was convicted, but Belfort and his co-conspirators avoided heavy jail time by ratting out other brokerage firms engaged in the same practices.
And while the biggest money-laundering scheme reported was by Wachovia Bank and involved $380 billion, it is estimated that two trillion dollars is illegally laundered each year.
A new kind of trust system
Detractors of cryptocurrency are quick to recite the words “drug dealers, ransom, money laundering, and theft” when you talk about the opportunity inherent in bringing a different kind of trust system to our monetary policy. As if crime originated when Satoshi Nakamoto developed bitcoin and blockchain databases were devised.
Blockchain is a technology, and bitcoin is an implementation of that technology. There is nothing inherently bad or good about the technology. It comes down to how it is deployed and, yes, how it is regulated.
People who claim our current regulated system “works” because they aren’t charged for fraudulent credit card purchases don’t calculate the $11 billion banks lose, the $4.8 billion customers lose, and the $190 billion merchants lose annually from credit card fraud. But is anyone claiming these losses are caused by fiat currency?
We need oversight to protect the system, and there will always be a place for criminal activity where anything of value used as money is involved.
But it is impossible to look at all the good that can come from deploying digital currency and blockchain technology to trade and not be excited for its future in the hands of people who will do good things with it. In fact, many of the crimes committed in the fiat world become harder to commit in a system with greater transparency, more redundancy, and way more dense security.
Crooks will be with us always. They can stick up a bank, but they shouldn’t hold up the future.
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