Is Bitcoin for Criminals?
It’s no secret that some of Bitcoin’s earliest users used it for criminal actions. Ransomware: viruses that encrypt a hard drive and leave a message and a Bitcoin address with a 72 hour countdown have likely made millionaires out of some criminal hackers.
Interestingly, nobody blames the internet for enabling this. The headlines at the time tended to focus more on Bitcoin’s role, as Bitcoin is still a novelty for the majority of the population.
But is Bitcoin really to blame for criminal use? Furthermore, are criminals still using Bitcoin as it grows in popularity and use? These are important questions potential investors in a technology need to ask.
Thankfully, the answer to both questions is “no”. Let’s take a look at each one individually.
Abusus Non Tollit Usum
This phrase, “the abuse does not invalidate the use”, has a long history in our legal system. The idea that objects can be misused or abused-as an alcoholic does with alcohol-does not mean that there is no valid use. In fact, it is difficult to find any single item that one cannot misuse or abuse.
One direct corollary here is cash. Cash has been used in illegal operations for generations. The same advantage that cash has to Bitcoin-its fungibility-allows it to be used easily by criminals worldwide.
While some companies such as Visa and Mastercard might like to see us move to a cashless society, the result would be an incredible loss of freedom and a huge growth in the power of credit companies to determine where an individual can-and cannot-spend her money.
We tolerate the criminal use of cash because we value its use more than we fear its abuse.
Is Bitcoin Still a Criminal Favorite?
In short, no. While careful key management can generally obfuscate the user from his Bitcoin hoard, the public nature of the blockchain makes privacy a challenge. Recall, the blockchain is a public ledger that anyone can read. Beyond that, miners could decide to decline transactions from certain public addresses that are known criminals (for instance, a ransomware address with BTC in it), essentially burning those coins and making them unspendable.
Regardless of what you heard on the evening news, Bitcoin was never anonymous.
Criminals have been moving to privacy coins that are built from the start to be anonymous, such as Monero. Another project, ZCash, features both anonymous and pseudonymous transfers, depending on the users’ needs.
Are Privacy Coins Awful?
This question goes beyond Bitcoin and cryptocurrency into the nature of privacy in general, which is beyond the scope of this blog. However, many law abiding citizens use encryption for email and texts that protect them from criminals as well as governments. One such use case was this girls’ school in Afghanistan, which was made possible by Bitcoin.
There are many reasons for law abiding citizens to keep their wealth private, which are obvious. Privacy coins will certainly see their share of abuses, but their use, like Bitcoin, does not invalidate the use.
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