Bitcoin is now a better tool for laundering money or is it?

One common criticism of Bitcoin is its ability to launder money. The problem is actually the reverse. It is not enough.

Matt Levine, from Bloomberg, recently wrote to respond to the Bitfinex theft arrest. Because the blockchain is visible to the world, it’s very difficult to launder Bitcoin money. The chain doesn’t have any user names that are associated with any particular address or wallet. It’s easy to monitor Bitcoin transactions and check if they’re moving. It’s easy for regulated exchanges and banks to reject Bitcoin that has been compromised in any way.

Additionally, although there are no names associated with any wallet, it is not difficult to link a wallet to a name in most cases. Your name can be linked to a transaction if you purchase Bitcoin from Coinbase or another established, regulated exchange. From there, it’s just a matter of going backwards.

Bitcoin critics are incorrect about the money laundering aspect. This is a great thing for industry participants, who can easily disassociate from any unsightly elements.

But there’s one problem. Bitcoin might not be able to be used for laundering money if it isn’t.

It’s not stateless money, which is a key selling point. Alice can send money directly to Bob, without any country or authority being involved. Alice and Bob will have a difficult time spending their bitcoin on actual items. Food. Or gasoline. Or a house.

Due to the current situation in Canada with its trucker convoy, the relationship between money and state is receiving a lot of attention. In an effort to stop truckers and their supporters, the Canadian government invoked emergency power. We saw first that crowdfunding sites stopped doing business with them. Now, any financial institution — banks and brokers — can stop them.

This is what crypto was designed for, theoretically. Alternative, stateless money systems would allow anyone to transact with the state without their permission. Except as stated by The Globe & Mail regulated crypto entities were instructed not to accept coins in 30 wallets that have been associated with the convoy.

Yesterday I had the opportunity to speak with Alex Gladstein who is a huge Bitcoin advocate and Chief Strategy Officer at The Human Rights Foundation. For years, his main argument has been that Bitcoin can be an effective tool for people living under oppressive governments. Even if truckers in Canada aren’t oppressed dissidents in any way, if they don’t have Bitcoin, the cryptocurrency cannot be used by anyone else.

Gladstein believes it is a mistake for Bitcoiners not to accept that Bitcoins aren’t good for money laundering. He says, “It must be good for money laundering” if it is going to be freedom currency.

He explained that there was a clear understanding that Bitcoin did not have privacy and that this was a deliberate tradeoff. Others priorities, such as the ability for individuals to run full nodes independently and verify the number of coins available, were considered more important. For the first few years of Bitcoin’s existence, there was a blissful state where no one really thought about blockchain analysis. However, analysis of the chain is now extremely accurate and Bitcoin needs to get to this point.

Gladstein says privacy tech is constantly evolving within the Bitcoin ecosystem. There are things like Coinjoin is a place where people can mix their Bitcoins so that it’s hard to tell who has what. Payjoin, Coinswap and other services are variations of the idea of putting money in a pot and then hiding who took it out. Alex prefers to use the Lightning Network to allow Bitcoin transactions to settle “off-chain”.

Gladstein says, “The best way to see where we’re going Lightning is like an ATM.”

It is very difficult to track the spending of cash taken out of ATMs. Lightning transactions are digital but not on the blockchain. (If you want to know more, We discussed how Lightning worked many years ago on an episode of our podcast.

Bitcoin is still not a mainstream currency. Some of the more unusual attempts to hide transactions or even spend Bitcoin are still very niche. Gladstein says that it was a mistake by the truckers’ supporters to publicly advertise one wallet address that could be easily identified as being associated with them.

He believes that Bitcoin should have the same goal as other open projects like Signal, Tor or email. They can be used even by people you don’t like. They can’t be used by them.

If Bitcoin does not reach this status, where it is freely accessible by anyone without the intervention of a central entity such as a government, then it’s hard to see what the point is. You can buy TIPS or other forms of inflation protection if you only need it to protect your bank account.

Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned
Share Talk
Malcare WordPress Security