There are several main arguments against cryptocurrency adoption, however, one is much more ridiculous than the others...
Which one am I talking about?
The one where you hear people saying that bitcoin and cryptocurrencies should be made illegal because they are often used to finance terrorism, drug trafficking, and other illicit activities.
You know, the one where people say bitcoin is evil because it can be used for nefarious activities.
But guess what, the US dollar funds far more of those kinds of activities than just about any other means of transcation, does that mean the dollar should be made illegal or banned as well?
By that line or thinking, yes!
To expand on that a bit, one of the main arguments as to why people have been using bitcoin to transact in nefarious activities is because of the anonymity of it all.
While that may sound true on first thought, lets think about that for a second.
When there is a transaction done on a blockchain, which is basically a public ledger, there is most certainly a trail. A digital foot print.
While it may be true that the users can use fake names and pseudonyms, the foot print remains.
To expand on that, check out a quote from regulators:
"The beauty of Bitcoin, from a detective’s point of view, is that the blockchain records all. If you catch a dealer with drugs and cash on the street, you’ve caught them committing one crime, but if you catch people using something like Silk Road, you’ve uncovered their whole criminal history. It’s like discovering their books.”
Compare that to say, something like cash.
Transactions done in dollars are not traceable. Once it moves from one party to the next there is no record of that ever happening, at least not one that lasts on a blockchain ledger forever.
That being said, it is more difficult to move large amounts of cash than it is to move large amounts of bitcoins, but that brings me to my next point.
While there may be some anonymity with a transaction of a virtual currency, it becomes much more difficult to actually turn that cryptocurrency into whatever your local fiat currency is.
This is due to all the increased verification standards that exchanges have been implementing over the last year, which only get tougher as the amount of money wanting to be moved grows larger.
It's not impossible to circumvent these standards, but it gets more difficult.
Then you factor in the tracing of IP addresses, which is not completely possible at first, however, when you start to notice patterns of transactions coming from a certain address, you can start to zero in on exactly where that bitcoin might have come from.
Take this exercept from regulators as an example:
"If the data flowing through the network were perfectly coordinated, with everyone’s computer sending and receiving data as frequently as the rest, then it might be impossible to link Bitcoin addresses with IP addresses. But there is no top-down coordination of the Bitcoin network, and its flow is far from perfect. Sometimes a computer sends out information about only one transaction, meaning that the person at that IP address was the owner of that Bitcoin address. And sometimes a surge of transactions come from a single IP address—probably when the user was upgrading his or her Bitcoin client software. Those transactions hold the key to a whole backlog of their Bitcoin addresses. Like unraveling a ball of string, once some of the addresses are isolated, others follow."
For more on that, check out this link:
http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin
Therefore, if it's not impossible to be completely anonymous, it is much more difficult than people make it out to be.
Your response to these claims:
For these reasons, the next time you hear someone say that bitcoin and cryptocurrencies should be made illegal because they are used to finance illegal activities and are completely anonymous...
Just tell em that cash finances many more illicit activities and has been doing so for the last 200+ years.
That and using cash is actually a much better way to stay completely anonymous versus using bitcoin...
Stay informed my friends.
Sources:
http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin
Image Sources:
http://insidebitcoins.com/news/bitcoin-is-not-anonymous-and-lacks-privacy/32945
http://www.cryptosquad.co.uk/bit-coin/how-to-demonstrate-that-bitcoin-is-not-anonymous/
http://www.newsbtc.com/2015/02/18/coinbase-seems-forgotten-btc-anonymous-coinbase-trying-mutate-btc-another-paypal/
