Since its inception in 2009, Bitcoin pioneered the way for cryptocurrencies and has boomed into mainstream consciousness in 2017. Blockchain technology promises liberation from centralized banking, but its anonymous nature also puts it in the sights of government and security agencies.
A prime example is the now defunct Silk Road, which was an online marketplace that allowed users to buy and sell everything from drugs and guns, to information, for Bitcoin.
Obviously buying and selling illegal goods will land you in a world of trouble if you are caught. This truly is the dark side of the cryptocurrency world, which allows drug dealers and the illegal arms trade an anonymous and untraceable way of doing business.
The FBI shut Silk Road down and arrested it’s founder Ross Ulbricht, ending the run of the biggest player in the dark web’s trading history. Ironically, one of the investigating agents was found guilty of stealing Bitcoin from Silk Road while he was investigating the online platform.
Encryption doesn’t necessarily equal anonymity
While it’s understandable that anonymous transactions allows nefarious people to do their dirty business, even the European Union believes that cryptocurrencies are not favourable for terrorism.
In a report released earlier this year, a European commision declared that terrorist groups need fiat currencies to operate. The intrinsic complexity of Blockchain transactions is a factor; so is the publicly available ledger. Every transaction made with Bitcoin is recorded on the ledger for all to see – which gives authorities some idea of who is sending who what.
It’s far easier to send cold, hard cash in an envelope than through digital currency, which is inevitably traceable in some way or form…