Posted by: Forencia Todaro
Bitcoin is the P2P electronic money and payment network, which offers the “advantage” of no controls; but does really work like that?
The online currency is enjoying a record on her value; it recently reached the price of gold. The benefits for illegal markets started to be in discussion. The latest cases exposed how the currency is used for ´dark market´, and consequently FBI intervened. The FBI intervention added to the debate concerning individual privacy.
There is no bank or central authority behind Bitcoin. It is a crypto currency, meaning that it uses cryptography for security, preventing counterfeiting, and enhancing privacy. Bitcoin allows you to make transactions anonymous and virtually untraceable. Its page announces as one of the conveniences that you can do a payment without disclosure of your identity.
However, with regards to protecting your privacy the website states that “once the address is used, it became tainted by the history of all transaction it is involved with”. So they recommended using different addresses and multiple wallets, to elude association. In addition they suggest a page that can help to hide a computer’s IP address.
But have the users expect anonymity?
With pages like blockchain.info and blockexplorer.com everybody can search block history transactions and address of users. Blockchain explain that they are an encrypted page, which take only as little info they need. But there are many skeptics; some question whether your IP is really anonymous if you are encrypted. Apparently NSI has been investigated TOR, and during the last few months have been working on tracking TOR users. They share that information with agencies, like the DEA of FBI to prevent pornography and drug-dealers.
The problem is that most of users believe in anonymity, it is better to take some precautions like Bitcoin page announce. But since we are talking about transactions in a parallel market, this type of currency offers privacy benefits and no fees, so many lawbreakers take the opportunity. It is likely that most of the Bitcoin transactions are for drugs and money laundering. If we believe that, how long until FBI and NSA are going to intervene?
One of the most recent cases was Silk Road, an online black market, which operated only by Tor service. The site was launched in February 2011 and it was principally focused on the black market sale of drugs. On October 2, 2013, The FBI shut down the site and captured its principal administrator “Dread Pirate Roberts” after a long investigation. The FBI estimates that the site generated approximately USD $1.2 B in sales and $80 M in commissions; involving 146,946 buyers and 3,877 vendors. Because they went behind administrators but did not go after users, the proliferation of the market may be encouraged.
Now more competitors are going ahead. Last Sunday, one of the predecessors, Sheep Marketplace evaporated with $100 Millions from users.
The preceding examples show how cryptocurrency can facilitate criminal activities. I believe that we are not far away from further Government intervention in this area for security purposes. As more attention is paid to Bitcoin, and higher volumes of it are traded, it is becoming more risky. Incidents such as Silk Road and Sheep Marketplace hurt Bitcoin’s reputation, and push for a proliferation of illegal uses.