Bitcoins have been a hot topic since its release in 2010. The value of the coin has been in a roller coaster ever since. It was initially sold for 0.008$ per coin and peaked in November 2013 when it was sold for $1,240 per coin. Currently, a bitcoin is worth a little over $600.
Besides being a famous fluctuating currency, it had the dubious honour of being the world’s worst-performing currency in 2014, Bitcoins are also subject of discussion because there is the common belief that Bitcoins are anonymously and people can use them to buy anything from anyone online. However, recent research found that bitcoins aren’t completely anonymous, but pseudonymous. But what does this actually mean?
Researchers from the University of California and George Mason found that you can own a Bitcoin without anyone knowing that it is yours, but as soon as you move the Bitcoin, you are leaving a digital trail of breadcrumbs. Every transaction is even recorded in a public ledger, which was initially created to check if people weren’t using the same coin twice.
The trail of digital breadcrumbs has always been there, and following the trail would only lead to an online pseudonym, which can’t be traced back to a real person. However, in 2013 the Financial Crimes Enforcement Network, an agency within the US Treasury Department, took initiative to tackle this problem and under new laws, if a person wishes to convert Bitcoins to US dollars the users identity must verified. Of course, there is always the opportunity to use illegitimate exchange services like BitLaundry and BitMix to convert your bitcoins to US dollars, but these companies do not have the capacity to process large-scale transactions.
What do you think the future of Bitcoin will look like? Will it be an ongoing game of cat and mouse between law enforcement and anonymous criminals hiding out on the dark net? Or will it actually become an accepted currency to buy legitimate stuff online?