4 reasons to care about Bitcoin and other crypto-currency
Bitcoin is a decentralized peer-to-peer payment network with no central authority or middlemen — perfect for criminal activity
By Tony Moore
There are many aspects of bitcoins — a new form of digital currency often referred to as crypto-currency — but in this article I will limit myself to the four reasons why I think that law enforcement should be concerned about the growth of this digital currency.
As I stated in today’s companion article, in which I provide some history and explanation of how it works, Bitcoin has seen a large rise in popularity since I began investigating and studying this and other crypto-currency in use on the Internet.
In future articles I will examine things like the Bitcoin protocol. Here, I want to ask and answer four questions that get to the heart of why law enforcement professionals should be interested in learning more about Bitcoin.
1.) Is Crypto-Currency Legal?
In that case, Trendon Shavers was charged with the operation of a Ponzi scheme, using the name Bitcoin Savings & Trust. His scheme managed to bilk more than 4,100 customers out of millions of dollars.
The SEC argued that bitcoins were an “investment contract” and an exchange for conventional currencies and the court agreed, citing, “It is clear that Bitcoin can be used as money. It can be used to purchase goods or services. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.”
2.) What About Theft?
Consider this: You respond to a call indicating bitcoins were stolen. Would your report indicate cash was taken? Based on the U.S. District Court decision, one could definitely argue that position.
Or what if while conducting a narcotics investigation, you discover several Bitcoin wallet addresses, QR codes in the suspect’s possession, or Bitcoin mobile applications on his phone?
Taking into consideration other key factors, would you arrest for “Possession of a Controlled Substance for Sales” charge? Could the suspect be negotiating drug sales via Bitcoin?
3.) Bitcoin’s Perceived Anonymity
With the assistance of an academic abstract published by researchers from the University of San Diego, I have been able to successfully track certain Bitcoin transaction patterns in the deep web. This same concept, although extensive, can easily be adopted by law enforcement to track patterns of local drug dealers and other criminals drawn to the potential anonymity using bitcoins.
4.) More Platform than Currency
With increased threat to one’s identity and privacy, Internet users are demanding a return of anonymity to the Internet. I foresee a time when the Bitcoin protocol will change the way we transverse the Internet.
Like email and social media changed the way we communicate, Bitcoin will change the way we transact. This could very well create a challenge for law enforcement. But knowing the protocol and understanding its function can allow us to be ahead of the game.
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