28 June 2016

Why am I so late on the Bitcoin train?

Image: Pixabay
I've been somewhat of a Bitcoin sceptic for quite some time.  When it first became a thing I was worried that governments would legislate it out of existence.

It has had a pretty bad rap of being associated with the dark web and it is definitely the choice of currency for malware authors.

In its normal usage Bitcoin is more transparent than cash.  If I give you a cash note there is no permanent record of the transaction and the tax man can't get a sniff into our business.

Governments hate transactions they can't tax or police and so in the beginning there was a concern that Bitcoin would be outlawed.

In contrast to cash, if I transfer you Bitcoin then there is a record of the transaction that anybody in the world can inspect.  It's possible to trace the coins in your Bitcoin wallet back through the various people who owned them.  Anybody in the world can watch the contents of your wallet and see where you spend your money.

This is exactly the sort of thing that governments love.

Of course not everybody wants to share their transactions with the world and so there are Bitcoin laundering services that attempt to anonymise the coins in your wallet.  This puts us back to square one with Bitcoin being very convenient for criminals to use in order to evade financial intelligence controls.

I suspect that the process of banning Bitcoin transactions would impinge too much on the freedom of citizens.  Some governments are talking about banning cryptography in order to maintain surveillance on their citizens so it's not a stretch to imagine them being displeased with Bitcoin laundering services.  *sigh*.

Anyway, back to my killer app for Bitcoin... I've recently emigrated and am still paying debt in South Africa.  Sending money back to South Africa costs about £30 and takes 2-4 days if I use the banking system.  If I use Bitcoin the process costs around £ 3 and I can have the money in my South African bank account on the very same day.

Bitcoin costs one tenth the price of using banks and is at least twice as fast.

My transaction is not at all anonymous and a government can trace the funds to me on either end of the transaction where copies of my passport are stored with the exchanges.  If I wanted to hide this from thieves, the government, spear-phishers, and other people who want to take my money without giving anything in return then I would use a Bitcoin laundry service.
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