A few months ago, the New York Times reported that Hamas, a militant Palestianian group, had developed an online campaign to raise money using the crypto currency, Bitcoin.
The group’s military wing known as Qassam Brigades has set up a website, on which every visitor is given a unique Bitcoin address where they can then send the digital currency to.
This method makes donations “nearly impossible for law enforcement to track” according to the NY Times, and it has revived a long-discussed debate over the efficiency and risk of crypto currencies.
RELATED: TechWatch: NI firms open to ransomware attacks, asking for bitcoin
Bitcoin is the first digital/crypto currency to have been introduced and people use it globally for many purposes including as a medium of exchange, store of wealth and for remittance. It has existed for 10 years now and was created as a way for people to transact together, without the need for a middle man (known as peer-to-peer transacting).
Danny Scott, co-founder and CEO of the UK Bitcoin Exchange, CoinCorner told Sync NI that “one of the key pros of using Bitcoin over traditional currencies is that it’s decentralised - this simply means that it isn’t controlled by any governments or other entities. Bitcoin isn’t affected by inflation either as it’s not possible to print or create extra Bitcoin due it having a finite supply of 21 million.”
However, not everyone agrees with this point and there are other electronic currencies trying to break through the market ahead of Bitcoin with counter claims.
For example, Facebook has been trying to get its own crypto currency, Libra up and running since its official announcement on 18 June earlier this year.
Although recently, Visa, Mastercard, eBay and PayPal have all withdrawn support for the Libra project, and the BBC also reported that none of the 20 firms partnering with Facebook have fully committed financially to it.
Mark Zuckerberg has insisted that Libra is “independent” and Facebook doesn’t “control it”. American media site CNET News stated that it is actually the project of the Libra Assocation which Facebook just co-founded. This association said Libra's purpose is to "empower billions of people," citing 1.7 billion adults without bank accounts who could use the currency.
US President, Donald Trump has not been shy in his dislike of Libra and crypto currencies in general, tweeting in July 2019 that they were “not money” and concurring that they facilitate criminal activity.
RELATED: Payment giants pull out of Facebook's cryptocurrency
Some crypto currency specialists have claimed though that the real reason the US government is against Libra is mainly because it would cut out the economic middle men; banks. One source that wishes to remain unnamed stated that it “has the power to potentially wipe out the need for fiat (traditional) currencies if it reached a point of mass adoption. You could also look at all the examples in recent history of various government links to funding, so normal currency isn’t exactly pristine either; it’s all controversial.”
Tom Lee of Fundtsrat Global Advisors told North American news site, CNBC that “Libra is a stable coin, backed by a basket of currencies and debt securities. Bitcoin is a hypervolatile crypto-currency”.
This basically suggests that Bitcoin’s prices are likely to rapidly change as it is not owned or governed by any central party, but this won’t be the case with Libra as it is supported by real currencies like the euro and the American dollar.
Spencer Bogart of Blockchain Capital also told CNBC that “Libra is potentially one of the most positive external tailwinds in Bitcoin in its 10-year history.”
However when deciphering these facts it is important to note that organisations such as these and the likes of the Global Blockchain Business Council are pro crypto, so it is difficult to find a source that is completely neutral when it comes to the crypto consideration.
It cannot be argued that Bitcoin’s early adoption did see it being used for various crimes. These mainly occurred on the darknet, which is an umbrella term that describes hidden online networks which are usually used for illegal activity.
RELATED: Facebook's controversial content to be reviewed by independent 'Supreme Court'
Silk Road is one of the most prolific darknet cases in which Bitcoin was used illegally, in its early adoption. It was an online marketplace set up in 2011 for users to anonymously sell and buy narcotics and was created by American Ross William Ulbrichtan.
Ulbrichtan used Tor to host Silk Road; a protocol that encrypts data and anonymises IP addresses. By hosting his market as a Tor site, Ulbricht could conceal its IP address. He then used Bitcoin as the electronic currency for the drugs transactions.
Although all Bitcoin transactions are recorded in a log known as the blockchain, users who avoid linking their identities to their online "wallets" can conduct transactions with considerable anonymity. Like anything digital though, it leaves a trail – no matter how minor, as Jose Pagliery discussed in CNN News.
This is what ultimately led to Ulbrichtan’s conviction to two life sentences in 2015. According to CNN News, “from September 2012 until August 2013, Ulbricht's personal laptop received 3,760 transactions from the Silk Road worth 700,254 bitcoins; that means Ulbricht had received the equivalent of $18 million over that time.”
It wasn’t overly difficult then for prosecutors to decipher the public records showing one-to-one connections between Bitcoin addresses.
Ulbrichtan, who has a bachelor’s degree in physics and a master’s degree in materials science and engineering, wrote to his sentencing judge in 2015 saying he “believed people should have the right to buy and sell whatever they want as long as they did not hurt anyone.”
This story then gives cause to doubt the concept that illegal terrorist organisations can freely and effectively use Bitcoin for funding without question or consequence. It also poses an ethical query about free will and freedom of speech; should people be allowed to purchase such items if it is in a harmless and discreet manner?
CoinCorner’s Danny Scott continued to tell Sync NI that “there is actually very little evidence of terrorist financing via Bitcoin. In fact from recent reports by Chainalysis, it's thought that “illicit transactions comprised less than 1% of all economic Bitcoin activity in 2018, down from 7% in 2012.”
CoinCorner's Danny Scott @CoinCornerDanny (c)
He continued: “On the surface, Bitcoin may seem like a desirable option for criminal activity due to things like the perceived “anonymity” of it. However, Bitcoin is not actually anonymous, it’s pseudo-anonymous, and all transactions are stored publicly on the blockchain, which anyone, anywhere can view. In fact, Bitcoin is easier to trace than cash.
“Nowadays most exchanges, we included, and other compliant businesses in the industry use software that monitors transactions on the blockchain for illicit activity. At CoinCorner, our compliance team are also trained in spotting signs of financial crime, which prevents things like terrorist financing and anti-money laundering.
“Even if a criminal gets as far as transacting in Bitcoin, they then need a way of converting that crypto to fiat money. This is typically done through an exchange like us, but with more businesses on the lookout for signs of illicit activity, it’s becoming increasingly difficult for them to do."
Bitcoin can be used to help facilitate fraudless payments as aforementioned, all purchases are made with a unique Bitcoin address and don’t require personal details like those issued on credit cards.
But what do you think? Do you think that Bitcoin is the future, and will make private purchases easier for customers? Or do you believe that it will and can be used for terrorist funding and other illegal endeavours?
