Cryptocurrencies in the Nakamotoan vein have always be attractive for extralegal transactions, for tax evasion, sale of contraband, digital extortion or other purposes. Economically, it is the equivalent of a “bag of twenties out in the alley”, and seems deliberately designed as an economic weapon.
Many apologists have tried to claim that the legitimate (for certain values of “legitimate”) use cases are increasing, and that it is unfair to focus so much on a few bad apples. “‘Sin’ Activities No Longer Drive Bitcoin Economy, Researchers Find“, reports Pete Rizzo.
Unfortunately, the picture is not really so rosy, because cryptocurrency continues to be primarily used for extralegal purposes, as age old rackets exploit the speed and efficiency of twenty first century technology. This is readily seen in any sample of headlines.
“Bitcoin Has a New Top Dark Market” reports Michael del Castillo. Years after the demise of Silk Road, dozens of dark markets have sprung up to serve your need for drugs, guns, murder for hire, and services. Bitcoin itself has become the bridge between hidden transactions and the legitimate commercial world, i.e., as the laundry. (This function is the basis for some of the claims to increased “legitimacy”: these transactions are classified as “clean”.)
“Demand for Zcash Mining Grows as Blockchain Launch Approaches” says Jacob Donnelly. The original Bitcoin concept prominently promised “transparency” as a crucial feature. This has turned out to be a drawback for the many dark transactions on the Internet, so new protocols such as zcash are coming out which are designed to be entirely opaque. Let’s be very clear here: these systems have little purpose other than cloaking transactions, mainly to avoid surveillance by authorities. Nothing good can come from this technology.
Cryptocurrency has found favor in some ancient criminal artforms, bringing them up to the minute. Bitcoin has become a favorite tool of for digital extortionists, allowing them to fully automate their racket. “Bitcoin is Not the Root Cause of Ransomware” reports Peter Van Valkenburgh, but it does fit perfectly into the MO that it might have been deisnged for this purpose.
As a computer scientists I am more than a little embarrassed by how automation has made it so easy for anyone to execute what is basically a mindless racket, over and over, whisking away the proceeds via the internet. Sigh. Beautiful engineering, for such a low purpose.
Cryptocurrency technology can also be employed in pyramid schemes and similar scams. Some cryptocurrencies are widely believed to be essentially nothing other than pyramid sales schemes, dressed up in fancy terminology.
“London Police Investigate OneCoin Cryptocurrency Scheme” reports Stan Higgins. In this case, the scam, if any, would be in the story surrounding the technology, and the associated sales programs. The Onecoin scheme is no different from any of hundreds of other multilevel marketing schemes, except they use cryptocurrency as a sort of window dressing, and, of course, to efficiently whisk away the profits. Sigh.
Having reinvented the universally abandoned Gold Standard, and made the world safe for money launderers, cryptocurrency is now invigorating age old crimes and scams with new, highly efficient technology.
This is certainly “disruptive”, though no points are awarded for “innovation”.
How is this a good thing?