From the beginning, Nakamoto style cryptocurrency was intended to enable unimpeded flows of funds . Cryptocurrencies are specifically designed to be the perfect mechanism for grey and black markets; for tax evasion and for money laundering of all kinds. While crypto-enthusiasts see this as a feature, most of civilized society views this as a serious bug.
In the short history of Bitcoin, we have seen it become a medium for illicit commerce and ransomware. (Even more-or-less legitimate uses, such as digital commerce are being highjacked by a flood of scams, including preposterous “initial coin offerings”, which might as well be called “tulipware”.)
It has become evident that Bitcoin has also become a favorite tool for human smuggling and human trafficking: modern day slave trade. I’m not seeing this as a good thing in any way at all.
As reported in Coindesk , this issue was highlighted by Joseph Mari of the Bank of Montreal at the The Pontifical Academy of Social Sciences, Workshop on Assisting Victims of Human Trafficking: Best Practices in Legal Aid, Compensation and Resettlement . (It’s not often that I cite something “Pontifical” : – )) Mari reports that, as conventional financial services move to block illicit commerce, including human trafficking, criminals have moved to use Bitcoin to collect their illicit money.
Cryptocurrency enthusiasts are quick to point out that this is pretty much exactly how Bitcoin was designed to work: it is supposed to be immune to “censorship”. Other cynics like me would also point out that the wealthy get away with this stuff without resorting to frippery like Bitcoin. (See perhaps: England, Queen of, offshore accounts of.)
Of course, the original Nakamoto design was more than a little hacky, and it isn’t completely immune to interference by determined authorities. Companies make good money selling analytics that spot suspicious transactions and, with favorable winds and some luck, might nab some bad guys.
However, this mostly retroactive data mining is hardly adequate. Detecting this stuff after the fact doesn’t stop, prevent, or deter it.
Worse, the tiny successes so loudly touted are technically obsolete, as the dark web moves to far more opaque cryptocurrencies.
Mari is right to be concerned, and it is good to educate conventional banks and other authorities about this technology. But I’m really not sure that there is anything that can be done, at least until quantum computing takes it all down.
- Michael del Castillo, Vatican Address to Highlight Bitcoin Use in Slave Trade. Coindesk.November 2 2017, https://www.coindesk.com/vatican-address-highlight-bitcoin-use-human-slave-trade/
- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System. 2009. http://bitcoin.org/bitcoin.pdf
- Darryn Pollock , Jamaican Police Take Aim at Human Traffickers’ Bitcoin Pockets, in Cointelegraph. 2017. https://cointelegraph.com/news/jamaican-police-take-aim-at-human-traffickers-bitcoin-pockets
- The Pontifical Academy of Social Sciences, Workshop on Assisting Victims of Human Trafficking: Best Practices in Legal Aid, Compensation and Resettlement. 2017: Vatican City. http://www.pass.va/content/scienzesociali/en/events/2014-18/resettlement.html