Bitcoin always leads the headlines and continues to stir government controversy across the globe by debates over whether their country will accept the virtual currency or not. Recently Russia joined with China to publicly announce to the world that they are not embracing the digital currency because of Bitcoin’s possibility of supporting illegal money laundering. However, who really creates these illegal markets, the digital currency or the governments themselves?
The Russian prosecutor General’s Office recently said that any use of the virtual currency will be considered as suspicious activity and that the Russian government has already linked the digital currency to illicit activities. The implications of such a large country taking a stance against Bitcoin were seen in the coin’s trading price as the digital currency fell to be traded in the mid $600’s down from $843 just a couple of days ago.
The similar drop in value of Bitcoin was recently caused by the Chinese government’s refusal to deal with the virtual currency in mid December. China’s announcement dropped the value of Bitcoin to $422 from a November high of $1,100. By the end of that day the Bitcoin price bounced back to $530 and made a steady climb back to between $800-$980 range where it has been at until Russia’s recent announcement.
What makes the Chinese and Russian governments taking stances against Bitcoin because of illegal activity so bizarre is that the biggest hoard of Bitcoin in the entire world is actually owned by the U.S. Federal Bureau of Investigations (FBI). Yes, the FBI took possession of the Bitcoin from busting an illegal market for online drug sales, but the fact remains that the U.S. government still owns around $100 million in the digital currency.
So does that mean that Bitcoin creates illegal markets? If Bitcoin itself is to blame, shouldn’t governments believe that their country’s currency is actually responsible for every robbery that occurs at a liquor store, convenience store, or gas station? No, people do not blame the U.S. dollar for creating prostitution either. What about all the illegal money that gets laundered through gambling in government-run casinos?
The reality of the situation is that there will always be crime, illegal activity, or shady money laundering happening no matter what currency is involved. Criminal activity will always exist no matter what governments and police agencies do to try to wipe it out. As police agencies across the world try to stomp out one crime, there is another crime being created.
In the case of Bitcoin, the government agencies already know the potential that allows Bitcoin to aid in money laundering. This is not being denied. However the money laundering is still the secondary crime to the more serious original illegal activity which got the perpetrators their dirty money in the first place. What is really worse, some money laundering via Bitcoin or dealing and distributing illegal drugs to a worldwide customer-base?
The fact stands that Bitcoin is here to stay. A little over a year ago there were 67 digital currencies in existence and as of February 2014 there are 93. Recently Sexcoin, Unobtanium, Catcoin and Bitgem joined Altcoin, Litecoin and Bitcoin and 86 others in the virtual currency world. The combined worth of the currencies are estimated to be around $13 billion with Bitcoin dominating that figure with an estimated worth of $9 billion. The growth in the number of virtual currencies available shows that digital currencies are very likely to become even more popular while becoming more widely used and accepted by the general population.
If the governments of the world would embrace the use of Bitcoin and other digital currencies they would be empowered to monitor trading just as the government monitors shady dealings with their own country’s currency. Instead of blaming Bitcoin on creating illegal markets government and police agencies should focus their efforts on the primary crimes that are being committed instead of pointing fingers at something that only virtually exists.
Editorial by Brent Matsalla
Bitcoin Ups and Downs