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CyptoCurrencies – Is Bitcoin A Vehicle For Terrorist Financing And Money Laundering?

By Sikander Hayat 


It is fascinating to understand the creation of money out of thin air by the central banks and governments across the world. How a fiat currency gains credence and what is it backed by is a very interesting subject. How piece of paper or some digits on computer screen can be called money and can be exchanged for physical goods is fascinating to observe. Off course value of such a currency is only valid as long as people trust it.

Is there a future for current paper currencies or these are going to be replaced by digital ones. With the meteoric rise of Bitcoin and other cryptocurrencies, it is a matter of time before central banks will have to come up with a mechanism to integrate these into fabric of current currency universe and find a way to regulate them.

I assume that the currently cryptocurrencies derive their value from the use by money launderers and criminal element of our societies as it is possibly the best way to make their black money white. Currencies like Bitcoin present a clear and present danger to the regulatory regimes around the world and although nobody is quite sure where these currencies derive their value from, they have seen a meteoric rise in the last few months.

Currencies like Bitcoin must be regulated to make sure that we know who owns how much of this stuff for variety of reasons. One of these reasons is to make sure that this does not turn out to be the ponzi scheme which it is increasingly looking like where as long as someone out there is in the market to buy it from you, the price will keep rising until the music stops at which point the currency becomes worthless. If that happens a lot of people will lose money and lives will be ruined.

Other important reason is it is very hard to stop accumulation of criminal funds when regulatory authorities have no idea of who owns the units in these crytocurrencies. This situation is similar to bearer shares which have now been banned in large parts of world exactly because of the reason that we do not know who owns them and what value is held by individuals. Bearer shares have proved to be a good way of hiding money which has been acquired by either by criminal enterprise or by swindling funds from national budgets in countries where accountability is not very strong.
Panama papers and more recently treasure island papers have been good examples of such phenomena.


May be it is a futile exercise to try to control market forces as from siliconvalley to to the back alleys of Mumbai, people are mining cryptocurrencies. The forces which brought internet age are the same forces which are going to transform the currency universe and the way we make payments . Regulatory authorities and central banks will have to live with the consequences of this new world where value / money can be anything as long as there is a mechanism to exchange one value for an other. These digital currencies do just that. The jury is out on the scale of disruption caused by cryptocurrencies but the impact can already be seen.  


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Comments

  1. look Dollar and Euro are really used by criminals they didn't use other currency before, laundering money, terrorists, drugs, and every corrupt politician use Cash in Dollars or Euro, the central banks create every time financial burbles, they take your money, my money and only give poornes, but they pay wars where they want...i hope really with all my heart that bitcoin kill and change all system...💪 :) , this articles in the newspapers are payed by the people who is afraid that bitcoin will change everything...

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