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Thursday, 13 June 2013 | Term 2, Week 7
FEATURE
The fine print
by Tom Gibson and Matthew Theophile
Are Bitcoins the currency
of the future
Bitcoin and other such crypto-currencies are certainly on track to becoming one of the currencies of the
future. Since Bitcoin’s humble beginnings in 2009, the currency has recently hit the one billion dollar market
capitalisation mark. Bitcoin acts as a currency that has no government affiliations, meaning that money
and trading can be done worldwide without any sort of government interference. The Bitcoins themselves
can be traded all around the world for goods and services, as well as for other more traditional currencies.
Although the worth of a Bitcoin is constantly fluctuating as more and more people become interested in the
new phenomenon, the worth of one Bitcoin has recently reached the equivalent of nearly two hundred US
dollars. Bitcoin, along with many of the other crypto-currencies, also provide an anonymous way to buy and
sell items, which has led many to consider the illicit results of such a currency.
Unlike bank transactions, Bitcoin transactions
are on public record. However, these public
records only show the transactions between
two accounts or ‘wallets’. There is no limit to
the number of Bitcoin wallets that any one
person can have, and since it is very difficult
to determine an actual identity from a Bitcoin
wallet, criminals have found the service
extremely useful. Over the last few months,
some Australians have been arrested for the
importation of illegal drugs, all of which were
organised online through sites that dealt only
in Bitcoins. Federal services have no idea of
the extent to which criminal organisations
have been dealing in Bitcoins, but they fear
that with the various illicit services that can
be found on the internet it is only a matter of
time before the crypto-currency becomes even
more widespread.
To put things in perspective, though,
the transactions being completed using
Bitcoins (especially in illegal dealing) are
not huge. The first Australian to be charged
for importing drugs through the use of the
internet and Bitcoins was sentenced to the
relatively minor sentence of three years and
six months in jail for the possession of 32
weapons, as well as the importation of 60
grams of cocaine and MDMA. Whilst the zero
transaction fees and relative privacy of Bitcoin
transactions are hugely enticing for many
criminal organisations, large payments are
not necessarily the best option. Because of the
nature of Bitcoin transactions detailed above,
Bitcoin has recently
reached the equivalent
of nearly two hundred US
dollars.
once government agencies find one criminal’s
wallet account, it is relatively easy to find the
rest of the transactions between it and the
various other ‘wallets’. When this is combined
with the relatively risky and fluctuating nature
of the worth of Bitcoins, it essentially means
that huge criminal transactions or moneylaundering
using Bitcoins would be in the
words of one of its developers ‘pretty dumb.’
Although there has been a lot of hype in
the media lately in relation to the criminal
possibilities of the Bitcoin, the reality is that
the majority of its business is conducted by
everyday people around the world. However,
it is unlikely that it will become the currency
of the future as some people are suggesting,
simply because it’s worth is so reliant on
its popularity, as opposed to a country’s
economy. Despite this, it represents the
technological advances that are occurring
every day to overcome many of the problems
that society faces. Whilst it may never become
an actual currency, the Bitcoin has certainly
shown its worth in online trading, and the
zero transaction fees that go with this free
technology makes Bitcoins and other cryptocurrencies
very useful to us all.
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