There is often public misconception that
Bitcoin is mostly used by criminals, but
nothing could be further from the truth. This
is mainly because many people think Bitcoin
is anonymous, when in fact it’s the opposite
- all Bitcoin transactions are transparent for
the whole world to see. People might not be
able to link the identity to Bitcoin right away
(that is also why it is sometimes called
‘pseudo anonymous’), but once they do, they
can track everything you’ve ever done on the
Bitcoin network. This makes it a particularly
bad tool for illicit use.
While Bitcoin might actually turn out to be
one of the safest and least ‘bad’ ways to use
money, it doesn’t mean that criminals don’t
use it. Just like normal money, they do. But
there are two important things to note -
firstly, that as more data becomes available
in the industry, the more it is becoming clear
the number of bad uses is very, very minute - if the entire Bitcoin ecosystem is
represented by a big mountain, the size of
the bad parts is a couple of rocks. Second,
that in any financial system, this is a risk
that can never be eliminated, merely
mitigated, and Bitcoin has some of the best
tools in the world for that.
It’s worth expanding on Bitcoin’s parallel
with the internet particularly in the context
of all the ‘bad stuff’ that people associate
Bitcoin with. Is the internet all good?
Definitely not. Terrorists, money launderers
and drug smugglers use Facebook, Twitter
and Whatsapp to communicate and
coordinate every single day. Some people
might feel uneasy about the fact that at
least 5–30% of visible online traffic relates
to pornography. And here we’re not even
considering the deep and dark web, where
there are all kinds of really bad things going
on that we’re not going to even mention
here.
But despite all these issues, does society
make a concerted effort to try and ban the
internet? No. And it’s not so much because
it’s hard to do so, it’s more because the
positives to society grossly outweigh the
negatives. For these same reasons, we
should all be very careful how we think
about Bitcoin, because most evidence
suggests Bitcoin to have the same net
positive effect, if not more, than the internet.
Both the internet and Bitcoin are tools that
can be used by the ‘bad guys’ or the ‘good
guys’, and thankfully most of the world are
in the latter category.
Bitcoin is a lot safer than what
most people think.