Bitcoin vs Banking [infographic]
Earlier this year Benjamin Lawsky, New York’s financial services superintendent, said he intended to initiate the biggest move towards regulating bitcoin.
Lawsky told CNN Money that he planned do this by administering “BitLicenses” to companies dealing with bitcoins, allegedly to protect the public from fraud.
Without explaining how exactly, Lawsky said he’d impose regulation on Bitcoin-related businesses, similar to those that govern banks.
Given the government’s track record on managing finances, including simple tasks like balancing a checkbook, the notion the government is either trustworthy, or competent, to successfully carry out such a task is debatable; some might say laughable.
“We’ve found in other areas of the financial world that strong, clear, concise disclosures are critical to earning the long-term trust and confidence of consumers,” said Lawsky. In other words, Lawsky wants Bitcoin exchanges to disclose the risks associated with virtual transactions.
Requesting exchanges provide potential users with facts regarding risks seems reasonable, but to insinuate government regulation is necessary to gain consumer trust is reaching.
If Lawsky’s statement were true, that would mean corporate banks have been nothing but honest to their customers, therefore gaining trust.
I bet many would beg to differ.
The initial idea behind the development of bitcoin was to escape government regulated currency, and develop one that would provide financial freedom to its users.
Enter Dark Wallet
A group of coders, including Cody Wilson, the mastermind behind printing 3D weapons, and Bitcoin project developer Amir Taaki, may be just one step ahead of the government when it comes to tracking the digital currency.
The coders refer to themselves as the unSystem.
Launched on Indiegogo, unSystem developed software capable of concealing bitcoin footprints, preventing its route from being tracked when transactions are made. Engadget explains how a “one-two punch” of encryption and “CoinJoin” technology makes this possible.
“In brief, the latter code registers multiple transactions as a single movement of funds, masking transfers,” reported Engadget.
Acting out of defiance, the team admitted the main purpose of the software, cleverly named the Dark Wallet, is to carry out “illicit transactions” similar to those that previously took place on the Silk Road website. The name itself is a play on the fear law enforcement officials once expressed that hackers and criminals would use technology to “go dark” and avoid government surveillance.
Silk Road was an underground website that supported a black market, including the sale of illegal drugs. It has since been shut down and the alleged site runner, Ross Ulbricht, is in jail awaiting his trial. Ulbricht is being federally charged with drug trafficking and money laundering.
The Dark Wallet is reportedly “…designed to protect its users’ identities far more strongly than the partial privacy protections bitcoin offers in its current form,” reported Wired.
“If the program works as promised, it could neuter impending bitcoin regulations that seek to tie individuals’ identities to bitcoin ownership.”
Law enforcement is watching
The New York Department of Financial Services, in which Lawsky is superintendent, failed to respond to requests for comment.
The Financial Crimes Enforcement Network, however, did respond to Wired Magazine stating they are, “well aware of the many emerging technological efforts designed to subvert financial transparency. It’s certainly our business to be interested and vigilant with respect to any activities that may assist money laundering and other financial crim
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