The world of cryptocurrency trading has undoubtedly experienced a fair share of difficult times in the past year, and the first quarter of 2018 alone has been tumultuous for Bitcoin and Ethereum.
As if the crypto troubles were not enough, an assembly was convened in Basel, Switzerland, to discuss additional strategies for ensuring the interstate crippling of digital money systems.
An observer would have easily termed this move as the last nail in the coffin. But is it the end of the road for crypto lovers?
January’s Cryptocurrency Workshop
The joint meeting was organized on 15 January 2018 to illuminate issues surrounding the crypto trade.
Europol, Interpol and the Basel Institute of Governance used the forum to debate the relationship between cryptocurrencies and global crime, and it was agreed that drug and theft rings had used the crypto world to disguise their operations.
This stems from the financing of terror groups around the globe and the laundering of money by rogue institutions.
The workshop united financial experts who agreed on the importance of administrative action in the investigation and seizure of transactions operating on cryptocurrencies.
The two-day event was attended by over sixty investigators working with law enforcement agencies that combat cybercrime, money laundering and identity theft.
Additionally, bright minds from the private sector graced the event to give their thoughts on the subject matter.
These individuals represented about thirty-two countries that made significant contributions to the materialization of 2016’s Working Group on Digital Currencies.
The working group had been established by the three organizing parties to analyze descriptive information concerning the crypto trade.
This data was specific to the applications of virtual money in supporting criminal activity across the globe.
The 2016 convention sought to brainstorm on the frameworks needed to unravel and recover illegal digital transactions.
The convention led to the establishment of critical intellectual settlements. These conclusions sought to establish a common ground for nations in the universal crackdown against virtual currencies.
Outcomes of the Workshop
First, the parties agreed on the significance of information sharing in the war against the crypto trade.
Concerning this, institutions were expected to relay relevant data across appropriate media to ensure interagency uniformity in fighting the proliferation of illegal transactions conducted with virtual currencies.
Particularly, Europol and Interpol were recommended as essential channels for disseminating information about money laundering rings and cryptocurrencies.
Second, the workshop agreed on the importance of constricting regulation measures as a way to suffocate the expansion of criminal activities linked to the crypto trade. Cryptocurrency exchanges would be required to operate in accordance with strict guidelines provided by national financial sectors to frustrate efforts made in supporting terrorist activities through virtual money trading.
The meeting also echoed the importance of understanding the concepts of digital currency and encompassing the same in legal frameworks provided by bona fide countries.
Regarding this, a precise definition of exchanges, cryptocurrencies and wallets would be critical in regulating the crypto industry.
Additionally, the workshop expressed its reservations concerning a fundamental feature of popular cryptocurrencies – advanced anonymity.
The attendees concluded that nations needed to discourage the development of digital currency mechanisms that enable the anonymity of transactions.
The rationale was based on the difficulty of law enforcement efforts to curtail international criminal activity stemming from the inability to identify and trace illicit transactions.
Combatting Crime and Terrorism
The general approach of the January 2018 workshop was primarily an offensive against cryptocurrencies.
This was explained with reference to the increasing use of cryptocurrencies to finance global terrorism, and Europol has been urged to advance efforts in mobilizing European efforts to combat the new threat.
Sometime in mid-2017, two of the most significant darknet markets were shut down. Before then, AlphaBay and Hansa had been regarded as the go-to online platforms for the trade of contraband items.
The two sites were known to accept payment in the form of Bitcoin and Monero, which have been hailed as dark web drug dealers’ favorite cryptocurrencies.
Europol was instrumental in this operation and has been lauded for shaking the very foundations of the crypto-savvy dark web through its activities.
Why the Hate? Banks and Fiat Currencies
The premise that “banks and governments hate cryptocurrencies” may be an understatement. A critical analysis of the role of governments in the control of money is vital in understanding justifications used in fighting the crypto trade. The relevance of governments is vested in the need to have a central authority that regulates national resources.
It is for this reason that government institutions are wary about the entry of cryptocurrencies into an arena that has long been hegemonized by conventional currencies.
Fiat denotes all forms of traditional monies provided by governments. The value embedded in fiat currencies is fundamentally supported by governmental decree, meaning that money is only valuable when a government declares it to be so.
Interestingly, this promise would be useless in most circumstances of human reasoning. After all, the foundations of fiat currencies are not solidified by tangible assets.
For example, as a country’s citizen, you cannot return money to the government in exchange for valuables such as diamonds or consumer goods like detergents.
Fiat currencies are therefore fully supported by sheer faith and the credit of a nation’s system of government.
It is the same government that regulates the flow of fiat currencies through central banks. This function is realized through the creation of monetary policies that exert influence on a country’s economic factors.
Furthermore, the government bears the final say on the transfer of fiat currencies with the intention of tracking the movement of such monies across the social divide.
This prerogative allows it to dictate the fundamental dynamics of social equality and the tracing of possible criminal activity.
Governmental control of money becomes futile when non-governmental entities create unique currencies, and this is precisely what happened when cryptocurrencies saw the light of day.
Cryptocurrencies and Cybercrime
So far, governments have continually blamed the advent of cryptocurrencies to the escalation of social vices.
This stems from the fact that virtual money offers a high degree of anonymity that is demanded by “online gangsters.” Darknet markets have widely embraced the use of cryptocurrencies as the medium of exchange in a bid to counter law enforcement efforts in catching offenders.
Various articles have implicated virtual currencies to criminal acts like the drug and organ trade, money laundering and information theft.
Agreeably, untraceable financial transactions have a high propensity to the occurrence of crime. It is for this reason that illicit darknet markets like Silk Road bloomed because of the sinister attributes embedded in the Bitcoin.
Another angle to the story is that cryptocurrencies may render the banking system useless.
Cryptocurrencies like Bitcoin do not require a banking platform for investors to transact. Bitcoin is established in cyberspace following the activities of “miners.” These individuals manipulate sophisticated computer algorithms to verify transactions involving the virtual coin.
The miners derive value by earning some of the cryptocurrency, which is stored in digital form and transacted at will without the need of an intermediary.
In this respect, the adoption of cryptocurrencies puts the entire global banking system to shame.
Most people may argue that the banks have failed civic society through exploitation, but we ought not to be tempted to lean towards one side of the coin.
While the current onslaught on cryptocurrencies may be uncalled for, banks are still crucial in the distribution of monies across the social divide.
Several questions can be raised to argue this case. For example, which other institutions would be used in the optimization of transactions involving public money? Would personal investments earn us interest over time? Such quizzes remain to be unanswered as public opinion is torn between adopting cryptocurrencies and sinking deeper into the endless realm of fiat currencies.
The Author’s Take
If asked, I would say the crypto issue presents a somewhat ambiguous dilemma. To place things in perspective, the government-funded war against cryptocurrencies is unreasonable.
The banking hatred against crypto coins is just a product of sheer fear, intellectual laziness and ignorance.
Banks do not seem to be favorably disposed to new ideas and norms, and would rather stick to the traditional means of transacting monies.
Their mentality is fastened to the past, and these institutions seem to only be interested in avoiding new challenges. This reality contributes to the continual suffering of the masses in the hands of the banks.
This is attributed to the charging of high fees to service loans, maintain accounts and engage in various other transactions.
On the other hand, cryptocurrencies have their problems. This starts with the constant threat of ever-increasing criminal activities that are difficult to combat.
Digital money is also vulnerable to issues such as double spending, which happens when digital files are duplicated. Unlike fiat currencies, verifying crypto money is difficult and information may be readily falsified.
Nevertheless, it is worth noting that centralized financial systems, banks, are highly susceptible to hacking efforts, as recent history has shown.
The crypto debate is, therefore, a function of whether one would choose to view the glass to be half full or half empty – it’s called an opinion.
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