Bitcoin is Garbage, Says Bloomberg Business Editor

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If bitcoin cannot protect criminals from hiding their identities, then what’s right in it, questions Joe Weisenthal of Bloomberg Business.

The editor lambasted the cryptocurrency, which rose to fame since its launch in 2009 for providing an additional layer of anonymity on financial transactions. Unlike a typical bank account, which associates a valid identity known to regulators and governments, a bitcoin wallet account encrypts users’ identity with nonsense alphanumeric addresses. Therefore, it becomes tougher for analysts to verify who is hiding behind a bitcoin account.

But according to Mr. Weisenthal, the myth is breaking up. He cited a federal investigation that was able to trace illicit Bitcoin transactions back to from where they stemmed. The Department of Justice this week arrested criminals accused of running a child pornographic racket on the dark web. In a press conference on Wednesday, deputy assistant attorney general Richard Downing cleared that bitcoin became a vital tool for them to arrest the racketeers.

“In August 2017 an investigation began into the illicit transactions of virtual currency on the darknet. By following the funds on a blockchain it ultimately uncovered the severity of Welcome to Video, a Tor network-based child pornography site that accepted payment in bitcoin,” said Mr. Downing.

The statements led Mr. Weisenthal, who has been a staunch bitcoin critic, to bash the cryptocurrency’s so-called talents. He said in a tweet that bitcoin could not offer anonymity to its users. It makes the cryptocurrency practically garbage because the government can – still – identify a wrongdoer.

“Until true anonymity (or near anonymity) is developed into Bitcoin, it’s still incomplete, and not delivering on its promise,” added Mr. Weisenthal. “So it’s a lame defense to say “it was never meant to be anonymous.” Nonsense. Without anonymity, there’s no censorship resistance and no store of value.”

Bitcoin Community Reacts

Mr. Weisenthal’s statements did not sit well with the staunch supporters of bitcoin. Ari Paul, chief information officer at BlockTower Capital – a New York-based investment management firm, said Mr. Weisenthal is wrong, adding that bitcoin is – at best – pseudonymous. While its transactions are visible atop a public ledger called blockchain, but they don’t have names attached.

Mr. Paul noted that authorities wait for criminals to make a mistake before they catch them. That includes transacting with entities that have their Know-Your-Customer done. The method can tie anonymous wallet addresses to the known ones, making it easier for investigators to track down the offenders.

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