Bitcoin was introduced in 2008 as a digital asset and payment system. This is a peer-to-peer transaction taking place directly between the users and in the absence of an intermediary. There is a verification process though. The point is that the system works without a central or single administrator. It is also referred to as a virtual currency or cryptocurrency.
Since it was introduced, Bitcoin has been used widely for various online transactions, most especially among online casinos. Newer versions of Bitcoin have also been introduced. There were modifications done to ensure security and privacy of the users. In some countries, the use of Bitcoins is regulated. In other countries though, they are totally banned.
After years of using Bitcoins, it is perhaps time for governments to act and have them banned. Though they have been useful for various transactions, they have also become a haven for those who wish to do illegal activities.
This is perhaps the biggest problem with bitcoins. In the United States for example, almost everything is taxable, including income earned online. The problem with the use of bitcoin is that it does not provide a clear map of the user. It is hidden. Only the user knows their exact address and the government can’t trace it, unless they hack into the person’s account or the person has been paying his due. This amounts to millions of dollars in losses from taxable income that could have gone to the government.
The use of bitcoins has also helped in propagating black markets. Every item sold and paid with the use of bitcoins is private. All users are anonymous. It means that the products are sold to buyers without being identified by the police. This is where contrabands and other illegal items are sold without getting caught.
This has always been a problem even in the past. It was even intensified with the use of bitcoin. In order to make this transaction happen, a user simply has to make two bitcoin accounts. The first account will receive laundered dollars and bitcoins. This will then be sold to the second account. The process would make it look like there was a legitimate transaction. As long as the first account is hidden from the police, it is as if the second account has been doing legal transactions. Since there is no physical interaction or bank transaction, it is difficult for the police to trace any suspicious activity.
These are just some of the issues with the use of bitcoins. It has helped spread illegal activities through the years. Although its main goal was to maintain privacy and security of transactions, people use the bitcoins mostly for illegal activities. Though regulations can be done by the government, it is still difficult to control the transactions happening. If the government wishes to stop bleeding money away from the coffer, then the use of bitcoins should finally come to an end. Other countries have already started and the results were positive.
Featured and 1st image by computer network participants and communities. (https://en.bitcoin.it/wiki/Promotional_graphics) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
2nd image by Davidstankiewicz (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons