FBI Fears Bitcoin As Target For Money Laundering
Bitcoins are a virtual currency that was created by Satoshi Nakamoto in 2009. Bitcoin is also the name of the open source software that the currency was built on and the P2P network used to run the software. Millions of dollars of Bitcoin transactions take place every year. The FBI fears that the Bitcoin payment network could be a way to launder money and other criminal activity like hackers stealing from fellow Bitcoin users. According to a leaked FBI report, it would be difficult to track and identify anonymous Bitcoin users.
The leaked report is titled “Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illicit Activity.” Here is a copy of the report from Wired: [link]. The document was dated April 24th. Bitcoin combines cryptography and a P2P architecture to avoid a central authority.
The FBI is confident that authorities can still find suspects that use Bitcoin services that require customers to submit valid information or banking information in order to convert Bitcoins into real-world currency. Using offshore services that don’t require valid IDs can throw off law enforcement agencies though.
To generate Bitcoins, a user has to download and install free a Bitcoin software client to their computer. The software generates Bitcoin addresses or accounts, which is a unique 36-digit string of numbers. The currency is then stored in a virtual “wallet.”
To send Bitcoins to each other, the send needs to enter the recipient’s address and the amount of Bitcoins that they want to transfer to the address. As of last month, there were over 8.8 million Bitcoins being circulated at a value of about $4 to $5 per Bitcoin.
“If Bitcoin stabilizes and grows in popularity, it will become an increasingly useful tool for various illegal activities beyond the cyber realm,” said the FBI in the report.This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry