Terrorists Use Bitcoin
Terrorists use smartphones. Terrorists use online social networks like Facebook and Twitter. Terrorists use the USD. Just because terrorists use Bitcoin, does not mean that Bitcoin should be outlawed. That would be the same as banning automobiles because terrorists use automobiles. The logic does not work. Bitcoin has a huge number of uses and just like anything useful, bad people will use it to accomplish their agenda. I do agree that governments will need to spend more effort monitoring the exchanges and the blockchain so that they can track and locate suspicious people.
Bitcoin is also a tool for the law enforcement agencies. All transactions on the blockchain are publicly available for anybody to see. Once an address is connected to an identity, the bitcoins in it can be tracked down the blockchain backwards and forward. The law enforcement agencies will then have clues to finding other criminals and terrorists. They could track down a network of criminals & terrorists.
I’m certain that wealthy bankers and politicians that are associated with the wealthy bankers will use this as an excuse to try to make more restrictions on Bitcoin. It will be the only tool that the bankers have to compete besides lowering their rates for their services. I don’t think the banks want to lose their largest income streams – very large salaries & bonuses depend on it! If governments start banning Bitcoin by the logic “because terrorists use it”, then they might as well ban airplanes since terrorists use them to crash into buildings. If a government bans Bitcoin with that logic, then they ought to start making it illegal for people to leave their homes since terrorists must leave their homes in order to commit terrorism. I guess the only way to stop terrorists is by stopping all people from leaving their homes. These related arguments against Bitcoin does not hold up if using reasonable logic.
Following the Chain
Imagine that you could follow the chain of where your money came from. With Bitcoin, you can do that. You can see where the bitcoins were created and to which accounts they were sent to by following the chain of transactions that led the money to you. The anonymity is that the addresses are not associated to anybody. Once the addresses are associated to individuals, then their is no anonymity. Some could argue that this is an invasion of privacy.
Once a person that owns some bitcoins is identified, that person could possibly be attached to bitcoins that were used in illegal transactions. It is possible that the bitcoins were legally obtained. It would be wise to keep detailed documentation if you are planning on doing a lot of business with bitcoins. Personally, I would recommend to only purchase bitcoins from a reputable source. If you don’t, then possibly your bitcoins could be seized by a government.
A court order could be made stating that you turn over your wallet, private key and password to authorities. This can be a good way to track down criminals online but some crimes are controversial such as marijuana. Could the authorities use Bitcoin to track down all the people that buy marijuana with bitcoins once they bust some dealer that has collected bitcoins from a large number of pot purchasers? Yes, they could. I don’t think the efforts would be made for small time criminals, but for larger more organized criminals, the authorities will have an extra tool to investigate. However, the criminals have access to the most advanced financial infrastructure to have ever existed on our planet. The general population does not even know about Bitcoin yet. However, criminals are using it everyday to transfer funds over borders instantly to anybody, anywhere at anytime.
Could courts ban transactions from being processed if they know that those funds are illegal? A court has jurisdiction over its own borders. Will the miners listen to those court orders? If the transactions in the history mapped to some bitcoin in an innocent persons wallet by legal transactions, could that money be seized? With the USD, money that was stolen can be seized by authorities. I’m not sure how far down a chain the US government could seize dollars that originated from an illegal activity, but similar laws might be applied to bitcoin in the future.