The dark side of cryptocurrencies
Virtual currency Bitcoin continues to become more mainstream, with an increasing number of brick and mortar stores and cafés accepting this digital form of payment.
Just last week, Knox Group of Companies, with headquarters in the Isle of Man, announced it will launch a residential and commercial property development in Dubai, with residences that can be purchased in bitcoins.
The announcement is an important milestone, as it ushers in a new age of payment system, not only here in Dubai, but also globally.
While digital currency will surely become the way forward for future transactions, perhaps we should take a few moments to look at the legal ramifications of such a development. Unlike other forms of currency, cryptocurrency is untraceable, as there are no serial numbers to track bitcoins, and there is definitely no central repository or single administrator. Bitcoin is pseudonymous, which means it is not pegged to a physical address, but rather to a virtual one. It is this level of anonymity that makes this digital payment method very desirable for those seeking privacy, and, of course, those with criminal intentions.
Certainly, these aforementioned attributes make bitcoin a favourite among users of the “Dark Web”.
‘Dark Web’
For those who are not familiar with the “Dark Web,” it is a collection of websites that exist on an encrypted network and cannot be found by using traditional search engines or visited by using traditional web browsers.
The “Dark Web” is exactly what it sounds like: a place where all sorts of illegal activities can occur, including buying and selling narcotics, contraband and even human trafficking. Another common use for digital currency is paying for ransom, as the digital currency is untraceable. Last month, hackers demanded HBO to pay a multi-million dollar ransom in bitcoin after obtaining huge amounts of data and sensitive information from the entertainment company. Before that, WannaCry, originally named as WanaCrypt, affected millions of computers across the world. The malware developers also demanded cryptocurrency ransom payments.
While the selling and purchasing of goods using cryptocurrency is not different from other forms of payments such as cash, credit cards and wire transfers; the fact that authorities cannot trace them is what makes them questionable.
Over the past few years, the UAE has cemented its position as a pioneer in the implementation of new technologies. While the use of bitcoins for purchasing a property certainly falls in line with our leadership’s vision to be the first in adopting technologies that would help in creating a happier nation, I don’t believe this is something that would be implemented in the UAE.