Cryp­to­ma­nia

Kyiv Post - - Opinion -

Cryp­tocur­rency has had a big week. At the BRICs (Brazil, Rus­sia, In­dia and China) con­fer­ence in China, Rus­sian Pres­i­dent Vladimir Putin praised the sys­tem’s value. The na­tions dis­cussed form­ing a BRICs-wide cryp­tocur­rency as an “al­ter­na­tive to other fi­nan­cial in­stru­ments.”

Ad­di­tion­ally, the Na­tional Bank of Ukraine took its first step to­wards work­ing out how to reg­u­late vir­tual cur­ren­cies as the value of Bit­coins rose and fell dra­mat­i­cally.

Be­sides be­ing a high-tech way of mak­ing safe and anony­mous trans­ac­tions, the real value of cryp­tocur­rency lies in giv­ing those ex­cluded from the world fi­nan­cial sys­tem for crim­i­nal ac­tiv­ity ac­cess to a world of shadow bank­ing.

Take Eastern Euro­pean oli­garchs and gov­ern­ment of­fi­cials, skilled at amass­ing for­tunes at the ex­pense of their cit­i­zens. Their prob­lem is how to store ill-got­ten gains. Cryp­tocur­ren­cies present a so­lu­tion. As­set move­ment can­not be traced and de­cen­tral­ized tech­nol­ogy means that no sin­gle reg­u­la­tor can be ef­fec­tive. Cryp­tocur­ren­cies are “sanc­tion-proof.” Rus­sia is, in fact, de­vel­op­ing its own cryp­tocur­rency. Some have taken no­tice. Aus­tralia’s Crim­i­nal In­tel­li­gence Com­mis­sion al­leged last week that cryp­tocur­ren­cies as­sist “se­ri­ous and or­ga­nized crime.” Not enough con­sid­er­a­tion has been given to whether pump­ing money into cryp­tocur­rency is akin to creating a bank­ing sys­tem for the world’s black mar­ket.

On the up­side, blockchain tech­nol­ogy could pro­vide a mech­a­nism of au­to­matic ac­count­abil­ity and ease for any trans­ac­tion.

But given the peo­ple who have lately started to push the in­no­va­tion and the money in­volved, it’s worth ask­ing whether this is merely a sys­tem that uses cash and gulli­bil­ity to al­low the world’s crim­i­nal syn­di­cates and tax cheats to store their shady wealth out of public over­sight.

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