Throughout its short existence, Bitcoin has successfully confronted several challenges, such as technical issues and internal wars. It has also withstood relentless persecution from governments and powerful financial personages. However, although Bitcoin is undoubtedly not intrinsically illicit, it unfairly has a bad reputation.
Granted, Bitcoin’s image needs improvement. Many still associate the cryptocurrency with cybercrime, drug dealing, fraud, and other illicit activities. Scandals, accusations, and allegations abundantly published in the world press have helped to tarnish Bitcoin’s reputation. Conspicuous are the cases of the Silk Road, the bankrupt Mt. Gox Bitcoin exchange, as well as several ransomware acts.
But Bitcoin itself is not illegal. Indeed, according to Dr. David Cowan:
With the controversy and confusion surrounding cryptocurrencies, it is easy to forget that there is nothing inherently illegal in them.
In effect, data shows that the use of Bitcoin in illegal activities is almost negligible.
In January 2018, Yaya Fanusie, director of analysis for the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance (CSIF), released a study entitled “Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services.” The study concludes:
Less than one percent of Bitcoin transactions used for illicit activities.
Nevertheless, Bitcoin’s unwarranted shady reputation has hindered its rate of adoption and chased away big money investors.
Safeguards and Controls Will Inspire Confidence
Restoring Bitcoin’s reputation is becoming more and more urgent. Thus, a growing number of key actors of the crypto space are now debating how to restore the reputation of Bitcoin and other cryptocurrencies.
For example, Dr. Cowan in his article entitled “Cryptocurrency: restoring reputation for the future,” asserts that making cryptocurrencies mainstream would be key to eliminating illegal uses.
In this regard, Matt Bisanz, financial services regulatory and enforcement associate at Mayer Brown, says:
We still have to put more in place to build confidence, where crimes are rare or have little effect on the consumer. When you get your credit card stolen, you don’t stop using it. It has low impact. Until crypto gets to a similar level, where people are not losing these sums of money, there will always be a question mark.
However, Bisanz optimistically concludes, “the safeguards and protections will come; they will inspire confidence.”
On the other hand, Tom Robinson, co-founder and chief data officer at Elliptic, asserts that regulations and controls over exchanges would help cryptocurrencies to restore cryptocurrencies’ reputation.
Bitcoin has proved time and time again its sturdiness and resiliency. For example, continued exposure to hacking and other illicit activities is, in fact, making Bitcoin immune to such attacks. As Christian Ferri, President and CEO of BlockStar, put it:
As in every technology, hacking will be painful for some in the short term; but it will be a major driver in strengthening the crypto ecosystem, making it more secure, which is key for mass adoption.
Therefore, Bitcoin and the crypto space will eventually become stronger and more secure. Sooner or later, Bitcoin’s strength and security will foster the confidence necessary to restore its reputation.
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Author: Julio Gil-Pulgar