Blood Diamonds vs. Bitcoin
Cryptocurrency has been trending the news a lot recently. The idea of using digital assets is appealing for several reasons, among them being more freedom than what centralized banking systems currently offers. But is there a downside to these new payment systems? One Forbes columnist, Jason Bloomberg, seems to think so. In one article, Bloomberg compared Bitcoins to blood diamonds, warning consumers not to participate in this type of system.
The Use of Conflict Resources
So what are blood diamonds and how do they compare to Bitcoins? A blood diamond is a conflict resource that is used to finance war efforts. Anyone who buys a diamond may be inadvertently funding a warlord in countries like Sierra Leone or the Ivory Coast. Bloomberg makes the point that using Bitcoins could be similar to buying diamonds, in that consumers could be accidentally participating in a system that aids criminals.
How Does Bitcoin Veer Into Crime?
While there have not been any scamming accusations against Bitcoin’s owners, there is still a strong association to crime. There has been a usage of bitcoins among cyber criminals, particularly drug dealers and ransomware extortionists. The internet currency is also being investigated by the IRS, with Coinbase being ordered to hand over transaction records from 2013 to 2015. Coinbase, Bitcoin’s wallet service, is being searched as a part of a larger investigation of tax evasion.
As Bitcoin’s critics continue to speculate over the currency, the Forbes article claims that the only reason its value is so high is because of criminal use, stating: “On the contrary – the only reason it has value to anyone is because of the underlying value as a medium of exchange for lawbreakers. If we could flip a switch and eliminate all illegal uses, there would be nothing left of the cybercurrency.”