ATANU BISWAS, 04 April 2021
The US Treasury described Bitcoin a “decentralised virtual currency”. For every transaction through Bitcoin, for example, some personal information from the user is used to create a kind of password. A ‘hash’ is given for every Bitcoin transaction, with a ‘public key’ and a ‘private key’. Each of these keys is inverse to each other, but it’s not easy to derive one from the other. The ‘public keys’ are available on public domain. Details of each transaction report are available in the database called ‘blockchain’. It is distributed across and maintained by nodes (computers). From this open source, anybody can tell how many Bitcoins are traded at a public key. But, nobody knows who the owner of those Bitcoins is as the security of the ledger cannot be broken. Anonymity and privacy are the characteristics and also the potential danger of cryptocurrencies.
In fact, there have been money laundering charges using Bitcoin, there were shadows of cryptocurrencies in the supply of money for terrorist activities, and, in ransomware attacks, hackers often steal and encrypt files and demand money in Bitcoin. Many find resounding similarities between the Bitcoin and ‘hawala’, a trust-based system of transferring money in a parallel arrangement avoiding the traditional banking system and escaping taxes. Consequently, the bid to put the Genie back to the bottle was the writing on the wall.