The latest buzz in the fintech space is the advent of the virtual currency. As consumers begin to see the potential in these currencies, central banks around the world are working on digital alternatives to cash. Specifically, the European Central Bank (ECB) is tinkering with a digital currency of its own.
This is a good thing, as it means that the ECB has a role to play in the emerging world of digital assets. In particular, a central bank has a responsibility to ensure that inexperienced investors don’t opportunistically invest their hard-earned cash in crypto-assets. However, the same cannot be said for the criminals who perpetrate illegal activities using the aforementioned coins.
For instance, the world’s largest illegal Darknet marketplace was shut down by the German police. A handful of the more than a million users were trading in drugs and other illicit goods. One of the most interesting facets of the digital currencies is the possibility of capital flight, a feat that has long been difficult for banks, particularly in the face of the onset of economic recession.
There is no doubt that the Bitcoin and other cryptocurrencies have changed the way we conduct our everyday business. These digital currencies offer an impressive degree of anonymity, making them highly attractive to both law enforcement and criminals alike. Indeed, it is not surprising that the aforementioned darknet market was a hit, as its low transaction cost allowed users to snag a number of bargains. Similarly, the blockchain – a network of digital ledgers that store all records in a decentralized, peer-to-peer fashion – is a boon to law enforcement. While the Darknet was the first place to tout the novelty of a shady online exchange, the digital currency is now the go-to source for a number of legitimate purchases.
Of course, the aforementioned flurry of transactions entails a number of drawbacks, not least of which is the need for a nimble and efficient system to verify the legitimacy of the transaction. To address this, the aforementioned FTX (an acronym for Federal Trading Exchange) is on the radar. But as with many such products, the FTX isn’t a cure-all for crypto-related sins.