What does the Bitcoin digital currency have in common with blood diamonds? They are both manipulated by criminal organization to fund their nefarious activities.
Let’s say you have been in a relationship with a kind, thoughtful and beautiful woman who deserves nothing less than a diamond engagement ring. The last thing you want to give to the woman of your dreams would be a blood diamond as part of your marriage proposal.
Blood Diamonds and BitCoins
Blood diamonds are those precious stones mined in far-off war zones, particularly in politically unstable and impoverished African nations. A blood diamond operation is typically conducted by criminals who take advantage of armed conflicts to acquire weapons and force civilians to work as miners under the threat of violence. In many cases, child labor is used to mine blood diamonds.
You can avoid getting your girlfriend a blood diamond by conducting research and due diligence at the jewelry shop. You want to make sure the precious stone was not mined in the Democratic Republic of the Congo, Angola or Zimbabwe, and you may want to spend a little extra on De Beers diamonds since they have been vetted.
When it comes to buying Bitcoin, the due diligence process is not as straightforward as that of blood diamonds. You may think that the blockchain, the public ledger that is used to track Bitcoin transactions, will help you establish the provenance of the digital currency you acquire, but this is not the case due to exchange systems such as Coinbase.
In a March 2017 article published by Forbes, respected columnist Jason Bloomberg reported that the Internal Revenue Service served a subpoena upon Coinbase as part of an ongoing investigation into systematic tax evasion that is being facilitated by Bitcoin exchanges.
Bitcoin Criminals to Avoid Taxes
Tax evasion is the least of the crimes that are being financed by Bitcoin exchanges; after all, this is the extortion currency of choice demanded by ransomware scams. Jason Bloomberg also pointed out that virtually all the illegal marketplaces for drugs and weapons that operate in the Dark Web also choose Bitcoin due to the veil of anonymity that this cryptocurrency provides. Furthermore, criminals can use Bitcoin exchanges to quickly and secretly convert their ill-gotten gains into dollars and euros.
The high value of Bitcoin is not driven purely by speculators; the fact that this digital currency is being used by criminals is also contributing to its inflation.
With all the above in mind, consumers who choose Bitcoin should consider its similarity to blood diamonds. The decentralized aspect of this currency does not help in terms of ethical use, particularly when there are better options such as OneCoin, a digital currency with a private blockchain that features Know Your Customer rules.