So they decided to form an organization and pay an ex-CIA director to lend his prestige and credibility to a report that distorts the truth and whitewashes the huge and ongoing use of Bitcoin and other cryptocurrencies as key parts of criminal enterprises.
“In An Analysis of Bitcoin’s Use in Illicit Finance, a study authored by Michael Morell, former Acting Director, Deputy Director and Director of Intelligence at the Central Intelligence Agency examines the general assertion that the Bitcoin market is rife with illicit activity.
Like all propaganda of its kind, the Morell report is all about starting with the conclusion you want – Bitcoin is great, criminals are fleeing from it! – and marshaling an impressive-sounding array of name-brand institutions and experts to say what you want.
None of the report authors have any technical expertise.
The words used in the second conclusion are one example among many: “The blockchain ledger on which Bitcoin transactions are recorded…” The way this is worded shows a lack of the most basic knowledge of how Bitcoin works, implying that Bitcoin is somehow not part and parcel of what some call the “blockchain ledger,” a phrase made up to describe one of the inextricable parts of the Bitcoin code base.
It is true, as the whitewashing report claims, that the Bitcoin ledger contains a complete record of Bitcoin transactions and is open for viewing to anyone.
There’s a little wrinkle, though, that’s the key to everything: the buyer and seller of each Bitcoin transaction are identified solely by the public side of the encryption keys controlled by the transactors.
In the introduction they talk about “…public statements from officials on both sides of the Atlantic who have suggested that Bitcoin is used primarily for illicit activities.” In fact the argument most often made is NOT about the fraction of Bitcoin used for criminal purposes, but about the fact that the nature of Bitcoin makes it DESIRABLE for criminals to use, and that criminals in fact make use of it.
The first major section of the report is “Bitcoin’s Use in Illicit Activity is Relatively Limited” The authors don’t deny that criminals like to use Bitcoin.
Only this year, after years of increasing regulations and costs with ongoing ineffectiveness, has the relevant agency started to take steps towards measuring effectiveness instead of just requiring “churning out more data that proves to be less than helpful” in actually catching the bad guys.
They manage to do so in spite of huge, costly efforts of banks, regulators and enforcement agencies, who end up catching only a small fraction of the crime.
I hope that the relevant organizations abandon the time-wasting report generation approach they’ve taken to finding financial crime in most areas other than credit card fraud and shift to a more entrepreneurial, results-oriented model with proper incentives to the participants.
I then wrote code for compilers, composition systems, operating systems, DBMS internals and applications, large scale financial transaction processing, document processing, workflow and more.