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I was reading this new report by US DOJ on how digital currencies are increasingly popular with money launderers(or is it laundries?) - http://www.usdoj.gov/ndic/pubs28/28675/index.htm
The DOJ notes that digital currencies 'combine the intrinsic value of gold and other precious metals as well as the designated value of national currencies with the worldwide reach of the Internet to create an ideal mechanism for international money laundering'.
To me this statement clearly declares that digital currencies are the best thing that have happened for the criminal fraternity. They no longer have to rely on cumbersome processes of transferring money through mules and have people open bank accounts to wash dirty currency. As ever, the shadowy world is the first mover and adopted innovations to benefit from the digital revolution; leaving the legitimate world to debate on regulations and consumer security!
The report defines digital currencies as 'privately owned online payment systems that allow international payments, which are often denominated in standard weights for gold and precious metals.' This really seems to suggest that the criminal world can literally start and operate a 'parallel' digital currency system with full settlement and transfer mechanism. Who knows, perhaps there is one already operating! All that needs to be done is to 'digitise' systems like 'Hawala' and other money transfer mechanisms tailoring them to the online world and lay down the rules for settlement and exchange.
I am sure sooner or later we will stumble upon a seamlessly operating 'underworld digital currency' on a global scale while the legitimate financial world will continue to debate and get only their feet wet in the deep waters of digital currencies.
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