Bad boy Bitcoin: A villain in the making of digital currency

December 15, 2017 5:16 pm


Bitcoin is earning some investors millions, even billions, and has been hailed the future of trading, an e-cash king to one day replace paper currency.

On December 15, 2017,Bitcoin hit a value of $16,531, and then the worse thing happened: Crypto terror funding.

Could it be the first sign of Bitcoin’s or cryptocurrencies’ arrested development?

Read: UAE and Saudi talk cryptocurrency banking as Bitcoin eyes $20,000

Bitcoin bombs   

Bloomberg reported that Pakistani born Zoobia Shahnaz, 27, was charged with bank fraud, conspiracy to commit money laundering.

“A woman from New York could be imprisoned for as long as 90 years for allegedly sending ISIS money in the form of bitcoin,” said Bloomberg.

“Shahnaz, an American from Long Island, is accused of funnelling $62,000 to the group via bitcoin and other cryptocurrencies earlier this year.”

Bloomberg said Shahnaz took out more than a dozen credit cards earlier this year and used the money she borrowed to buy cryptocurrency and send it abroad, citing a US indictment filed recently in federal court.

Her overall financial support for ISIS totals $150,000 according to a press release by the US Department of Justice.

Read: Bitcoin: A fraud or an ultimate game-changer?

Goldman Sachs and JP Morgan had said Bitcoin was a vehicle to commit fraud and other crimes.

The EU recently announced plans to crackdown on Bitcoin amid worries it was being used for money laundering and tax evasion.

The UK Treasury plans to force traders to disclose their identities.

Anonymity gave birth to the digital currency to begin with when it was used for illicit financial transactions by drug dealers.

Bitcoin’s potential bust

Bitcoin could potentially make you lose your shirt, turning a subject of profitable gain to one of financial loss and pain.

U.S. Federal Reserve Chair Janet Yellen recently referred to Bitcoin as a “highly speculative asset,” and that “it does not constitute legal tender” and  indicated it was unsuitable as a stable store of value.

Coin desk, an industry online platform, reported Andrew Bailey, chief executive of the UK’s Financial Conduct Authority (FCA) as telling the BBC’s Newsnight program that buying Bitcoin poses similar risks to gambling warning that people stand to lose their funds if they invest in it.

“It is a very volatile commodity in terms of its pricing … If you want to invest in Bitcoin be prepared to lose your money – that would be my serious warning.”

Read: 11 things you need to know about Bitcoin following its futures trading debut

Killer Bitcoin

Making a losing bet with Bitcoin pales to the damage it can have on humanity.

Making Bitcoins online is using up coal generated electricity which at cryptocurrencies’ current growth rate could destroy the world as we know it!

Bloomberg said the tedious creation of every digital Bitcoin by private computer networks uses massive energy and creates serious air pollution.

“Eight 100-metre-long metal warehouses in northern China are a case in point. Bitmain Technologies runs a server farm in Erdors, Inner Mongolia, with about 25,000 computers dedicated to solving the encrypted calculations that generate each bitcoin. The entire operation runs on electricity produced with coal, as do a growing number of cryptocurrency “mines” popping up in China,” it said.

Read: Bitcoin aftershocks: Don’t mortgage your house just yet!

“The global industry’s power use already may equal 3 million US homes, topping the individual consumption of 159 countries,” according to the Digiconomist Bitcoin Energy Consumption Index, as reported by Bloomberg.

And as more Bitcoins are created, the difficulty rate of token-generating calculations increases, as does the need for electricity.

Total electricity use in bitcoin mining has increased by 30 percent in the past month, according to Alex de Vries, a 28-year-old blockchain analyst for accounting firm PwC.

“The energy-consumption is insane,” said de Vries adding “If we start using this on a global scale, it will kill the planet.”

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.



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