Posted By: Mubarak Bin Abdullah Al Sulaiti
Post Date: 14/2/2018
Revolution of the Crypto-Currencies Caught in the Crossfire between the Personal Interests and Global Economy
All of a sudden, the share value of the "Bitcoin" currency rose from a thousand dollar to seventeen thousand dollars amid the increasing concerns of the Arab and International Banking Institutions as many depositors tend to withdraw their funds from the banks in order to invest them in this virtual decentralized currency and also amid the increasing talks about the utilization of this currency in financing terrorist and criminal operations and activities worldwide.
For that reason, we will address in this article the characteristics that have distinguished this currency compared to other traditional currencies in financing terrorist and criminal activities and money laundering operations and enabled and empowered certain persons to create great wealth and fortunes in a very limited span of time without any state restrictions to their trading in the same.
In a related and similar vein, we will address the perils to which the state economies in particular and the world economy in general would be exposed due to the increasing demand for this currency from day to day as well as the risks to the World Economy after the regulation and legalization of this currency through international treaties and agreements.
At first, we would like to note that the Bitcoin Digital Currency was not the first of its kind in terms of the virtual and Crypto-Currencies as there were many similar currencies that have emerged before such as: LiteCoin, DogeCoin, VertCoin, YaCoin and UltraCoin.
Yet, what distinguished the BitCoin to serve as a fertile soil for criminal activities worldwide is the fact that it is a Crypto-Currency. Very strong mechanisms were customized to secure this currency including without being limited to its backup copies and endorsed signatures that render its counterfeiting a very difficult process. Moreover, its users maintain full control over their payments and none can proceed against them for any unendorsed claims. Apart from the aforecited, this currency is anonymous and of an unknown origin and even its inventor who bears the nickname (Satoshi Takemoto) is also anonymous in terms of whether being a person, a gang or a state and he could have generated a fortune from the Bitcoin prior the proclamation of the same.
All these characteristics have caused the Bitcoin to be the most convenient and viable means for financing criminal activities and terrorist operations particularly, as the funds generated from illegal activities require what is known as "Money Laundering". Yet, with this currency that is hard to be monitored or traced, these illegal practices will be become easier and streamlined.
As an explanatory example, there are sites on the deep web that promote and sell drugs and utilize at the same time the Bitcoin currency in consideration for the same. Accordingly, the privilege of confidentiality and privacy serves as a double-edged weapon since as much freedom it avails to people; it does the same to the criminals, as well.
The most notable illegal event that has taken place in which the virtual currency " BitCoin" was utilized was the hacking of the Qatar News Agency "Q.N.A." website as the funds were transferred via this currency to the criminals who hacked QNA website particularly, as it is an uncensored operation and the hackers' personalities can hardly be identified.
On the other hand, this currency has become the most convenient and suitable means for persons to create fortunes easily and without too much concern with regard to being traced and prosecuted by the state authorities as a result of their trade in this currency while breaking the law that forbids the trading in the same apart from the fact that it is a tax-free transaction. State authorities can only interrogate those persons about the source of their wealth generated overnight.
With regard to the damages caused or expected to be inflicted upon the Arab and international banking institutions resulting from the increasing demand for the trade in the BitCoin, there are reports recently released about the depositors' withdrawal of their funds from these banks in an endeavor to invest the same in the BitCoin currency leveraging in this regard on the generous incentives and privileges availed by this currency entailing the maximization of their annual revenues compared to those offered by the normal banking institutions.
Can the BitCoin Currency be legalized on the international level? Will its increasing international recognition have any impacts on the World Economy?
In order to reach a conclusive answer to this dazzling question, we should first discuss the necessary steps required to be taken to properly legalize the status of this currency in the international monetary system in order to meet the internationally acceptable criteria and regulations since an international decision should be taken by the international organizations to recognize this currency as a means for trading on the international level and international treaties and agreements should be executed in terms of the member states' admittance of this currency in their monetary system followed by regulations to be enacted locally endorsing the utilization of the same on the local and regional levels apart from being backed by the gold standard as applicable in the case of the bank notes.
At this point, one can dare say this currency has internationally and locally stabilized and trading in the same will be acknowledged in legal terms.
Yet, we must address in this regard two main issues namely; the fluctuating value of this currency as it has started as a humble one then elevated late 2013 AD to be with a value of $1000 US dollars per one Bitcoin Unit then depreciated by 20% after the ban enforced by China since it lacks the gold standard and as it is not connected to a state but the dealers only subject to the recognition it may receive from the international markets.
The second issue is represented in the fact that according to the newly released reports, the BitCoin currency can hardly be recognized as the dominant states that control the World Monetary System reject any idea to undermine the dollar dominating system the matter that would lead to the imbalances of the dollar-controlled world financial system.
This assumption is substantiated by virtue of Article IV of the International Monitory Fund "IMF" Charter which stipulates upon the admittance by the member states of the main purpose beyond the international monetary system as represented in providing a framework to facilitate the exchange of goods, commodities, services and funds among the member states while maintaining an unblemished and intact economic growth. It has also provided for creating a stable Exchange Rate System.
Unquestionably, the dealing of some countries in the BitCoin and the banning of the same by others will ultimately lead to the violation of the IMF treaty that have put the member states under obligation to find a stable monetary system to facilitate the exchange of goods, commodities, services and funds among the member states.
To sum up, the question remains about the future of the 'BitCoin' currency whether it will ultimately be transferred into an internationally recognized currency and act as a strong competitor to the nationally and internationally acceptable and prevailing currencies worldwide or to the contrary, it will fade till it disappears with the passage of time and remains only in the memory as an illegal means utilized by anonymous personalities to create fortunes estimated in billions of dollars!!