Bitcoin, the unregulated, decentralized crypto currency associated in the past with online drug deals and even more unsavory criminal dealings, has now exploded into the mainstream. Once used almost exclusively by criminals to buy and sell illegal goods and services while hiding their activities from law enforcement officers, Bitcoins can now be found in the virtual wallets of ordinary, law-abiding citizens who use them to pay for everything from meals in restaurants and beer in bars to houses, cars and college degrees. However, can using Bitcoins make you more vulnerable to cybercrime?
The short answer: yes, it can. As an unregulated crypto currency, Bitcoin has appeal not just to criminals, but among regular folks who may want a greater degree of privacy attached to their purchases than credit and debit cards can allow. If you don’t want a particular purchase to show up on your credit card or bank statement, it might be best to just use cash.
Why Use Bitcoin?
Bitcoin’s widely fluctuating value is a big part of what’s made it so popular in recent months. It’s become a vehicle for investment speculators. Perhaps for good reason —during November 2013 alone, Bitcoin’s value shot from $300 a Bitcoin to $1,200, and then dropped back down to $900. Many investors can’t resist the temptation to earn a quick buck, even if using the cryptocurrency as an investment vehicle risks devaluing it entirely.
However, Bitcoin’s main appeal for many lies in its relative UN-traceability. Unlike paper bills, Bitcoins can’t be marked, and they can’t be easily traced back to a bank or credit card either, like most digital purchases. That’s what made the crypto currency so popular for criminal purchases on the Web. In fact, it was the currency of choice for Silk Road, the illegal marketplace for drugs, weapons, malware, hacking services and sensitive personal information that the FBI finally shut down last year.
Even if you’re not a criminal, you might want to use a currency like Bitcoin to make purchases you don’t necessarily want traced back to you. If you were a married person having an affair, for example, you might use Bitcoins to buy presents for your lover without tipping off your spouse. Or you might simply use the cryptocurrency to make purchases that would embarrass you if anyone ever found out about them.
Businesses can benefit from accepting Bitcoins as payment for goods and services, too. Accepting Bitcoins helps merchants get around paying steep credit card processing fees. That can be especially appealing for small businesses that operate on a tight margin.
The Case Against Bitcoin
Unfortunately for fans of the crypto currency, Bitcoin’s prospects aren’t as rosy as they seem. Even if the Bitcoin escapes being run into the ground by speculators, using it could make you more vulnerable to theft. When you pay for something using your credit card or debit card, there’s a bank or lending institution involved in that transaction. They have security measures in place to protect your financial data from theft, and they can back you up if your information is stolen and purchases are made in your name without your permission.
When you go to school online to earn your Master’s in Cyber forensics, you’ll learn about the protections financial institutions have in place to safeguard customers’ data and accounts. You’ll also learn that you have no such protection when you use Bitcoin. Since it’s not regulated, there’s no one watching over Bitcoin to protect law-abiding users if their Bitcoins are stolen. It’s much harder to trace Bitcoin activity, so law enforcement won’t even know where to look if criminals steal your Bitcoins. Since there aren’t banks or lending institutions monitoring your Bitcoin transactions, it will be hard to even identify theft of your Bitcoins. Because Bitcoins offer a level of anonymity that traditional currencies lack, they’re already attractive to criminals. Some would say that by using Bitcoins, you’re almost asking to be robbed.
The crypto currency Bitcoin has been associated with distasteful criminal activity in the past; since it’s almost impossible to trace, lawbreakers have used it to buy and sell illegal goods and services over the Internet without drawing the attention of the authorities. Now, Bitcoin has gone mainstream. You may want to think twice before buying too many Bitcoins of your own; criminals can easily steal them with little fear of ever being caught.