For the past few years, bitcoin proponents have claimed that the digital currency is anonymous and it cannot be tracked by anyone. Opponents have argued that bitcoin can be tracked by anyone and that potential regulations could hurt the cryptocurrency industry. It has now been confirmed that governments are indeed tracking bitcoin transactions.
According to a report from ZDNet, Australian Transaction Reports and Analysis Centre (Austrac), the nation’s governmental agency in charge of combating money laundering and terrorism financing, can now track every single bitcoin transaction that converts into or out of Australian dollars.
John Schmidt, CEO of Austrac, delivered testimony to Senate estimates Monday in which he claimed that Australia is one of the few countries in the developed world today that can track, monitor and collect all international fund transfers, including bitcoins.
“At some point, a person will be purchasing bitcoin using Australian dollars, for example, and then if they are dealing in substances or services, will want to convert those bitcoins back into the legitimate currencies of where ever they are, so they can gain the benefit of them,” said Schmidt. “Because we get the international funds transfers instructions, it is possible using other intelligence sources to identify transactions where people are purchasing bitcoins.”
Schmidt did note that many countries do share the same technological capabilities as Australia and suggested a solution to countering global criminal organizations is international cooperation, including when it comes to bitcoin since it is not backed by any government.
“Because they are not backed by government, because they are floating in the ether and there is no regulator as such, there’s a volatility and exposure there to individuals using them, which is limiting their usage, and the mere fact that there aren’t that many sites where you can use them yet,” added Schmidt. “But at this point in time, when you consider all the existing threats we face from the criminal perspective, they are not top of the list.”
Since it’s rather unlikely that bitcoin and other virtual currencies like it are going to destroy the United States dollar or other fiat monetary systems, the question has now become: will bitcoin become a viable, long-term electronic payment system? Technology enthusiasts and Silicon Valley professionals are uninterested in its currency capabilities but rather its payment options.
Nonetheless, the traditional payment network outlets aren’t scared of the potential threat and competition that bitcoin poses. American Express doesn’t believe cryptocurrencies offer security, Discover Financial Services is skeptical and Visa has noted it’s just monitoring the bitcoin situation.