Okay, so, the Nobel Prize for Economics is not technically a Nobel prize since it is funded by the Swedish bankers, not the Nobel Foundation. Still, they call it that because the Nobel committee selects the winner. For 2016, Satoshi Nakamoto, the inventor of BitCoin, is being nominated.
Satoshi Nakamoto might not even be a real person, although BitCoin administrators say he is. He, if he is a “he,” is technically not the inventor of BitCoin but the inventor of cryptocurrency.
Cryptocurrency are any currency that exist digitally, uses a system of recording on a public registry record transactions and there is no central recorder. It is completely decentralized. There is one additional fact about Nakamoto’s invention that is unique: money supply. There is a finite amount of currency out there and it must be “discovered” by solving a mathematical problem in conjunction with taking on the server cost of recording BitCoin transactions. Basically, anyone can be part of the central bank because anyone can “create” money… kind of. They call it mining because it is more like mining for gold because the finite number has already been created.
There are many other cryptocurrencies out there, but BitCoin was the first to use Nakamoto’s system and it is the most prevalent.
Currently, a single BitCoin costs about $375, but it once was at $1,147.25. When I first heard about it, before all the craze three years ago, it was worth just pennies. I heard about it because it was a major crime facilitator. It allowed people to buy and sell drugs without leaving a financial trace. Of course, there is still the thorny problem of having to give/receive the drugs, but with BitCoin there was one less piece of evidence of it. It was safer than cash because the transactions can be tied to specific accounts, making it impossible to steal.
BitCoin and other cryptocurrencies are an experiment in decentralized banking. The current boom in payment technology are also decentralizing the banking system. While having control over our own financial transactions is good, a decentralized banking system comes with other problems we might not yet be ready to face. Such things as financing murder and terrorism, which does happen with cryptocurrency. The statistics are not out there to show how much of cryptocurrency is used for such transactions, but the intelligence agencies are doing their work to find it.
Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE.