Bitcoin's anonymity is really a great characteristic. It enables users to use BTC in any transactions with nearly no traces. But is this really a good thing? Let us consider utilizing bitcoin in a negative way. Since bitcoin is considered currency, there is no doubt that a person that needs money will not reject bitcoin even if it involves unethical or illegal act.
Due to the anonymity of bitcoin, some uses bitcoin in a negative way [citation needed]. They can easily use bitcoin in paying others to commit crimes. They can even use bitcoin in bribery and/or money laundering. This characteristic of bitcoin are abused [citation needed] and it will never end well.
For the case of terrorism, terrorist can easily purchase weaponry from other country. With the use of transaction using bitcoin, authorities will have a hard time tracing that transaction thus, will give advantage to the side of terrorists.
This is not an impossible scenario. People can now use bitcoin in any way they want to. It's inevitable.
I share the same sentiments as above. That is why some countries do not support the use of Bitcoins because it has successfully penetrated their respective jurisdictions without requisite regulations.
I really think that Bitcoins can go a long way for the better, however, its proliferation should submit to a State regulation in order to do away with illicit businesses that come with it. Just like a normal currency which is developed as a means of exchange but is still widely used as means to create crimes, Bitcoins also have the same dilemma. Thus, the only answer is a sound regulation that will address this issue. The aforesaid regulation cannot be expected to do away with all the negative intricacies but will only somehow eliminate the unacceptable side.
Bitcoin is essentially the perfect anarcho-capitalist currency, and that's the issue that governments have with it. Trying to regulate it will do nothing to the terrorist cell or the criminal and it hurts the average user far more than anyone else. Terrorists will still get their money, criminals will go back to using cash or other illicit means, and nothing happens to really stop anything.
Regulation is not going to solve their issues, especially considering Bitcoin is used for crime that typically has very few victims and is rarely used by terrorists, aside from some high-profile cases like the Paris attacks.
