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January 16, 2018, 07:00:14 AM |
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That's because of some basic differences between Bitcoin and a conventional currency such as dollars or Euros. Bitcoin and other cryptocurrencies, such as Litecoin and Ethereum, are wholly digital forms of cash stored in so-called wallets. Like other files, Bitcoin wallets can be stored locally, say on a hard drive stuffed under a mattress, or in the cloud.
And like dollars, Bitcoin can be lost or stolen.
The majority of Bitcoin users are law-abiding people motivated by privacy concerns or just curiosity. But Bitcoin’s anonymity is also a powerful tool for financing crime: The virtual money can keep shady transactions secret. The paradox of cryptocurrency is that its associated data create a forensic trail that can suddenly make your entire financial history public information.
Bitcoin's privacy properties are a kind of paradox: Every Bitcoin transaction that occurs in the entire payment network is recorded in the "blockchain," Bitcoin's decentralized mechanism for tracking who has what coins when, and preventing fraud and counterfeiting.
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