The FBI sees the anonymous Bitcoin payment network as an alarming
haven for money laundering and other criminal activity — including as a
tool for hackers to rip off fellow Bitcoin users.
That’s according to a new FBI internal report that leaked to the
internet this week, which expresses concern about the difficulty of
tracking the identify of anonymous Bitcoin users, while also
unintentionally providing tips for Bitcoin users to remain more
In the document, the FBI notes that because Bitcoin combines
cryptography and a peer-to-peer architecture to avoid a central
authority, contrary to how digital currencies such as eGold and WebMoney operated, law enforcement agencies have more difficulty identifying suspicious users and obtaining transaction records.
Though the Bureau expresses confidence that authorities can still
snag some suspects who use third-party Bitcoin services that require
customers to submit valid identification or banking information in order
to convert their bitcoins into real-world currencies, it notes that
using offshore services that don’t require valid IDs can thwart tracking
by law enforcement.
Bitcoin is an online currency that allows buyers and sellers to
exchange money anonymously. To “cash-out,” the recipient has to convert
the digital cash into U.S. dollars, British pounds or another
established currency. Bitcoin is used as a legitimate form of payment by
numerous online retailers selling traditional consumer goods, such as
clothing and music. But it’s also used by underground sites, such as Silk Road, for the sale of illegal narcotics.