150 karma · joined March 9, 2011
It covers Worldcom all the way up to the recent Terra
- Laundering money in poor countries directly hurt the citizens of those countries because the government doesn't collect the taxes it is entitled to
- Most of the money to be laundered comes from illicit activities: drugs, prostitution, human trafficking. I don't have any citations here for proportions, sorry.
Update: fix formatting
Money laundering is despicable, specially when it happens at high level. And we have to admit that Bitcoin, ZCash, Ethereum (Tornado Cash) and other cryptocurrencies are facilitating that. But we're getting better at tracking that. After all, transactions are all public and once you can label one wallet address, you can perform all sorts of graph analysis and learn a lot. Contrast that with trying to subpoena banks to follow money trails.
The other aspect of this is that, like it or not, banks are not playing by the rules all the time. See HSBC laundering almost 1 billion for Mexican and Colombian cartels. See Austria’s Raiffeisen Bank enabling former Ukraine's president to steal money with offshore accounts (https://www.occrp.org/en/investigations/former-ukrainian-pre...)
We should absolutely deal with this, but the first place to start is the Bank -> Cryptocurrency (and vice versa) transfers, or as they call them, the fiat gateways. You still can't pay for stuff with cryptocurrencies so ultimately, whoever steals or launders using cryptocurrencies, will need to eventually convert back into fiat money.
Edit: correct typo in first paragraph
- a way to ensure that users of the system can't cheat by creating a vast number of nodes and inflate their "voting power" (think of a poll where you can get behind a proxy to vote multiple times because the only security is weather or not the IP voted): this is the hash-cash, proof of work computation that ensures you have real hardware behind your "vote"
- an incentive to mine and secure the network: the cryptocurrency. The amount of cryptocurrency you mined is just a translation of the energy and work you did to secure the network the same way as a banknote is a conversion of X number of hours you worked for someone.
The question, like I stated in another comment, is whether or not this distributed ledger is useful. Let's say we haven't discovered the killer use case for this yet (putting my skeptic hat). Is it fair to dismiss it just because of all the scams related to its current use ? Do we do the same for email just because there's so many phishing attacks that happen on the protocol ?
- if it's a Proof of Authority is like a way to deal with who has access to write to the db
- the distributed consensus part is well researched (Raft, Paxos etc)
The only advantage that I can think of is interoperability: you will be able to communicate with the public blockchain for point in time "backups". Also, building your internal smart contracts you can use an existing language like Solidity.