Bitcoin and modern alchemy: in code we trust

Jeffrey Simser (Government of Ontario, Toronto, Canada)

Journal of Financial Crime

ISSN: 1359-0790

Publication date: 5 May 2015

Abstract

Purpose

This paper aims to explore the challenge posed by Bitcoin to regulators, particularly anti-money laundering regulators. Bitcoin is a crypto-currency based on open-source software and protocols that operates in peer-to-peer networks as a private irreversible payment mechanism. The protocol allows cross-border payments, for large and small items, with little or no transactional costs.

Design/methodology/approach

Case studies and case law are examined as are relevant reports by regulators.

Findings

Bitcoin is based on complex computer code supported by a robust community in a peer-to-peer network. Unlike other virtual currencies, Bitcoin appears to have obtained purchase and as such poses unique challenges to regulators.

Research limitations/implications

Bitcoin is at a nascent stage and the evolution of the virtual currency is difficult to predict.

Practical implications

Those who study financial systems, anti-money laundering regimes and asset forfeiture laws will have an interest in this topic.

Originality/value

This is a new and emerging currency; there is limited literature on the implications of this currency to anti-money laundering systems.

Keywords

Citation

Simser, J. (2015), "Bitcoin and modern alchemy: in code we trust", Journal of Financial Crime, Vol. 22 No. 2, pp. 156-169. https://doi.org/10.1108/JFC-11-2013-0067

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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