Bitcoin in the Headlines is a weekly analysis of bitcoin media coverage and its impact.
Despite setting off to a rather boring start, excitement peaked this week when reports surfaced that two former bitcoin exchange operators had been arrested on anti-money laundering (AML) charges in the US.
Elsewhere, bitcoin enthusiasts were yet again confronted with the everlasting – and ever-boring – “chicken and egg” debate regarding the technology’s expected advancement.
Unlike last week, however, where mentions of the technology by financial bigwigs and political figures went largely unnoticed, the last few days have been characterized by media validation of “blockchain technology”, often at the expense of clarity on the complexities surrounding the term.
The sheer amount of coverage, however, seems to once again be affected by a case of Summer doldrums.
Bitcoin takes a backseat
It’s not the first time that bitcoin has seen its reputation suffer as a result of its association with business owners who have been accused of illegal activities. Yet, this week found bitcoin taking the backseat in a high-profile case as major publications omitted prominent mentions of the technology from coverage.
Fusion’s Rob Wile explained how in 2014 hackers had gained access to customer information of tens of millions of JP Morgan accountholders.
Why is this relevant? Well, it turns out that authorities in Israel and the US arrested four individuals believed to be connected to the hack earlier this week. “Two of them allegedly ran an illicit bitcoin exchange.”
As reported by CoinDesk, the US Attorney’s Office of Southern District of Manhattan stated that Murgio and Lebedev – the exchange’s former operators – AML laws by not running know-your-customer (KYC) checks on customers. The pair were also accused of being connected to bitcoin ransomware attacks.
The news caught the attention of the The Wall Street Journal, but it omitted the bitcoin mention from its headline and subsequently buried it into the article, writing:
“The men were charged in a Manhattan federal court Tuesday. Three were accused of running a pump-and-pump scheme to manipulate stock prices, while the other two were accused of operating an illegal bitcoin operation.”
Bitcoin, however, reentered the spotlight in a piece by the Washington Post titled “Why the Justice Department is going after this Bitcoin exchange”.
“The Justice Department has arrested and charged two men in an ‘underground’ bitcoin exchange that allegedly helped tens of thousands of clients convert nearly $2m worth of the anonymous digital currency – illegally.”
The mixed approach, however, may suggest some fatigue in the idea that bitcoin’s association with criminal activities somehow separates it from other payments technologies.
Bitcoin, blockchain or both?
The media is still struggling with how to frame developments in the industry given that more enterprise institutions are expressing an interest in the capabilities of decentralized ledgers, often using the term “blockchain” to voice this enthusiasm.
At issue is that often these “blockchain projects” use the bitcoin blockchain, which necessitates the use of bitcoin the currency or some other mediating digital token such as those offered by Counterparty and Factom to access the ledger.
Such nuances are often lost in coverage, suffering from the lack of consensus on definitions for concepts relating to the early-stage technology.
Reuters’ Jemima Kelly wrote a piece with “Betting on blockchain: firm seek fortune in bitcoin’s plumbing” as its headline.
“A year ago, bitcoin was widely dismissed as little more than a way for drug dealers and terrorists to move money around anonymously. Now, some of the world’s biggest banks and companies are buying into the technology behind it.”
She continued: “Underlying the controversial web-based ‘cryptocurrency’ is the blockchain – a massive ledger of every bitcoin transaction ever made that is verified and shared by a global network of computers.”
Kelly went on to note the endless possibilities offered by blockchain technology.
“But the data that can be secured by the blockchain is not restricted to bitcoin transactions,” she said, adding: “Any two parties could use it to exchange other information, including stock deals, legal contracts and property records, within minutes and with no need for a third party to verify it.”
Still, the press has shown an increasing willingness to favor a more general definition of “blockchain” even in cases when the institution is experimenting with bitcoin’s blockchain.
Such was the case when global stock exchange Nasdaq announced it intends to launch more blockchain projects, though it is currently developing a solution with bitcoin’s ledger.
The end of cash
Still, there was thoughtful coverage that explored how bitcoin could potentially be used as a currency, as the BBC’s Rose Eveleth attempted to connect the technology to the future of cash payments.
“It’s tempting to forecast the demise of cash,” she wrote. “In fact, people have been predicting the end for physical money for nearly 60 years, with the rise of credit cards, contactless payments and cryptocurrencies like bitcoin the death knells have only gotten louder.”
Despite this, Eveleth said that predicting the complete disappearance of cash payments was premature given its continued popularity as well as the inability of alternatives to displace its position as the most widely used payment method.
Currently, the author noted, we lack an alternative that “is as convenient, reliable and anonymous” to cash.
“Bitcoin is anonymous, but currently unstable and inconvenient. Credit and debit cards are widely accepted, but they instantly connect your purchases with your person.”
Peer-to-peer payment systems like PayPal or Venmo, she added “require apps and accounts, and are still easily traceable”.
Psychological attachment to money, the infrastructure available to banks, and the need to create systems that are compatible with a wide range of merchants and consumers, “all make progress away from cash more of a slog than a spring”,” she added.
“Cash is with us, and it will stay with us whether bitcoin and PayPal advocates like it or not,” she concluded.
Pete Rizzo contributed reporting.
Drumbeat image via Shutterstock.