Silk Road Trial: Fate of Drug Exchange Reveals Bitcoin Flaws
J Thoendell stashed this in Cryptocurrency
As an unregulated currency, Bitcoin appeared to be a natural fit for the illicit drug market. But while Bitcoin is anonymous, it isn't untraceable. When users convert bitcoins to hard currency, their name becomes linked to a "public blockchain" that comprises the entire transactional history of the bitcoin. This would be equivalent to a $20 bill containing a comprehensive history of every person who has touched it since emerging from the printing press. These public blockchains make it very easy for law enforcement officials, once users' identities are compromised, to understand the full extent of their illicit activity.
...and therefore Bitcoin seems like a massive setup where criminals accidentally reveal themselves.
Meanwhile there's still no legal use for which Bitcoin is better than the existing alternatives.