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Unlike credit card transactions, which leave a digital trail, Bitcoin transactions are designed to be anonymous and untraceable. When you transfer Bitcoins to someone else, it is as if you handed over a paper bag filled with $100 bills in a dark alley. Sure enough, as best as anyone can tell, the main use of Bitcoin so far, other than as a target for speculation (on the markets), has been online versions of those dark alley exchanges, with Bitcoins traded for narcotics and other illegal items (Krugman, 2013).
1. Introduction
The Library of Alexandria, by the third century BC, was believed to hold the sum of human knowledge; today there is enough information floating around the world, big data, to give every single person alive 320 times as much information as that great library held, 1,200 exabytes worth (Cukier and Mayer-Schoenberger, 2013). Big data offers unique opportunities to solve problems, potentially threatens our privacy and create unique challenges. With oceans of data floating around, governments in particular have found it challenging to keep track of their secrets. Consider the drama in 2013 surrounding Edward Snowden, who worked for a National Security Agency contractor. In May 2013, he landed in Hong Kong with at least four computers loaded with US government secrets. In June, he met with reporters and leaked a number of documents that revealed that the US government had accessed data and documentation from telecommunication entities, like Verizon, and Web sites like Google and Facebook. At the time of writing, Snowden has fled to Moscow where he remains (Gidda, 2013; Myers and Kramer). A curious link between Snowden and a virtual currency, called Bitcoin, emerged as a lesser known part of the narrative. When WikiLeaks founder Julian Assange praised Snowden as a hero, Bitcoin donations to WikiLeaks increased from $20 a day to $700 a day. WikiLeaks, an organization devoted to whistleblowing, had initially been funded by donations through credit cards and PayPal, a source of funding choked off in 2010; the organization now accepts Bitcoin (Ross, 2013; Grinberg, 2013). This curious virtual currency, which is designed to allow anonymous transactions, has drawn serious attention from regulators, particularly in respect to anti-money laundering (AML) regimes. Bitcoin, at the moment, exists largely in the ether...