What effects could the growing use (and abuse) of Decentralized crypto-currency have on the rest of the world economy? For example, one cause for concern is the simplicity of laundering the currency. Is there any comparable event in history that could help forecast what might be in store? Is there even any cause for worry?
I want to get some outside opinions on this thought experiment.
I agree that cryptocurrency can be used to launder illicit gains, but I think this question needs to consider a broader societal context. It is estimated that there is at least $20 trillion hidden within tax havens around the world. Much of this is laundered by the very institutions (banks) now claiming that cryptocurrency is a potential space for criminal activity.
I think a good example of this is China's recent clampdown on Bitcoin within the context of capital outflows. Although it was speculated that Bitcoin trading within China could be used to avoid capital controls, the comparative amount of Bitcoin was a fraction of the overall amount. Bitcoins entire market cap is about USD18 billion, whereas Chinas capital outflows were USD220 billion in 2016.
I suppose my answer is that cryptocurrency will only ever be a cog within a broader illicit machine. Reducing criminal activities like laundering will require systemic and governance changes within our societies, starting tax avoidance and effective regulation on those who are most likely to carry it out - the super rich.
