Bitcoin is a strange development in the realm of economics, a non-currency with fluctuating value, and the best friend of black marketeers and money launderers across the entire Internet. Governments have been trying to get a grip on regulating the currency, but very soon Dark Wallet is going to make everything a wee bit more complicated.
According to Wired, the radical programming collective known as unSystem are releasing a powerful new piece of software called Dark Wallet that obfuscates bitcoin transactions and users more than ever before. The creators, two 26 year-old tech wizards named Cody Wilson and Amir Taaki (anarchist wizards!), have stated their intention is a nigh on untraceable flow of money from one shadowy Internet zone to another. And although government regulators have said they are being vigilant and such, the software appears to be protected by First Amendment rights, making the issue even hazier.
Dark Wallet utilizes a tool called CoinJoin to mix laundering with regular online transactions, making it exponentially difficult to trace individual transactions over the blockchain (that ledger or what-have-you where all transactions on the bitcoin network are held). Transactions seem to merge in the system, happening at the same moment, and are encrypted. The more transactions occur, the more the blockchain gets confused, transactions linking to others; CoinJoin can even be run whilst sending money from one account to another not as a transaction but as a personal transfer.
Users of Dark Wallet can also enjoy stealth addresses, so transactions are even more hidden. Anonymity is protected, and the bitcoins become super difficult to trace, making Dark Wallet a powerful tool in the already confusing and controversial discourse over bitcoins.
The impressive software, though, really is a scary project. Wilson and Taaki apparently view success as an enhanced method to launder funds, and believe that their innovations in bitcoin management will make criminal activity far easier. It’s privatization of black market banking, and it spells disaster for regulators. Pretty much any kind of criminal transaction, through Dark Wallet, will be anonymous and incredibly hard to keep tabs on. Wilson even commented that a liberated marketplace is a highly dangerous thing, this software really enabling dangers to occur in the dark.
As usual, we have a highly controversial bit of economics on our hands. Although I tend to stray a bit from anarchism, the folks creating this kind of software do make us aware of how much we are under surveillance, bitcoins are a fine example of everything being tracked (the Internet is super crazy). Anonymity can be a good thing for the future of the bitcoin, which has already faced controversy over its standing as an actual currency.
But pure obfuscation on the private level is scary because it’s completely against regulation in every way, and demonizes bitcoins as a criminal currency directly contrary to money recognized by government entities. It’s terrifying to think of what criminal organizations will be able to do when their transactions are this in the dark (Dark Wallet’s name apparently a reference to FBI warnings about the Internet). Although the software still has errors and is constantly being developed, improvements happen fast, and Wilson and Taaki seem like the kind of fellows that want bitcoins to invite controversy in the economy. Again, anonymity in the marketplace is valuable presently, but may (will) be taken advantage of here, especially when the intention is to give governments a new, shadowy opponent.