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^ Jump up to: a b c d "Statement of Jennifer Shasky Calvery, Director Financial Crimes Enforcement Network United States Department of the Treasury Before the United States Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on National Security and International Trade and Finance Subcommittee on Economic Policy" (PDF). fincen.gov. Financial Crimes Enforcement Network. 19 November 2013. Archived (PDF) from the original on 9 October 2016. Retrieved 1 June 2014.
Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through "idioms of use" (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses.[111] Additionally, bitcoin exchanges, where bitcoins are traded for traditional currencies, may be required by law to collect personal information.[112]
That’s why mining pools came into existence. The idea is simple: miners group together to form a “pool” (i.e., combine their mining power to compete more effectively). Once the pool manages to win the competition, the reward is spread out between the pool members depending on how much mining power each of them contributed. This way, even small miners can join the mining game and have a chance of earning Bitcoin (though they get only a part of the reward).
Bitcoins may not be ideal for money laundering, because all transactions are public.[50] Authorities, including the European Banking Authority[51] the FBI,[23] and the Financial Action Task Force of the G7[52] have expressed concerns that bitcoin may be used for money laundering. In early 2014, an operator of a U.S. bitcoin exchange, Charlie Shrem, was arrested for money laundering.[53] Subsequently, he was sentenced to two years in prison for "aiding and abetting an unlicensed money transmitting business".[43] Alexander Vinnik, an alleged owner of BTC-e was arrested in Greece July 25 of 2017 on $4 bln money laundering charges for flouting anti-money laundering (AML) laws of the US. A report by UK's Treasury and Home Office named "UK national risk assessment of money laundering and terrorist financing" (2015 October) found that, of the twelve methods examined in the report, bitcoin carries the lowest risk of being used for money laundering, with the most common money laundering method being the banks.[54]

The concept of a virtual currency is still novel and, compared to traditional investments, Bitcoin doesn't have much of a longterm track record or history of credibility to back it. With their increasing use, bitcoins are becoming less experimental every day, of course; still, after eight years, they (like all digital currencies) remain in a development phase, still evolving. "It is pretty much the highest-risk, highest-return investment that you can possibly make,” says Barry Silbert, CEO of Digital Currency Group, which builds and invests in Bitcoin and blockchain companies.
More fundamentally, miners argue that the current boom is simply the first rough step to a much larger technological shift that the basin would do well to get into early on. “What you can actually do with the technology, we’re only beginning to discover,” Salcido says. “But the technology requires a platform.” And, he says, as the world discovers what the blockchain can do, the global economy will increasingly depend on regions, like the basin, with the natural resources to run that platform as cheaply as possible.
In March 2013 the blockchain temporarily split into two independent chains with different rules. The two blockchains operated simultaneously for six hours, each with its own version of the transaction history. Normal operation was restored when the majority of the network downgraded to version 0.7 of the bitcoin software.[36] The Mt. Gox exchange briefly halted bitcoin deposits and the price dropped by 23% to $37[37][38] before recovering to previous level of approximately $48 in the following hours.[39] The US Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for "decentralized virtual currencies" such as bitcoin, classifying American bitcoin miners who sell their generated bitcoins as Money Service Businesses (MSBs), that are subject to registration or other legal obligations.[40][41][42] In April, exchanges BitInstant and Mt. Gox experienced processing delays due to insufficient capacity[43] resulting in the bitcoin price dropping from $266 to $76 before returning to $160 within six hours.[44] The bitcoin price rose to $259 on 10 April, but then crashed by 83% to $45 over the next three days.[34] On 15 May 2013, US authorities seized accounts associated with Mt. Gox after discovering it had not registered as a money transmitter with FinCEN in the US.[45][46] On 23 June 2013, the US Drug Enforcement Administration (DEA) listed 11.02 bitcoins as a seized asset in a United States Department of Justice seizure notice pursuant to 21 U.S.C. § 881.[47] This marked the first time a government agency had seized bitcoin.[48][49] The FBI seized about 26,000 bitcoins in October 2013 from the dark web website Silk Road during the arrest of Ross William Ulbricht.[50][51][52] Bitcoin's price rose to $755 on 19 November and crashed by 50% to $378 the same day. On 30 November 2013 the price reached $1,163 before starting a long-term crash, declining by 87% to $152 in January 2015.[34] On 5 December 2013, the People's Bank of China prohibited Chinese financial institutions from using bitcoins.[53] After the announcement, the value of bitcoins dropped,[54] and Baidu no longer accepted bitcoins for certain services.[55] Buying real-world goods with any virtual currency had been illegal in China since at least 2009.[56]
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