This article represents only the personal thoughts of its author by his own capacity, and does not extend to represent any other firm/body opinions nor to be regarded as a legal or business advice.

With this innovation era, we are living in and with all the stunning tech we are experiencing every day, a very attractive concept is massively occupying the minds of the youths around the world, running behind having even small portfolios of shares in crypto currencies that are initially offered in some countries’ markets. The question is, will that be certainly realizable in future?

In this article, I am summarizing my reading for the original proposed model of the cryptocurrency, which was put together by a mysterious person or maybe group of them “Satoshi Nakamoto” back to the end of October 2008, and the synergy of correlating that model with the financial crimes and the anti-money laundering activities we are witnessing all over the world.

The model was built on two main pillars; the first is that phenomenal and sexy for capital liberty extremists in the world; which is summarized in processing peer-to-peer cash transactions without involving any third trust party like financial institutions or regulators who are verifying the legitimacy of such transactions in our nowadays world. Although the concept by itself could be envisaged as a very easy going to replace small/medium cash transactions, however, it could implicitly be catastrophic for large scale transactions that could involve money laundering and fund transfer from one jurisdiction to another.

The proposed mechanism is to operate the system by having block chains of on timestamp proofs of works for all transactions processed by each crypto currency, which in its tern, translated into codes and then aggregated in blocks with hash keys.

Although this approach would in certain circumstances enable any peer to peer to avoid any double spending, however, this could only serve to fulfil that short-term goal of disallowing double spending, and does not extend to verify the history of transactions occurred amongst numerous number of users and the legitimacy of the hidden transactions behind those hash codes. This would lead us to the second pillar of the model, which assumes that the nodes will act transparently and in a good faith; which is pretty much doubted to occur in real world situations with all the opportunistic dogsbodies and hackers, all around the world, who are waiting, with a great appetite, to run such system to prove the contrary.

The model is purely a trust based system, that could be manipulated. Although some body could be able to avoid being compensated by a double spent crypto currency, however, this is certainly not enough at both micro and macro levels. I can imagine a world where people would find themselves intuitively obliged to only serve their own individual interests than to collaboratively protecting the system they are living in.

Corporates might find themselves in conflict of interests of some lucrative and tempting opportunities, that could jeopardize their compliance with the regulatory requirements in different jurisdictions, and that trade off might sometimes just lead to disastrous consequences. While history is busy repeating itself in a world that is suffering from what ought to be predicted financial crises, and tremulously tensed geopolitical scenes across the West and the East, financial systems and markets are struggling in spite of all the heavy regulations set up by different supervisory authorities, watchdogs state bodies, central banks and even states all over the world.

At the same time and over the recent history we witnessed numerous allegations of anti-money laundering activities toward large financial institutions, such as the “Danske Bank Scandal” of claiming approximately EURO 200 billion of suspicious anti-money laundering activities, through its branch in Estonia over the years from 2007 until 2018, in spite of all the regulations and the compliance requirements set by all different heavy regulating bodies, that govern the financial system in Copenhagen.

Many other class A financial institutions are suspicious by now, or investigations have been already started in different others.

Having said that, how do you envisage the outcomes of removing the third trust party (the regulator) from the financial system equation to solely deploy a crypto currency model in the future?

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