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There is a new breed of digital currencies making its way into the global digital economy. They are completely different from bitcoin and other altcoins that are based on it. These new digital currencies are known as identifiable digital currencies. Unlike bitcoin, identifiable digital currencies require the users to provide their identity and verify the same before executing any transaction.
Nobody cared about bitcoin in the early days. Bitcoin, when it was first introduced was categorized along with other digital game currencies back then. The main reason for bitcoin to gain popularity, or should we say notoriety was its widespread adoption among deep web users because of a certain degree of anonymity associated with it.
Bitcoin has come a long way since then. Bitcoin community is growing in a rapid pace and the digital currency is now widely used across the world. With increasing bitcoin usage, the very property that led to its popularity has now become a cause of concern. Bitcoin is pseudonymous in nature. Even though bitcoin transactions are transparent and can easily be tracked to wallets, identifying the person or an entity owning a particular wallet is not an easy task. It requires a lot of resources and time to come up with an ID.
READ MORE: Bitcoin Community to Hit 5 Million Mark by 2019
Bitcoin has been increasingly used by criminals and money launderers, which has led to bitcoin being referred to as the most preferred currency of the criminals. Increasing instances of cybercrimes alongside regular crimes involving bitcoin in one way or another has forced many governments and law enforcement agencies to put their foot down on bitcoin and other digital currencies. As the regulatory noose tightens around present day digital currencies like bitcoin, their growth and potential to do good is also hampered.
Identifiable digital currencies requires the users to furnish some kind of identification information, maybe their email id, phone number etc. in order to be able to conduct transactions. Users will be able to transfer these identifiable digital currencies by sending it to associated email id or phone number instead of using a long string of characters as in bitcoin wallet address. This will make transactions a lot easier and user friendly. It will also deter criminals from using these identifiable digital currencies for unlawful activities or for transferring ill-gotten wealth. These new breed of digital currencies can be made AML and CTF complaint by default, with records maintained under strict privacy controls by associated platforms will make it more regulation friendly. This will provide a much needed leeway to alternative digital currency to offer its services across the world while complying with existing regulations.
The very concept of identifiable digital currency may sound blasphemous to many ardent followers of bitcoin and proponents of anonymity and privacy. And there is still no clarity regarding its reception among the masses as these identifiable digital currencies are either still in development or pilot project stages.
READ MORE: Identabit — A New Take on Digital Currency
