Bitcoin AUD Conversion

blog It’s hard to believe in many ways how quickly Bitcoin has changed from being a minor Internet oddity into the mother of all crypto-currencies — a giant whose impact is creating massive tidal waves around the global financial system. Well, at least we now know how closely the Feds are tracking it. The Australian Transaction Reports and Analysis Centre (AUSTRAC) admitted in a Senate Estimates session in Canberra this week that it is literally tracking every conversion between Bitcoins and Australian dollars. Wow. Talk about privacy-invasive. ZDNet has a great story on this. The site reports:

“Australia is very fortunate among its international counterparts, in that we are one of the few countries which currently collects all international funds transfers, into or out of Australia, ” John Schmidt, CEO of Austrac, told Senate Estimates today. “… “Because we get the international funds transfers instructions, it is possible using other intelligence sources to identify transactions where people are purchasing bitcoins.”

To my mind, this exposes a security and privacy weakness of the currency conversion process with Bitcoin, in that it appears to depend on the international funds transfer system. Although I’m sure most people’s usage of Bitcoins is entirely harmless, I am sure there is substantial potential for abuse of what little privacy rights Australians have left from AUSTRAC’s comprehensive tracking system here.

I’m not sure to what extent AUSTRAC is actively storing all these transactions, or whether it just has the capacity to but is not using it unless there’s a criminal case involved. But I’d certainly like to see the agency step back a little and not track every Bitcoin conversion by default. Just because you can track every piece of Bitcoin/AUD transactional data, does not mean that you should. And perhaps an inquiry should be set up at some point into how to ensure privacy remains an important concept in the crypto-currency age. I suspect these issues will become rather less than academic as crypto-currencies become more mature as a concept.