Cryptocurrency is back in the news.

Decentralized digital currency like Bitcoin has been hailed as a radical technology that will shake up global financial markets by some, and by others, is presumed to be a digital tulip – having created a financial mania over an intangible asset without any intrinsic value. This debate has created a swath of speculation since its inception in 2009. And with a 24/7 market that is volatile  and full of booms and busts, these zeros and ones can mean big dollars for buyers and miners alike.

Cryptocurrency – a digital form of currency using a blockchain, or “distributed ledger” technology, relies on complex cryptography to secure peer-to-peer transactions across the network. Miners, use computing power to hash algorithms and solve digital equations to confirm transaction validity and are compensated with a “block reward” or a piece of cryptocurrency.

Bitcoin, (BTC) is the first and currently leading cryptocurrency. Bitcoin is kept on electronic devices and store Bitcoin in a digital wallet. These can be on a smartphone, desktop – or tablet computer. Bitcoin transactions are peer-to-peer, so there’s no intermediary or bank facilitating the transaction. This means funds can’t be frozen or charged without explicit permission by the owner. While this isn’t foolproof, as accidents or hacks can happen, it’s encouraged to exercise caution when handling digital currencies like Bitcoin.

For example, if you were to have bought $100 worth of Bitcoin in 2013, that same Bitcoin would be worth roughly $15 million in October of 2017. These exponential growth patterns are very alluring to some investors, whereas others are skeptical due to the volatility of BTC has shown by also crashing over 50% in a single day.


However, some investors are wary. Unlike Gold, Bitcoin is not a tangible physical asset. But like Gold, Bitcoin’s supply is limited (roughly 16.5 million with a cap of 22 million) – and cannot be easily counterfeited. And also unlike Gold, Bitcoin is easy to transact in large quantities. This makes it a potential storage of value, as well as transfer of wealth, which is appealing to many investors.

And similar to Gold, Bitcoin isn’t exactly convenient to buy a cup of coffee with, as transactions can take up to hours to verify depending on network congestion. (Can you imagine trying to buy a cup of coffee with Gold? Is this real? Weigh it on site? No thanks!) This is one of the main elements of Bitcoin’s ongoing development. And recently, Bitcoin’s source code had a “hard fork” – creating a new, duplicate blockchain known as Bitcoin Cash. Bitcoin Cash, or BCH – was created to help handle transactions faster, by increasing the block size which miners are able to verify. This caused controversy in the community, creating ‘camps’ – some who agree with larger blocks, and others who believe this theory goes against the original intention of Bitcoin.

However, since the hard fork in August 2017, Bitcoin’s price has almost doubled.

And Bitcoin is no longer alone in its meteoric rises and crashes, with some market days experiencing over a 40% drop. Other digital assets such as Ethereum, Litecoin, Dash, and Monero, have also seen explosive growth in 2017. And with these new coins, also brings new technology.

Ethereum, (ETH) another decentralized cryptocurrency – is designed for the creation of smart contracts and decentralized applications. Using these two technologies, Ethereum developers are able to create applications that do not rely on a single point of infrastructure to keep them live. And smart contracts allow for transparent management of transactions, both privately and publicly, between parties. All of this is programming using the development language Solidity, and in a virtual machine, known as the Ethereum Virtual Machine.

Commercial Crypto?

Corporate financial investigations often involve individuals attempting to conceal assets from debtors. These can be properties, wealth, or communications. And cryptocurrency, given its presumed anonymous nature, are inherently difficult to track technologies, and can often be overlooked as a store of funds in a civil or business disagreement.

Cryptocurrency is also very easy to send from one place to another in short notice. And while most purchases and sales are made through online exchanges, or over-the-counter sales services, there are networks set up to exchange cryptocurrency in person, for cash.

This can make it extremely difficult to track. But not all cryptocurrencies are created equal in their anonymous nature. Most specifically, Monero (XMR) is notorious for its untraceable technology. By using ring signatures, and one-time addresses, the transaction is both secure, and nearly impossible to trace.

Bitcoin, on the other hand, incorporates transactions on a distributed ledger that are publicly transacted. And while the identity of the user is not necessarily revealed, the two wallet addresses (or more) that are involved in the transactions are actually visible by the general public. However, those wishing to remain anonymous and use Bitcoin do have other options, such as a method called “tumbling” – which works similarly to other money laundering schemes by intermingling illegitimate funds with legitimate transactions.

The future for cryptocurrency is still to be determined. With such an enormous amount of both support and skepticism worldwide, it is going to be interesting to watch unfold. Some governments are openly opposed to decentralized digital currencies roaming free in their country, whereas others such as in Dubai – have started to embrace cryptocurrency by implementing a national digital note.

The skepticism is very similar to that of the Internet in the early 1990’s, where scalability, security, and ease of access were all issues preventing the Internet from allowing for commerce and fast, predictable performance. In the case of cryptocurrency, there is still much development to be made. Currently, the Bitcoin network handles roughly 7 transactions per second, whereas VISA processes about 2,000 and upwards of 56,000. Ethereum developer, Vitalik Buterin claims “in a couple years, blockchain transactions could exceed those numbers.” This will be imperitive as we move towards the implementation of Internet of Things (IoT) devices, and the need for “micro-transactions” increases, as well as the development of permission-based devices.

How to prepare?

Just because encryption and cryptography are extremely effective at what they do, does not mean they’re foolproof. A single user error can bring down a house of cards. One example, is the case of black market website, AlphaBay. Even using high-profile and controversial hosting service CloudFlare, website encryption and anonymous transactions, the massive organization specializing in illegal dealings was eventually brought down by the shortcomings over the creators.

Cryptocurrency might have enormous potential for both technologists and investors alike, but if the research and due-diligence isn’t done, then that is when funds go missing.

At CIS, we are frequently asked how best to deal with cryptocurrency being used to hide assets. We are experienced with situations exactly like these, and the methods of retrieval are similar as they would be with any physical asset. Through a refined process of due-diligence, data mining technologies, and financial investigation, we are able to retrieve assets that may otherwise be lost.

If you’re looking to learn more about cryptocurrency, follow us on – a cryptocurrency powered social network. It’s a great channel to earn cryptocurrency for curating and creating content, and we are hoping to share more insights from our experiences in the commercial collections and financial reporting perspective.

Featured Article by: V12 Marketing