“Private cities" are springing up throughout the world and establishing their own cryptocurrencies allowing residents to pay for goods and services, as well as manage private data using blockchain technology. For example, self-proclaimed libertarian city Liberstad in Norway, established in June 2017, has ditched cash for its own cryptocurrency. But Cybercrime expert Yaya Fanusie, an adjunct fellow at FDD’s Center on Economic and Financial Power at the US Foundation for Defense of Democracies Center (FDD), says there is a risk criminals could hijack the cash to turn dirty money into untraceable assets. He said: “There could be a concern that if someone set up a city where they’re going to be using a token to purchase goods and services there might be some concerns that people could use that destination to launder money by purchasing services through those tokens.
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“If, for example, you’re a Russian oligarch who wants to launder money from corruption you could buy property in these cities.
“But it’s only going to be a factor if (the city’s cryptocurrency) proves successful.”
A form of digital cash, cryptocurrency uses encryption to secure transactions and control the creation of new units.
The most well-known is bitcoin but more and more spring up all the time.
Bitcoin: Coin Rivet experts analyse cryptocurrency trends
It uses cryptography, a form of secret coding originating from the Second World War, to process transactions securely.
Its major appeal is it is independence from established financial systems.
Crypto can be moved quickly and easily across borders, making it attractive to cybercriminals.
Terror groups and the shadowy extremists who sponsor them often use cryptocurrency because it is incredibly hard to trace.
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