4 Reasons The Bitcoin Divorce Panic Is Just Hype

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In a previous article we talked about the potential danger of bitcoins and other digital currencies being used to hide assets in a divorce. Unlike traditional assets, bitcoins exist only as computer code and can be transferred anywhere in the world instantly and anonymously. The new technology of digital currency appears ripe for abuse.


While the hype surrounding Bitcoins may make it seem too tempting for dishonest folks to resist, there are several limitations that may make it only a footnote in the history of financial malfeasance.

Hard to Buy

Transferring cash into Bitcoins is actually rather difficult to do. Most people buy Bitcoins from large exchanges which are registered with local and national governments. Much like banks, these exchanges require proof of your identity. They also record all your transactions and keep records which can be subpoenaed.

It is possible to buy Bitcoins anonymously over the internet, but the risk of fraud is extremely high and often involves bringing cash to a Starbucks to make the exchange. Not the safest way to buy things.

Still Have a Paper Trail

While Bitcoins are transferred in the cloud, purchases can still produce a paper trial. The money used to buy digital currency has to be withdrawn from somewhere. The large exchanges require that funds be wired from a bank account. Debits and wire transfers to Bitcoin exchanges are clear signs to a judge that money has been moved. While the paper trail may be smaller when buying and moving bitcoins, it still exists especially if you know where to look.

Price is Highly Volatile

The Bitcoin price is extremely volatile and can move as much as $200 during a 30 day span. In the last six months the price has been as high as $900 and as low as $320 per Bitcoin. $100,000 transferred to Bitcoin in January 2014 would have been worth only $35,000 in April 2014. Bitcoin’s price instability makes it very risky.

It’s Still Illegal

Hiding assets is illegal. Bitcoins may be a new and emerging technology, however, hiding assets during a divorce by any means is still against the law. Each party in a divorce is required to attest that the list of assets and property submitted is complete and true. Failing to report all assets could lead to a charge of contempt or perjury and even time in jail in extreme cases.

Taking into account the limitations of bitcoin, it may be premature to declare digital currency the next big divorce crisis issue. Hiding assets in bitcoins requires a great deal of technological skill and effort. Until the technology is more mainstream and easier to use for the average person, it will likely not be an issue in most divorces. Still, computer programmers do get divorced.

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