The Panama Papers and Questions on Conventional Banking.

  
It’s the start of the week and the world has been hit by arguably the largest data leaks in history: The Panama Papers.

The Panama Papers consists of leaked data from Mossack Fonseca (Mossfon), a Panamanian law firm/offshore provider. Leaked documents shows that Mossack Fonseca has worked together with clients to launder money, shield off wealth, skirt around tax, engage in arms and drug deals and sanction evasion.

The company’s director, Ramon Fonseca, stated to Reuters in an interview that the firm has set up over 240,000 offshore companies. The ‘vast majority’, as Fonseca mentioned, have been used for ‘legitimate purposes’. As a side note, Fonseca was a senior government official in Panama until just recently in March.

How did the word get out? It all started around last year when The Süddeutsche Zeitung, one of Germany’s leading newspapers, was contacted by John Doe. The anonymous source submitted encrypted internal documents from Mossack Fonseca. The Süddeutsche Zeitung received over 2.6 terabytes worth of data. The investigation became a joint effort between involving around 400 journalists from 100 media companies in over 80 countries. The documents gathered show jaw-dropping findings.

72 former and current heads of state, their families and close associates are linked to using offshore tax havens and international crimes.

Names found in The Panama Papers include Iceland’s Prime Minister Sigmundur Gunnlaugson and wife along with Ukrainian President Petro Poroshenko. Families and associates of British Prime Minister David Cameron, Egypt’s former president Hosni Mubarak, Syrian President Bashar al-Assad, Russian President Putin and former Libyan leader Muammar Gaddafi are also found in the leaked documents.

The bewildering findings on current and former nation leaders worldwide raises questions among the public on financial policies, deals and regulations that have been made. One would wonder whether the decisions made by their leaders were affected by personal interests. And if so, what are the effects towards each nation’s economy? Would people need to start making contingency plans if the economy fails and collapses again like when it last did in 2008?

There were 11.5 million documents that captured e-mails, database formats, PDFs, images, text documents. These documents show the hard truth of the rich and the powerful that have been trusted and chosen by the public. Aside from tragic, this harsh reality could be seen as ironic for those active and involved within the bitcoin community. Bitcoin enthusiasts could recall times when the digital currency was questioned, severely criticized and commonly identified with fraudulent and illegal activities.

At the World Economic Forum 2016, head of the International Monetary Fund Christine Lagarde mentioned that bitcoin and other digital currencies are a “substantial threat to financial stability”.

The Panama Papers serve as hard cold truth of the fact that digital currencies does not initiate and strengthen criminal activities. It also does not serve as a bigger threat to a country’s financial stability when compared to conventional currencies. Leaked data presented in The Panama Papers shows how conventional and centralized banking systems are historically the culprit behind the world’s past financial bubbles.

Bitcoin usage seems inevitable as the world continues to shift towards a digital economy. As the blockchain technology continues to grow and mature, bitcoins can serve more value to the public who are slowly losing confidence and trust in their national currency. Despite the potential advantages, some may argue that digital currencies will not be any safer than centralized banking. However, the independence and stability of bitcoins could be a potential way out to the problematic currency markets.

Many bitcoin critics claim that digital currencies allow easier tax avoidance for its adapters. However, The Panama Paper serves evidence that shows how currency is not the main problem: the issue lies in how it is actually utilized. Regardless of the currency being in Euro or US Dollars, tax avoidance and money laundering will continue to exist with or without the existence of bitcoin and other digital currencies.