Looks like you are describing conventional cash! ;) Any kind of currency allows criminal actions...

check for example this: http://www.nbcnews.com/business/report-hsbc-allowed-money-la...

and this: http://www.guardian.co.uk/world/2009/aug/17/cocaine-dollar-b...

I can't. I think criminals will find their way with Bitcoin or without it. It's easy to fall for the easy argument: "the standard banking/monetary system is even worse, so bitcoin is ok". As a small example HSBC was considered too big to jail (they laundered last year about twice the size of the Bitcoin Economy, helping criminals, drug lords, etc), and only got a slap on the hand (a $1.8bn fine). The powerful can launder their money, do tax evasion, use tax havens ... now it's available to all technicaly skilled ones (good or bad?). Drugs sold on silk road were evaluated (http://arxiv.org/abs/1207.7139) last year to about $14m/year ... a good 20% - 30% of the bitcoin Economy, so yes it's looking pretty tainted so far. I would however highlight one innovative point: If you slip (leave any trace, don't use TOR, use a physical address, leave your IP), the community can track you down! And I think it will happen. Because ledgers are public, you can make algorithmic criminal enforcement :)(for those criminals or corrupt politicians who are not careful enough)

Well said.

I also think criminals will avoid it like the plague. Bitcoin could conceivably tell law enforcement everywhere you received money from and everywhere you spent it. I realize it is one long number transacting with another long number, but law enforcement have computers too, and they have time on their side. Using bitcoins could be like leaving DNA on the scene of the crime - probably not a good idea if you want to get away with whatever you are doing.

If I understand the idea correctly, using a different key pair for every transaction should help mask user histories. Not sure if this is easy in practice.

Not doubting you at all, but can you link to the evidence that criminals are using it? Other than Silk Road, which I'm already aware of.

Curious to read about the evidence, is all.