Divorce's new weapon: Separating spouses using Bitcoin to hide wealth from estranged partners during court battles

Divorce lawyers have warned digital currency could be used to hide wealth

Forums devoted to Bitcoin have been filled with husbands discussing option

Bitcoin is entirely virtual currency that works without need for central bank

Digital currencies like Bitcoin are fast becoming the weapon of choice for divorcing spouses trying to hide wealth from partners during court battles, it has emerged.



A number of forums devoted to Bitcoin have been filled with husbands discussing the option of using digital currencies, a London divorce lawyer has claimed.

It comes as courts are facing more legal battles from divorcing spouses who claim the other side has tried to conceal their wealth.

It is feared that spouses could use Bitcoin to hide wealth by transferring the currency between online wallets, to friends, or to areas outside of legal jurisdiction.

New weapon: Digital currencies such as Bitcoin are fast becoming the weapon of choice for divorcing spouses trying to hide currency from their partners Ayesha Vardag said that more divorce lawyers could start including digital currency in financial disclosure orders if there is evidence they have been used.

She told the Financial Times: 'They can be used to run a parallel economy.

'People will go to immense lengths... as a spousal claim is more damaging than tax because it is half your wealth.'

Frank Arndt, head of international family law at Stowe Family Law, also told the paper that Bitcoins may need to be disclosed as an asset in divorce cases.



He said: 'Husbands are becoming more and more creative in terms of what they do to reduce their wealth and the courts are struggling to catch up. It’s just like when the internet started and it was difficult for courts to catch up.'

Bitcoin is an entirely virtual currency that works without the need for a central bank, and can be sent over the internet.



It is feared that divorcing spouses could hide their wealth by transferring the currency between online wallets, to friends, or to areas outside of legal jurisdiction

Bitcoin is a virtual currency that works without the need for a central bank, and can be sent over the internet

Coins are transferred directly from person to person and are kept in a digital wallet that can be accessed on a computer or mobile device.

Creating new coins is done through a process called 'mining' where users are rewarded with new coins for verifying transactions that take place.

The process is open source and can therefore be used by anyone, with more and more mainstream businesses now accepting the currency as a form of payment.



Courts in California are already beginning to issue search and discovery orders of assets - including digital currencies such as Bitcoin.

WHAT IS A BITCOIN? A LOOK AT THE DIGITAL CURRENCY

What is a bitcoin? Bitcoins are just lines of computer code that are digitally signed each time they travel from one owner to the next. They are the basic unit of a new online economy which runs independently of any company, bank, or government. Because Bitcoins allow people to trade money without a third party getting involved, they have become popular with libertarians as well as technophiles, speculators — and criminals.

Who's behind the currency?

It's a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto and then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as Bitcoin began to attract widespread attention, but proponents say that doesn't matter; the currency obeys its own, internal logic.



What's a bitcoin worth?

Like any other currency, Bitcoins are only worth as much as you and your counterpart want them to be. In its early days, boosters swapped Bitcoins back and forth for minor favors or just as a game. One website even gave them away for free. As the market matured, the value of each Bitcoin grew. At its height three months ago, a single Bitcoin was valued at $1,200. On Tuesday, it was around $500.



Is the currency widely used?

That's debatable. Businesses ranging from blogging platform Wordpress to retailer Overstock have jumped on the Bitcoin bandwagon amid a flurry of media coverage, but it's not clear whether the currency has really taken off. On the one hand, leading Bitcoin payment processor BitPay works with more than 20,000 businesses — roughly five times more than it did last year. On the other, the total number of Bitcoin transactions has stayed roughly constant at between 60,000 and 70,000 per day over the same period, according to Bitcoin wallet site blockchain.info.



Is Bitcoin particularly vulnerable to counterfeiting?

The Bitcoin network works by harnessing individuals' greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional Bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn't be an issue.