Bitcoin is misunderstood, if known at all. Just talk about it to notice. Despite more than a decade of existence, problems it overcomes and how it works remain unclear for most. This state of affairs is based on limitating preconceptions. (don't feel attacked, I'm mainly agitating straw men.)
Let's agree on words. The Cambridge dictionnary defines virtual as :
So, to be clear the word "virtual" does not designate an illusion or something that can't have any impact on reality.
Under (1), Bitcoin is virtual as it is rendered possible through the use of computers.
Under (2), Bitcoin is not virtual anymore since it started in '09.
How many baguettes must the baker pay the bricklayer for a house? This is difficult to solve without currency.
Currency is a standard for converting the value of something (object, service, domain, ..., baguettes) into a value of itself.
Bitcoin falls into that definition and is no different from fiat currencies, as people can buy pizzas, rent VPS or pay for a haircut with it.
If criminals use Bitcoin, then Bitcoin is criminal.
-- a fictitious genius
RedCross accepts Bitcoin donations. Being used by dishonest persons is not a convincing argument to discredit something. What about dollar, then? Obviously, dubious activities make eyes to Bitcoin as it can improve privacy and is easy to use. But Bitcoin is far from offering anonymity (see below).
Bitcoin is not focused on anonymity, tho it can boost privacy. Theoretically, no identity is required to make transactions. Theoretically, no Bitcoin wallet is linked to any identity.
But let's stress it again: this is theoretical.
Every Bitcoin owner possesses wallets labeled by unique identifiers looking like this: bc1q4cflj0e3hwcn5edut654je86upn37p37gut5yk.
Those unique identifiers -- the wallets' addresses, can be public, allowing anyone to take a look inside and gather information: balance and transactions history (amount emitted/received, sender/recipient addresses).
It is then sufficient to link someone's identity to a Bitcoin address to retrace every transactions made with this wallet.
Is it common? Most likely. Many platforms on the internet make it easy to buy Bitcoins, and people tend to use them to make their first purchases. Those platforms apply KYC (Know Your Customer) policies, asking to verify users' identity when opening an account. That's where anonymity gets slapped in the face.
I mean to stay simple here, focusing on Bitcoin only, but some cryptocurrencies like Monero solve the tracability problem, offering robust anonymity possibility. Also, if you are privacy-focused, it is possible to buy BTC anonymously.
Anyway, the "crime-currency" argument can't be solely supported by the anonymity postulate.
Limits of centralization is by nature a political matter, putting anyone discussing it under the yoke of subjectivity. I think my thoughts on the subject are not controversial, but make up your own mind if you consider I'm not picky enough.
With Bitcoin, we dispose of a system freed from centralized third-party institutions like banks. Let's talk about them banks. Power in their hands is unheard of. Staying extremely basic:
Not discussing further implications of those models, it is not delusional to think excessive money concentration (and we've only talked about banks!) gives rise to corruption, fraud, impunity or immoral conducts. Defense of private interests is never too far away in the human species. It is not vain innovating to try escaping it. Bitcoin pionneered one solution.
To understand it, one need to know about blockchain and proof of work.
(to be continued)