Yup, there is the issue of converting cash to bitcoins, which requires that you have an account at an exchange, which means there’s a money trail of sorts related to that account and getting the cash into it. No doubt there are a number of clever mechanisms to hide one’s identity in that cash-to-deposit step, but I wouldn’t have a clue.
However, once the money is in bitcoins, it’s pretty easily exchanged and transported.
And, of course, there’s the issue at the other end, in a different form. If you keep coming up with bitcoins to sell on an exchange, the Feds might wonder where you’re getting all these bitcoins, and why you’re not paying taxes on the income from selling them. (Gosh, Mr Agent, I’m taking a loss!)
But due to my 2nd paragraph above, even if the one cashing in gets caught with unexplained income, it isn’t easy for the Federales to tell from whence it came. So, they can bust him on something, but not the actual offense. Presumably … unless it’s the same guy, and they find the account he uses to convert cash to bitcoins. I suppose that would be too sloppy to be useful.
There’s a tangential issue I’ve wondered about. In theory, bitcoins would be a great way to get money out of a closed economy. For example, I knew a South African who was thinking of relocating to Australia, back in the 80’s. At that time, he’d have to leave his bank account behind, and as the owner of a successful small business, that wouldn’t be ideal. Would bitcoins have saved him? (Turns out the revolution he feared was forestalled by Mandela and DeKlerk, a much better save.)
As I see it, they’d help, but you’d get mauled by the exchange rate, in any situation where people are trying to get wealth out illegally. The demand for bitcoins would be much higher in that currency. But I suppose anything is better than nothing, so anyone in-country with a source of out-country currencies would reap the benefits.