Government regulators around the world have spent the last year scrambling to prevent bitcoin from becoming the currency of choice for money launderers and black marketeers. Now their worst fears may be about to materialise in a single piece of software.

On Thursday, a collective of politically radical coders that calls itself unSystem plans to release the first version of Dark Wallet: a bitcoin application designed to protect its users' identities far more strongly than the partial privacy protections bitcoin offers in its current form. If the program works as promised, it could neuter impending bitcoin regulations that seek to tie individuals' identities to bitcoin ownership. By encrypting and mixing together its users' payments, Dark Wallet seeks to enable practically untraceable flows of money online that add new fuel to the Web's burgeoning black markets.

'This is a way of using bitcoin that mocks every attempt to sprinkle it with regulation,' says Cody Wilson, one of Dark Wallet's two 26-year-old organisers. 'It's a way to say to the government 'You've set yourself up to regulate bitcoin. Regulate this.''