Bitcoin is also used by criminals. After all, any form of money is. However, the claim that its main use is attributable to criminal activity is absolutely false. According to a recent study by Chainanalysis, also reported by Forbes, criminal activity attributable to cryptocurrencies in 2020 accounted for just 0.34% of the volumes traded.
Only very clueless criminals would use Bitcoin and other cryptocurrencies to receive or make payments. In fact, there are many cases of criminals caught red-handed when they tried to convert crypto to other currencies. For this reason, there are also many funds that remain “locked” in cryptocurrencies and can no longer be converted back into fiat currency because they are now reported to be derived from criminal activity and therefore under close observation by the authorities. It is recent news, for example, that as many as 10,057 bitcoins (worth about $500-600 million) from the 2016 Bitfinex exchange hack were first moved to April 2021. Meaning: it has been five years since criminals have touched them knowing they are being monitored, and as soon as they did they set off the alarm. If moving them to other accounts is something that is easily done but serves little purpose, converting them to dollars or euros will be a much more difficult.
Which form of money is best for illicit activities?
If one understands how Bitcoin and the blockchain work, it is easy to see how it is a really bad idea to use it for criminal activities: every transaction is immutable and leaves an indelible trace forever. This means that although there is a certain degree of anonymity of transactions on the blockchain, it is very difficult to maintain it when you want to convert bitcoins into traditional currencies, as almost all currency exchanges now require identification through KYC (Know Your Customer), which is essential for companies to identify their customers, the nature of their activities and, of course, the legitimacy of the source of income. It is therefore easy to identify suspicious or fraudulent behavior and equally easy to stop these fraudulent transactions before they even occur. With these security measures, it is possible to assess whether there are risks of crime (e.g., money laundering), thus increasing the attractiveness for those seeking a transparent and completely legal form of investment.
In contrast, cash and precious metals in physical form are completely anonymous and leave no trace, thus constituting clearly preferable means of payment for illicit activity than cryptocurrencies.
Is the world of cryptocurrencies full of scams?
The world of cryptocurrencies is full of scams so you must be very careful. But all the tools we use most today are full of scams, such as email and phone, but that is not a good reason not to use them. You just need to be very careful.
Many people think there are a lot of scams because of its digital nature, and in part that is true in the sense that people who want to buy cryptocurrency typically use computers. But if we talk about the asset itself so for example bitcoin, the opposite is actually true: the fact that it is digital and especially that it uses cryptography makes it an asset that is technically impossible to counterfeit. At most one can be induced to buy different versions of bitcoin, such as bitcoin cash or bitcoin sv or bitcoin gold. Cash and gold, on the other hand, are quite easy to counterfeit: it is estimated that more than 4% of the bgold held in reserve by China may be counterfeit.
With bitcoin, extra attention is needed when buying and then moving them to your own private wallet. But once they are purchased correctly, you can be certain that they are real bitcoins and you can verify them on the blockchain at any time.
Image Credits: Yegor Petrov
