Debunking myths around criminal use in crypto markets

There is no denying that cryptocurrency has been used for criminal activity, but this can also be said for every different variation of money worldwide, says Marcus de Maria

There has been much debate surrounding cryptocurrency since Bitcoin officially launched for use in 2009 and became the first decentralised digital currency. Due to its complexity, crypto has attracted much debate and is subject to myths and stigmas around how it is produced and used. Many critics of the digital currency have scrutinised its ecological impact and potential for facilitating illegal activity, essentially being the currency of choice for criminals. Many people, including businesses and governments, do not believe crypto has any true intrinsic value, which has added to the misconceptions of it being risky and unstable and has led to a level of mistrust and misunderstanding from the majority.

Despite the scrutiny, the domain of cryptocurrency continues to grow rapidly. It will eventually gain more widespread adoption and enter the financial mainstream.

Ultimately, there is much confusion and contradicting information about what crypto is and isn’t; many so-called ‘experts’ can often deliver misinformation, further casting doubt over digital currencies and their potential to change lives for the better.

It’s often difficult to tell the difference between fact and fiction in this fast-changing environment, so that I will look at de-bunking four of the biggest crypto myths in this article.

Myth #1: Crypto is now the preferred payment choice for criminals

While it is true that the first recorded use case was for a dark web market, the truth is that cryptocurrency has certainly shown its usefulness and potential to solve traditional banking problems across many areas, including that security. As blockchain is the technology that enables cryptocurrency’s existence, each new block connects to all the blocks in such a way that it is almost near impossible to tamper with. All transactions within the blocks are validated and agreed upon by a consensus mechanism, ensuring that each transaction is true and correct.

Cryptocurrencies use advanced coding to verify transactions and keep track of cryptocurrency data. This makes it difficult for hackers to steal or damage cryptocurrency. Encryption is an important tool for protecting information and ensuring safety. So, while cash is anonymous, cryptocurrencies can be tracked through blockchain analytics, making it very difficult for criminals to use the digital currency for illicit means. As cryptocurrency is becoming more and more of a regulated currency, its security measures will also increase, deterring nefarious usage.

Cash continues to be the preferred payment choice for criminals because of this.

Myth #2: The criminal use of cryptocurrency is limited to cybercrime

The criminal use of cryptocurrency is no longer primarily confined to cybercrime activities. Still, it now relates to all types of crime that require the transmission of monetary value, including fraud and drug trafficking. However, the scale and share of the illicit use of cryptocurrencies as part of criminal activities are difficult to estimate. Criminal networks involved in serious and organised crime also continue to rely on traditional fiat money and transactions to a large degree and emerging value transfer opportunities. 

Myth #3: Illicit funds flow straight from wallet to wallet

The usage of cryptocurrencies by criminals has become increasingly sophisticated. Illicit funds are increasingly moving via a multi-step process involving financial institutions, many new and have yet to be integrated into standardised, regulated banking and payment markets. Criminals continue to develop and deploy obfuscation techniques and other countermeasures.

However, as cryptocurrency exists within a blockchain and the digitalised currencies are becoming more of a regulated currency, without adding a multi-step process, criminals risk law enforcement agencies tracking their illicit activities through the traceable mechanisms of the blockchain if the blockchain is not an anonymous system or is not encrypted. As cryptocurrencies become more widely used, they will have much more regulation control, resulting in a decrease in crime involving cryptocurrency.

Myth #4: Cryptocurrencies provide anonymity 

When crypto was first launched, many thought transactions were untraceable and entirely anonymous. However, the bitcoin public transaction ledger holds a whole host of information but tracing the person behind the wallet can be trickier.

As the currency is unregulated, there is nothing to stop people from opening multiple accounts or wallets, making it seem anonymous. Still, a huge amount of data is stored when a crypto transaction takes place. This data includes where the money is sent to and from, the date and time, and each transaction’s value. The only data that isn’t stored is the identity of the person who makes the transaction, but when combined with other data, there are ways it can be traced back to the user.

On the blockchain network, every transaction is permanent and accessible to everyone who is on that network, so anyone who makes multiple transactions can find that their whole financial history becomes public information. So, for example, if a bitcoin address were published, other users would then be able to see that person’s balance and then, from there, every transaction that ever took place.

This can then leave a trail of breadcrumbs, and it is these data points allow law enforcement to track criminal activity. These data points also give law enforcement access to more information than a criminal case involving cash. While privacy coins and several services and techniques may hinder law enforcement investigations, it does by no means stop law enforcement from finding out who is hiding behind the crime. 

Some blockchains, such as Monero, are 100% anonymous, which paves the way for illegal activity and criminal use. But these coins are very tiny and not widely used compared to the bigger ones.  Anyone looking to invest should do their research beforehand and remember that cryptos are unregulated. There is a history of platforms and startups claiming to be the next big thing when they are outright scams.

There is no denying that cryptocurrency has been used for criminal activity, but this can also be said for every different variation of money worldwide. The most popular currency for these types of activities is the US dollar. Transactions with fiat currency, a.k.a. paper money, is difficult to trace compared to bitcoin, which now is extremely easy to track with systems built for this specific purpose.

All in all, If I were a criminal, I would probably choose something other than cryptocurrency to conduct my illicit deals.

Marcus de Maria is Co-Founder and Chairman of Investment Mastery.

Marcus de Maria is Co-Founder and Chairman of Investment Mastery.

A sought-after keynote speaker on wealth creation who has shared the stage with some of the world’s leaders in business, success and philanthropy, Marcus has gained mutual respect from many high profiled individuals, including Richard Branson and Robert Kiyosaki, Tony Robbins and Brian Tracy.

Marcus is also the author of three books, including The Lunchtime Trader, a guide on building indestructible wealth by trading stocks for just 20 minutes a day.

After experiencing financial difficulties, Marcus went from being £100,000 in bad debt and sleeping on his brother’s floor to taking control of his financial future and learning strategies to become financially fit, building multiple pillars of wealth for security. He now uses all he has learned to help others follow this path of wealth creation.





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