The cryptocurrency domain has been constantly expanding at an increasing rate since the Inception of Bitcoin. Today the total cryptocurrency market capitalization is around $270 billion with the contribution from Bitcoin unknown being $116 billion. With such dominance in the crypto space, it is speculated and doubted upon a number of times. It is assumed that Bitcoin is extensively being used for illegal activities. However, things have not been clear in this regard as no reliable evidence is made available in this regard.
Bitcoin and all other cryptocurrency’s main goal was to completely transform the financial system of the world by incentivizing the whole process with an increased transaction speed and reduced cost. But as there is both advantages and disadvantages that come with every new technology, Bitcoin too was extensively used in the darknet for all the illegal activities from money laundering, tax evasion to using it to fund terrorism, buy drugs. The anonymity and its globalized nature are responsible for its widespread adoption by the lawbreakers.
According to research conducted by an Australian organization on the Bitcoin transactions, it was estimated that 25% of all the Bitcoin transactions were employed for illegal activities. This means that 1 out of every 4 crypto fanatic in the industry is using the cryptocurrencies for some of the other kinds of illicit activities. According to reports almost $72 billion in Bitcoin were involved in a year for such activities. Also, coincidentally it is evident that the total number of Bitcoins lost is around $72 billion.
Nevertheless, the most recent study claims that almost half of the Bitcoin transactions are vested with illegal activities. The professionals even fear the widespread usage of Bitcoin by them as a reason for the sustainment of a cryptocurrency.
It is to be clearly understood that Bitcoin is not restricted to the usage by the people in the darknet for illegal child pornography, murder for hire, thefts, and hacks but due to its amazing features it has also led to an expansion of the black market. The cryptocurrencies are completely digital in nature which opens gates to access the black market in a globalized manner. The crooks, which earlier used to conduct physical meetings for a transaction, now get their work done in just a few clicks of the mouse. The anonymous nature of the cryptocurrencies is a prominent attribute which is efficiently being exploited by the fugitives. Although, in the traditional world anonymity is not a major requirement, on the contrary, in the dark world economy, it is considered to be the top priority for which cryptocurrencies perfectly fits in.
Specifically, some of the privacy-focused on coins like Monero, Dash, and Zcash are extensively being used as a part of the dark world these days. The perspective shift from Bitcoin to these privacy-focused coins is also quoted as a reason for a decreased activity in the Bitcoin network. According to another research, the actual intrinsic value for Bitcoin is due to its adoption in the illegal domain.
Many professional researchers in the cryptocurrency field have marked the usage of Bitcoin by the lawbreakers as one of the main reasons for the Bitcoin spike. Also, they estimate that if they find other better privacy-focused cryptocurrencies, it might result in a drastic Bitcoin fall.
However, there is a hope in preventing such activities. The Distributed Ledger Technology used by the Bitcoin enables the experts in the field to track a particular suspicious Bitcoin address, which seems to be the hub for the legal activities. The connected public addresses to that particular address are checked and through the IP addresses, their identities can be traced to an extent.
All the above-quoted explanations cannot be considered that Bitcoin is solely used for illicit activities. The amazing Blockchain Technology, that Bitcoin introduced to us can’t be neglected, which intern has proven to become one of the most widely adopted technology in numerous feels like HR industry, Healthcare, supply chain management, the electoral process, identity verification, and most importantly entrepreneurship.