The rise of Bitcoin to global consciousness has given rise to intended and unintended consequences. While Bitcoin was not innovated simply to serve as an anonymous payment system, some of its features are being embraced for nefarious activities.
Criminal Activities and Bitcoin Usage
Undoubtedly, Bitcoin has a lot of inherent benefits in comparison to conventional banking systems. In the world, there is no common approach to Bitcoin regulation and its validity hinges on your location. As the validity or regulation of Bitcoin which is yet to be fully deliberated on in different quarters, more questions are springing up which needs prompt attention.
Such questions have been making the rounds in the Blockchain technology sphere. The focus is how to chastise individuals who are using Bitcoin to break the law. What confirms this fear is, all cryptocurrencies including Bitcoin, operate with the anonymous and decentralized basis. This is what makes it a perfect opportunity for money laundering.
Research has shown that around 10% of the illegal money made online, proceeds from cyber criminal activities. The research further stated that lately, it is easy for criminals to make money, and convert to cash. Several tax evaders are now considering different ways on how to launder money such as cryptocurrencies. Bitcoin gives a great advantage when it comes to doing this.
How Criminals Use the Bitcoin Privacy Feature
Unlike the traditional banking scenery, there is no reporting body that acts as a central regulator for cryptocurrency exchanges. Also, owners of businesses do not really need a middleman to facilitate the transfer of huge funds with Bitcoin. This is where the privacy comes in and this for regulators is a challenge. Initially, the basis for conducting transactions with cryptocurrencies was to present a secure way of conducting transactions.
Individuals are their own banks when it comes to cryptocurrency. By owning their private keys in their bitcoin wallets, people take charge of their coins and tokens. So, this is how people who evade taxes in their various countries find a refuge in bitcoin usage. However, some crypto-analytic platforms, are looking to correct this ill. They are making it possible for all cryptocurrency transaction to be traced and reported.
All cryptocurrencies including Bitcoin are decentralized, so no organization is informed about all sorts of transactions which are ongoing or have occurred in the past. Presently, the major concerns now are close monitoring of the Bitcoin exchange rate and other trading updates. This is made possible with the use of Crypto trading signals and the likes.
These cryptocurrency launderers want to take advantage of every event which happens on the market. Therefore, they are always on the lookout round the clock. This might prove to be impossible to perform. However, with the use of topnotch crypto trading signals, it is very possible.
Online Exchanges and their Risks
What could be termed as being risky are the various platforms where buyers and sellers are matched. Some of these platforms have no sort of legitimate verification whatsoever, and it is dangerous to use such platforms. At times, these platforms could withhold the funds of the traders. There are mishaps which could surface, and this could spell doom for those who trade with digital coins.
A number of these platforms also known as exchanges are beset by a poor security standard. They are also devoid of investor protection which is a norm in financial markets which are regulated. Certain exchanges have used this medium to escalate their trading volume in a bid to attract new customers.Now, research has shown that since 2011, around 30 reports of cryptocurrency exchanges attacks have occurred. These exchanges who were victims of the attack have been reported to have shut down.
These series of attacks have been responsible for the loss of around one million bitcoins, which if recovered, would be around 4 billion dollars. Bitcoin is a Hideaway for Huge Payments Purchases which involves properties are the common focus for criminals who use virtual currency. They can convert the proceeds gotten illegally into assets and cash. For example, Bitcoin Real Estate which has mouth-watering suites, mansions and private islands up for sale, have an option to purchase with bitcoins.
So, for criminals, this is a perfect opportunity to use the bitcoins gotten illegally.
What makes it easier for them is, such properties’ purchase with Bitcoins, are not as closely monitored as cash purchases. It is projected that in the nearest future, around 25% of all property sales would be in cryptocurrency. This projected report has been a huge source of concern to financial analysts. They believe this would give way for faster and secret transactions.
What the Future Could Unveil
Bitcoin is currently being monitored closely, and this has made criminals change the conventional tactics and opt for others. All the necessary information which can be gotten about Bitcoin transactions can be gotten during web transactions. What this implies is, it is possible to trace the transactions to the individuals connected. This possibility is 60 % attainable, which implies that it is a good sign for the security of cryptocurrency transactions.
Across the world, regulators have attempted severally to regulate Bitcoins all to no avail. This happens most times when these regulators do not understand the basic concept of Bitcoins and how they can be addressed. Currently, one of the most effective ways to monitor Bitcoins is to look out for platforms where Bitcoin to fiat conversions are made.
So, if someone makes a Bitcoin conversion to fiat, the platforms where such transactions are carried out would have access to the history of the underlying transaction. This also leaves a trail on how the Bitcoins have been utilized in the past. This also leaves a trail on how the Bitcoins have been utilized in the past. This would make it easier for law enforcements to pinpoint those who are into illicit activities such as money laundering and the likes.
It is hoped that soonest, more innovative methods would be in place to curtail the excesses of dubious cyber actors.
About The Author
Stevan Mcgrath, is a Bitcoin and cryptocurrency enthusiast, passionate about the potential these tools and blockchain technology bring to the world and writes consistently for CoinReview. He has been following development of blockchain for several years. To know his work and more details you can follow him on twitter, Linkedin, facebook.