- Criminals recognize privacy-focused coins' advantages and are shifting away from Bitcoin as their primary choice for illicit transactions.
- The shift presents opportunities and challenges for the crypto industry, including improving Bitcoin's tarnished reputation.
It was once the go-to currency for illicit activities on the internet. But a recent BanklessTimes.com data presentation reveals that Bitcoin’s (BTC) share of illegal cryptocurrency volumes has plummeted by 80% in the last seven years. According to the report, BTC’s share of illicit crypto volumes dropped from 97% in 2016 to 19% in 2022.
Bitcoin’s attractiveness to the criminal world stemmed from its unique features. The blockchain technology underlying this digital asset facilitated decentralization, affording users unprecedented control over their transactions.
Again, its support for pseudonymous exchanges made it an ideal tool for activities that required discretion and evasion from law enforcement.
Why Has Bitcoin’s Usage in Illicit Transactions Declined?
One significant factor contributing to the decline of Bitcoin’s share in illicit crypto volumes is the rise of alternative cryptocurrencies. As the crypto ecosystem expanded, numerous digital currencies with varying features and privacy capabilities emerged, providing criminals with alternatives to BTC.
Cryptocurrencies such as Monero, Zcash, and Dash gained popularity due to their enhanced privacy features, making it significantly harder to trace transactions and link them to real-world identities. Criminals began to recognize the advantages offered by these privacy-focused coins, leading to a shift away from BTC as the primary choice for illicit transactions.
BanklessTimes CEO Jonathan Merry sheds light on this trend:
“The shift from Bitcoin to other, more anonymous cryptocurrencies for illicit activities reflects the adaptive nature of cybercriminals. As authorities become more adept at tracing Bitcoin transactions, those engaging in illegal activities seek out new avenues that offer greater anonymity.”
Additionally, the rise of decentralized exchanges presents new challenges for law enforcement agencies, as these platforms offer reduced oversight and regulatory control.
What Are the Implications of This Decline?
The shift away from Bitcoin for illicit activities has several implications. On the one hand, it could help improve Bitcoin’s tarnished reputation and promote its mainstream adoption. On the other hand, it highlights the persistent challenges in regulating the crypto space and curbing its use for illegal activities.
As governments and regulators continue to address the challenges arising from illicit crypto activities, the focus on tracking and monitoring transactions is becoming more effective. However, it is crucial to remain vigilant and adapt to the evolving strategies employed by criminals in the crypto space.
Merry is upbeat about this decline in Bitcoin’s association with illicit activities. He argues that it presents an opportunity to reshape the narrative surrounding cryptocurrencies and highlight their potential for positive innovation and legitimate use cases.
The crypto industry can further establish trust and confidence among users and regulators by addressing the remaining challenges and fostering stakeholder collaboration.
