Bitcoin Losing Market Share… Among Criminals
Bitcoin has not had a great few weeks. Since approaching $20,000 on December 18th it has fallen back around $13,800 at time of writing. Investors currently prefer Ethereum, which reached a new high today, and Ripple, which has experienced extraordinary growth in the last month. But it’s not just investors who are moving away from Bitcoin, criminals are too.
The association with criminal activity dogged the reputation of cryptocurrencies for years, only lightened by the increasing financial acceptability of Bitcoin with the launch of futures contracts and the potential for ETFs. While the mainstream has become more keen on Bitcoin as an asset, they have also got better at identifying criminal activity in the currency.
Tracking and tracing of Bitcoin transactions has become stronger, with firms like Chainanalysis flagging suspicious activity to exchanges. Criminal elements seem to have noticed. Europol, the EU’s law-enforcement agency, reported in October its Internet Organised Crime Threat Assessment (IOCTA), where it argued that,
other cryptocurrencies such as monero, ethereum and Zcash are gaining popularity within the digital underground”.
The nature of Bitcoin’s transactions make it traceable to those who know what to look for. Bitcoin wallets may not be linked to addresses, but with transactions all recorded in the ledger there is a trail that offers hope for deciphering.
The WannaCry ransomware attack of May 2017 demanded victims pay in Bitcoin to regain access to their files. A similar attack today would much more likely ask for Monero or Zcash.
Monero generates fake addresses and encryption to obscure the amount sent, who sent it, and who received it.
While this functionality is useful to criminals it also has great appeal for privacy advocates. In an interview with Bloomberg, Lucas Nuzzi of Digital Asset Research suggested that in an era of mass surveillance,
there is utility in these currencies that go beyond just a means of exchange for illicit goods.”