Bitcoin For Cybercriminals

The arrival of Bitcoin opened doors to various new illicit cyber crime activities. While authorities are struggling to contain these, the continuing success of Bitcoin is fuelling it. Malware attacks showed some growth recently in which this crypto coin played a critical part. Hackers encrypt computer files, and unless they receive ransom paid in bitcoins, they refuse to undo the encryption.

Illegal expenditure in Bitcoin has reached new heights despite authorities’ hopes to clamp down on it by taking down online darknet markets. However, illegal purchases through this coin showed a slight decrease, generally speaking.

What are Darknet Markets?

The black online markets are called darknet markets. Activities on these markets include purchases of stolen credit card information and a variety of illegal drugs by using Bitcoin, among other crypto coins. 

According to Chainalysis, a company that tracks all Bitcoin transactions and also serves as an advisor to various government authorities, a new high of $601 million was reached in BTC spending on darknet markets in the last quarter of 2019, which is an increase of 60%.

Bitcoin has earned a reputation as a sanctuary for villains, and the growing number of illegal Bitcoin transactions makes it extremely difficult for it to move past this reputation.

According to the new Crypto Crime Report released by Chainalysis, illegal activities involving Bitcoin almost doubled from the year before. It seems that illicit activities are part of the Bitcoin ecosystem, which are resistant to the fluctuations in its value.

Who is Winning the Battle?

The authorities have been aggressive in their approach to the so-called cryptocurrency schemes, along with the darknet. However, their efforts seem futile as fraudulent Bitcoin activities still manage to hit new heights. According to Chainalasys data, fraudsters took $3.5 billion from millions of victims last year, which is more than triple compared to 2018.

Silk Road, the first online black market, began accepting Bitcoin back in 2011. Since then, illegal transactions have been an integral part of the crypto world. Bitcoin doesn’t have any central authority, which makes it possible for anyone to open a wallet and use the currency without registering a real identity. 

This structure made Bitcoin very useful for the Silk Road because it makes it easy for a criminal to move and use Bitcoin while remaining unidentified. According to The European Banking Authority (EBA), crypto assets are not usually according to the EU financial regulations, so building a context around individual transactions is very difficult.

Do We Need to Be Concerned About Crypto Crime?

According to Ryan Selkis, founder of Messari, Bitcoin is a crummy currency to use for cybercrime and has substantial drawbacks for criminals. Selkis says that “Maybe it is good for petty crime, but if you are running a cartel, it is a different story.”

Unlike cash, which is mostly traceless and anonymous currency, blockchain technology is pseudo-anonymous. It behaves like an infinite and undeniable data register that houses all transactions ever made in particular crypto coins. It also allows for the money to be traced and followed by law enforcement agents.

Criminals, however, are not deterred by Bitcoin transactions leaving a trail. Agents cannot identify criminals involved in Bitcoin transactions straight away, but patterns in cryptocurrency movement can be spotted and studied to profile and de-anonymize suspects.

Tom Robison, the founder of Elliptic, which provides blockchain analysis service, said that rather than tracking criminals, their focus is on preventing money laundering. They provide financial institutions and cryptocurrency exchanges with tools that will allow them to screen transactions for links to illicit activity.

Robinson said that illegal activity gets discouraged by making it harder for criminals to launder their takings in cryptocurrency.

Final Notes

For as long as there are people on this planet, there will be crimes. Cybercrime is no different. As long as we remember to keep our online world as safe as possible, we can make it difficult for criminals. 

Keep your crypto wallets secure by using security features like two-factor authentication and similar, and you will be reasonably safe.

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