The very features with which Bitcoin was created, a currency not dependent on the mainstream institutions by being unregulated, anonymous and secure, have also made it a star attraction for illegal activities, especially on what is called the “dark web”. This is the underbelly of the internet that is scary and fearsome, and has now soared into prominence with bitcoin, which we can call the “money of the internet”.
Bitcoin is truly a digital or virtual currency, in that it does not exist without the internet or computers.
A recent article in Forbes described it as a ‘protocol’ for finance, and thus revolutionary, just like other protocols for emails, web or streaming videos.But just as new technologies are quickly adopted by the underworld and less reputable businesses, bitcoin too has met the same fate.
A research report in Cashessentials.org says nearly 25% of bitcoin users and half of all bitcoin transactions are related to illegal activities. The annual volume of these transactions is estimated at $72 billion, as per the report.
In 2019, so far cybercriminals have made $4.3 billion by hacking or cheating bitcoin exchanges, investors and users, as per Coin Telegraph. Some reports are entirely negative of cryptocurrencies. The World Government Summit website says that some experts consider illegal activities as the only driving force behind the use and growth of cryptocurrencies. Among these, bitcoin is considered the most favorite, and used in 98% of known cases.
The Silk Road case is the most notorious in the short history of bitcoin.
This was part of the dark web, and its owner made millions creating a platform where mostly drugs were sold. Between 2012–13, Silk Road is believed to have processed $1.2 billion worth of goods.
The last two years alone have seen several crimes related to bitcoin. Apart from exchange hacks, petty crime too now involves crypto. The Bitconnect scam in India has been well reported. In 2017, a bitcoin dealer was kidnapped and a million dollar ransom demanded. In the US, drug dealers using bitcoin is now an old story, but of late opioid deals are now a new scare, as per CNBC.
A funny case involves someone impersonating John McAfee, the founder of the anti-virus platform, and offering great returns on investments on the condition that a little bitcoin is first sent to the impersonator’s address. A Ponzi scheme runner from Australia was arrested recently in India for cheating investors of $28 million.
A new phenomenon is Bitcoin Ransomware. The program GermanWiper, once it makes its way into a computer, sends out a message that it has “encrypted” all data found on the device, and demands a little bitcoin for restoration. This is a misleading message, as the malware actually deletes the data.
For porn viewers, there is now a crypto threat in the form of Bitcoin Sextortion, which involves threatening watchers with public disclosure of their activities. Symantec says it has blocked 289 million such emails.
An interesting aspect that came out whenever criminals were arrested in the last four or five years is that the value of their bitcoins rose to millions as the case progressed. For instance, a Canadian man under trial for narcotics in 2015 had bitcoin wroth only around $65K. By end of 2017, when BTC was on its historic highs, the value had crossed $5 million.
If there is a silver lining in the bitcoin crime phenomenon, it is perhaps that it makes people aware of the potential of this new technology. Like in the case of a marijuana smoker from Europe, who went to Australia and saw how bitcoin was used to buy weed, and is now the founder of a blockchain based service that is entirely clean and legal.