Bitcoin or fiat: which is more often used in illegal activities?

Cryptocurrencies and illegal activities are often mentioned in the same sentence - especially by those who do not support the idea of digital assets. The anonymous nature of the coins serves as a pretext for accusing them of being used primarily in illegal transactions. However, a number of messages may shed more light on this matter. Let's try to figure out whether Bitcoin is actually used more often in illegal activities, or whether cash still prevails here.


What is used in illegal activities?
Criminals and delinquents existed long before cryptocurrencies. Now some argue that thanks to cryptocurrencies, villains have become more sophisticated. However, real data paint a slightly different picture.

A CNN report eleven years ago noted that 90 percent of US dollar bills contain traces of cocaine. Even if not all of them were used in illegal transactions with the notorious drug, its particles fell on them from other bills lying with them in one bundle.

Such cases are one of the reasons why many have called for electronic payment methods. Hence the emergence of credit and debit cards. Including the need for a digital form of payment - such as Bitcoin.

A CNN message has been around for quite some time. There is also a more recent Europol report showing that cash still prevails in illegal activities. A study conducted in 2015 examined cryptocurrencies, but the conclusion is error-free: the most commonly used payment method for fraud with money is still cash.

The use of cryptocurrencies in illegal activities
Although cash is still very popular among criminals, there is also a sin for Bitcoin and altcoins.

Perhaps the most famous example is related to the infamous Silk Road site. It was a black market and is usually considered the first modern darknet market for the sale of illegal goods and services. Hidden in the Tor network, the service allowed users to anonymously view products and make purchases. The most commonly used (and sometimes the only) form of payment was Bitcoin, which made its role very significant.

Anonymity properties were achieved by combining the anonymity of the Tor hidden network, where the client and server IP addresses are invisible to each other and to external observers, with Bitcoin's pseudonymous electronic payment system, this article says.

After the closure of Silk Road, the use of Bitcoin in illegal activities has significantly decreased. However, it did not stop completely and may never stop, which is not surprising. Published two years ago, right after the parabolic price increase and increased media attention, the message shows excellent, but not too optimistic, figures.

At the time of writing that article, the authors estimated that “annually, Bitcoin is used in illegal activities for $ 76 billion, that is, 46 percent of all transactions in bitcoins. This is close to the scale of the American and European drug markets. ” It is also alleged that with the growth of mass interest in the largest cryptocurrency (or any other) and its adoption, the share of illegal transactions decreases. This is quite logical, because the more participants there are, the lower the percentage of illegal activities.

Is Bitcoin really used so often in illegal activities?
As a rule, studies provide real data and figures that arouse the confidence of readers. But sometimes in different articles different information is given depending on the chosen point of view. If the aforementioned study indicates that almost half of Bitcoin's transactions are illegal, then in the crypto-information resource CryptoPotato two other studies have recently been mentioned that came to completely different conclusions.

The first one concerns the third largest cryptocurrency by market capitalization - Ripple. It is noted that transactions with XRP for $ 400 million are associated with illegal activities. This is only 0.2 percent of the total circulating offer of the token.

Moreover, the second study, which focuses mainly on Bitcoin, gives a much lower figure than the 46 percent mentioned above. According to him, 0.5 percent of all transactions with the largest cryptocurrency are associated with illegal activities.

Illegal activity has existed for more than one millennium and will obviously never disappear. Bitcoin is a payment method, even if some skeptic regulators still do not recognize this. Consequently, Bitcoin can be used both in ordinary transactions, whether it’s buying coffee or airline tickets, or in illegal transactions. If it seems to you that you have already heard something similar somewhere, then all because the same thing applies to the most generally accepted form of payment - cash - only on a large scale.

Does this mean that cash is terrible and we should blame or ignore it? Definitely not. It only means that it is a form of payment with its advantages and disadvantages, and most importantly, it is just a tool. Like Bitcoin. Is the tool to blame?