Crypto Being Mainly Used by Criminals

The truth is that ever since cryptocurrencies existed, there have been a lot of myths enveloping the space. The truth is, many of them could not be further from the truth, and it’s important to provide some clarity on the matter, especially now that the eyes of global regulators are closing in on the industry.

The main points of this article are:

• The concept of cryptography being used by criminals can be traced back to early media coverage of space. More specifically, it centers around the infamous Silk Road market.
• Information from the independent company that provides blockchain data and analytics, Chainalysis, shows that illicit activity accounted for around 0.15% of all crypto transactions in 2021.
• On the other hand, data from the United Nations shows that between $800 billion and $2 trillion is laundered every year. Cryptography is only about 0.03% of that.

It goes without saying that blockchain technology, being relatively new, is the subject of many misconceptions, so let’s take a look at one of the most common myths and try to see if there is any merit to it.

Myth: Cryptocurrencies are only used by criminals

The use of cryptocurrency for illegal activities has been a topic of great concern since the early days of the industry. The public perception of cryptocurrencies as inherently associated with illicit activity can be traced back to the times when the infamous Silk Road was operating in full force.

For those unaware, the Silk Road was an online black market that operated over the dark web from 2011 to 2013. It was famous for enabling people to buy and sell illegal goods. It was involved in drug dealing and others of that kind, and its association with cryptocurrency contributed to the negative reputation of the industry in the face of the mainstream media.

Additionally, the perceived decentralization of cryptocurrencies and anonymity has added fuel to the fire of fears that they facilitate criminal activity.

And while it is true that there are criminals using cryptocurrencies, it is minuscule compared to the total transaction volume and even more difficult when compared to the number of criminals who prefer criminality.

Reality: Data shows that encryption is mainly used by ordinary people

data From an independent blockchain analysis firm called Chainalysis that shows that cryptocurrency is primarily used by everyday people, and that it exists as a legitimate tool for a range of everyday transactions.

The leading cryptocurrency trading platform, binance, alone more than 120 million registered users. Of course, as with any emerging technology, criminals and bad guys will always try to use it for nefarious purposes. However, illicit activity accounted for only about 0.15% of all cryptocurrency transactions in 2021. This figure is down from 0.62% in 2020, despite the exponential growth of the industry. Money laundering accounted for 0.05% of that.

It should also be noted that Chainalysis provides data to government agencies, including the US Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation, as well as the Drug Enforcement Agency. It also provides data to the UK National Crime Agency.

Now, let’s compare that to the world of Fiat. Data provided by the United Nations revealed that criminals launder between $800 billion and $2 trillion each year. This is between 2% and 5% of global GDP. Crypto accounts for a mere 0.03% of that.

Obviously criminals You do not like Encryption because all transactions are publicly and permanently recorded. This allows investigators to work – and helps them track the money trail and easily identify bad actors.

Conclusion

The myth that encryption is mainly used by bad actors is greatly exaggerated. The fact of the matter is that the vast majority of transactions and investments are completely legitimate and focus on a real-world use case for the technology.

The emergence of blockchain technology has opened up new opportunities, and cryptocurrency is just one aspect.

From non-fungible tokens (NFTs) to decentralized finance (DeFi), the potential applications for the technology are diverse and numerous.