Cryptocurrencies have become increasingly popular over the last few years, with many people believing they are the future of money. However, this begs the question: What are cryptocurrencies actually good for? And are they being used for nefarious purposes, or can they be used for good as well? In this blog, we will be exploring the dark side of cryptocurrencies and the ways in which criminals are using them.
Cryptocurrencies such as Bitcoin have captured the imagination of many, with the idea of decentralization, anonymity and eliminating intermediaries holding great appeal. However, cryptocurrencies also have a darker side, one that criminals are already exploring. Even though there are legitimate reasons to use cryptocurrencies, such as low fees and fast transactions, there are also a number of nefarious reasons.
What are the Cryptocurrencies Used for?
Cryptocurrencies such as Bitcoin can be used for a variety of legitimate purposes, such as paying for goods and services or saving for the long-term. However, one of the most popular uses of cryptocurrencies is for investing. Cryptocurrencies can be used to buy and sell assets, such as stocks and bonds, as well as physical commodities, such as gold and silver.
Cryptocurrencies can also be used as a medium of exchange. Because cryptocurrencies are decentralized, no central authority issues them, meaning they cannot be shut down by governments or banks. This makes them a very useful tool for conducting transactions that are otherwise unfavorable to the parties involved, such as sending money to an enemy country or person.
Finally, cryptocurrencies can be used as an asset class. Many people are investing in cryptocurrencies as a way to diversify their wealth, protecting against inflation and government confiscation.
How Criminals Use Cryptocurrencies
One of the most common uses of cryptocurrencies by criminals is for money laundering. Because cryptocurrencies are decentralized and issued (or “created”) by no authority, they are attractive to those who want to keep their illegitimate activities hidden from view.
For example, cryptocurrencies can be used to launder money acquired through criminal activities such as drug trafficking, fraud and identity theft. Criminals can also use cryptocurrencies to pay for goods and services online without generating invoices that can be tracked or traced.
In addition, cryptocurrencies provide anonymity, meaning criminals can buy and sell goods and services without revealing their identity. Anonymity can be a boon for criminals who want to carry out illicit activities, but it can also be a protection for people who want to hide their actions from the authorities.
How Governments Use Cryptocurrencies
One of the most interesting uses of cryptocurrencies by governments is for public aid. Governments all over the world are exploring ways to use cryptocurrencies to deliver public services, such as paying the salaries of public sector workers or subsidizing the cost of medication.
Some countries, such as the U.S., are exploring how to use cryptocurrencies to distribute government benefits directly to the public, such as social security or health benefits.
While these are very promising developments, it’s important to note that cryptocurrencies are not yet ready to be used in place of fiat currencies. They are still relatively new and volatile, and their legal and regulatory status varies from country to country.
The Dark Web and Crypto
The final nefarious use of cryptocurrencies is on the dark web. The dark web is a section of the internet that requires special software to access, instead of being indexed by search engines.
Many cryptocurrencies are used on the dark web for two main purposes: buying and selling illegal goods and services, and paying for criminal activities with privacy.
The selling of illegal goods and services via the dark web is a well-established activity, dating back to the early days of the web. However, the use of cryptocurrencies on the dark web for anonymous transactions is a relatively new phenomena.
While cryptocurrencies were originally developed as a way to conduct legitimate business transactions, they have been heavily exploited by criminals for their privacy features. This has led to a booming business on the dark web for cryptocurrencies, with tens of thousands of marketplaces dedicated to the sale of cryptocurrencies.
Many of these marketplaces accept payment in Bitcoins, which can be a major privacy concern. After all, if your transactions are anonymous, then identifying which purchases were made using which bitcoins is essentially impossible.
Cryptocurrencies have been around for less than a decade, but they have already seen massive growth. As more people become aware of cryptocurrencies, and their uses, it’s likely that we will see an increase in the number of nefarious uses of these increasingly popular digital currencies.
In this blog, we have explored some of the ways criminals are using cryptocurrencies, and we have looked at how governments and large institutions are also exploring how to use these innovative technologies.
While cryptocurrencies can be used for legitimate purposes, such as paying for goods and services online without incurring fees or having your data transferred through intermediaries, it is important to be aware of the darker side of these rapidly-growing technologies.