A common misconception is that people use Bitcoin for illegal activities and this has been a controversial topic for a while. Some individuals argue that people use Bitcoin to get services they can’t pay for. But that’s because Bitcoin allows the users to spend it with some level of anonymity. It also allows you more freedom that you can’t have with fiat money. For such reasons, some people assume that most individuals use Bitcoin to solicit or purchase illegal services.
Investigators can calculate the approximate percentile for Bitcoin transactions that people may have used for illegal services and goods compared to legal transactions. However, this approach paints a less troubling image than some people might think.
The number of BTC transactions involving illegal services and goods is less than that of banking systems, credit cards, and cash. Thus, people use fiat money for unlawful activities more than Bitcoin.However, being a a decade old, it’s one of the highest yielding financial assets. cryptocurrencies have had a difficult journey.
The ambiguity surrounding this digital currency has led to many myths and misconceptions, due to which many people think twice before investing in it. Cryptocurrency critics say that it can misbalance the traditional financial ecosystem. But like most other consequential disruptions, crypto has now managed to gain public favor as people slowly shed their inhibitions and insecurities around this digital currency.
A shroud of mystery covers crypto transactions because crypto-assets like Bitcoin were once used for payments on the dark web. Therefore, many people still assume that this digital currency is used only to carry out illegal transactions. But that’s not true. The lifting of the ban on Crypto trading has attracted a wave of institutional investments, making them a respectable fiscal transaction and an important class asset.
Bitcoin for illegal activities only?
The blockchain, which is the technology behind Bitcoin, can enable investigators to trace back all transactions and this deters would-be criminals from using this virtual currency for illegal activities because experts can trace their transactions.
Essentially, Bitcoin is combating some financial crimes, though many people don’t realize it. For instance, one fact that people often overlook yet it’s crucial is the inability to counterfeit Bitcoin. Currently, the U.S. dollar has many counterfeit bills in circulation.
Financial experts estimate that over $200 million of the money circulating in the U.S. is counterfeit. The U.S. government can avoid such an issue by adopting Bitcoin as a legal tender. That’s because Bitcoin gives the user total control of the money that enters or leaves their wallet. Also, Bitcoin hinders individuals from making fraudulent charges.
Bitcoin helps prevent financial crimes because transactions made in this virtual currency are irreversible. Also, Bitcoin is impossible to fake. But many doubt whether Bitcoin should be legal because as it is fully secure, anonymous, and decentralized, there is no way to tax or regulate transactions. If it were to grow significantly in popularity, Bitcoin could start to undermine many of the financial roles of government. There is also a possibility that the anonymous nature of the currency could facilitate many black-market, or otherwise illegal transactions.
In fact, the British Metropolitan Police have recently claimed to have seized almost $250M of Bitcoin in criminal money laundering activities in a major international investigation.
That said, those who proclaim that only criminals use Bitcoin, or that Bitcoin is a major facilitator of criminal activity is a bit like saying that nobody has ever used fiat currency for crimes, and that is just utter rubbish. At the end of the day, Bitcoin is a form of currency, and any and all forms of currency can (and have always been) used illegally.