The inefficiencies of Bitcoin protocols are making it lose one of its oldest type of customers: online criminals.
This is due to its taking too long to process transactions, high transaction fees and volatility in prices says a report released by legal firm Chainalysis. Also, these customers are leaving to more private cryptocurrencies that offer better user experience.
The report says that the proportion of Bitcoin transactions associated with “dark web” sites has fallen from 30 percent in 2012 to under 1 percent in 2017. However, the value has increased, with $660 million of Bitcoin being sent to darknet markets in 2017.
Transactions fell by two thirds between May and July 2017 as law enforcement closed the largest darknet markets.
Dark webs are secure untraceable sites, but also which make it possible for criminals to engage in criminal activities. Even currencies like Monero, Dash, and Zcash are termed as the dark web for their strictness in user privacy and security. They offer faster and cheaper transactions and extra layers of intimacy that make it difficult to track Bitcoin.
Indeed, ZDNet published a report detailing that High Bitcoin fees and slow transactions were causing crooks to move to Monero. Even ransomware operators who hijack and freeze victim’s computers demand payment are doing so.
“Instead of being provided with instructions on how to buy bitcoin—which, thanks to its popularity, might now prove cumbersome—it’s likely cybercriminals will soon be providing their ransomware victims with instructions on how to buy and exchange Monero”.
The fact that criminals are moving away from using Bitcoin protocol does not mean that they are no longer stealing Bitcoins. In fact, at least $172 million worth of Bitcoin between 2013 and 2017. This figure was arrived at by using Bitcoin prices at the dates of the hacks.
“We find that theft of Bitcoin has risen from at least $3 million in 2013 to $95 million in 2016”.
Chainalysis report notes that theft of Bitcoin through scams, ransomware, and hacks. It is increasing from at least $3 million in 2013 to $95 million in 2016.
The drop in Bitcoin transactions in dark websites cited by Chainalysis is caused by many people. Since who are choosing to hold cryptocurrency than spend it.
Use of dark web in criminal activity is likely to continue this year according to Executive Director of Europol, Rob Wainwright.
Wainwright on Twitter said,
“We’ll see a progressive shift in 2018 towards the criminal use of cryptocurrencies other than Bitcoin. Thus, making it more challenging for law enforcement to counter”.
But critics will cite the fact that the total value of crime in cryptocurrency and blockchain platforms is tiny. Indeed tiny compared to the amount of offense involving fiat and fiat systems where every transaction. Thus, owners of accounts can be tracked for free.
It is unlikely that law enforcement agencies, which have largely failed to end crime within fiat systems. Although open theft and drug dealings will stop corruption in cryptocurrencies.
Fiat, in general, has fueled crime more than cryptocurrencies even for the stated period. Hence inaction, laxity and corruption and vested interests lie at the door of any law enforcement.