Bitcoin and Cybercriminals


  • Beginning of Relationship between Bitcoin and Cyber Criminals
  • Bitcoin and Anonymity
  • Why Do Cybercriminals Use Bitcoin?
  • Why are Cyber-Criminals Looking for an Alternative?

In the modern era, the popularity of Bitcoin and other cryptocurrencies continues to grow. With this growth, law enforcement and legislation are trying hard to get a strong grip over the growing cryptocurrency ecosystem, cybercriminals are at the vanguard of using cryptocurrency, since its inception.   

But recently, law enforcement has made significant growth and uncovered many criminal organizations, through their utilization of cryptocurrency. Criminal organizations are looking to switch to cryptocurrencies that are more secure and privacy-oriented. 

Beginning of Relationship between Bitcoin and Cyber Criminals

Cybercriminals have long been associated with Bitcoin, since its beginning in 2009. For criminals, cryptocurrency is of great use – facilitating dark web transactions, money laundering, extortion, and fraudulent payments. But with growth in the law-enforcement tracking capabilities and improved account identification processes, there has been a shift in the way in which cybercriminals are using Bitcoin. Also, the usefulness of Bitcoin in the future, for the cyber-criminal world is under the scanner, where anonymity is an important characteristic.        

Bitcoin and Anonymity

Anonymity is a misconception with Bitcoin; in reality, it’s the opposite. All the transactions on the Bitcoin network are recorded on public ledgers and are broadcast across the network. This allows complete tracking of all the coins from their origin to their destination. It is for this reason that Bitcoin is referred to as pseudonymous, instead of anonymous.  

Although in the past 5 to 10 years, Bitcoin has been a crucial factor in the growth of cybercriminals, by using unnamed virtual wallets, decentralized systems, easy cross-border payments, and lack of real-life identification process – growth in blockchain tracking technology has started to close this gap. Dedicated platforms are designed to trace Bitcoins and are proving to be of great value in tackling cybercrime.  

Why Do Cybercriminals Use Bitcoin?

Even though law enforcement has started to tighten its grip on cyber criminals using Bitcoin, cybercriminals have also started to find tools and methods to make tracking difficult. There also are some common mechanisms, which are keeping Bitcoin feasible for criminals. 

These mechanisms include – coin mixing and tumbling – it is the process where tainted coins are mixed with other transactions to hide their true source of origin.     

Another reason for the popularity of Bitcoin is decentralization. Whereas in the real-world financial system, documents are required to create accounts or validate the monetary transaction, which can act as a barrier to criminals, in Bitcoin, there is no such requirement. With no central authority, virtual wallets could be created easily without being tied to real-life identity.

Why are Cyber-Criminals Looking for an Alternative?

With advancements in blockchain analysis techniques, law enforcement is continually working to disrupt or seize high-profile criminal marketplaces. So the criminals are looking to find a better alternative, which could offer more privacy. Despite features like mixing and tumbling, which provide a certain amount of privacy, but not enough as historical transactions associated with an accused criminal could be used to unmask the owner of the coin. Thus, cybercriminals are looking for other cryptocurrencies, than Bitcoin.         

Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investing. 

Photo by – Shafin_Protic on Pixabay