Wednesday, January 3rd 2018
Bitcoin's Lack of Wallet Privacy Leads Criminals to Look Towards Other Cryptos
"It is used for criminal, illegal activities" is one of the most oft-mentioned reasons for users to reject Bitcoin or other cryptocurrencies. However, it seems that this argument is losing weight as we speak when it comes to Bitcoin. In the wake of much increased interest and awareness regarding the fledgling, currently leading cryptocurrency, which has seen institutions and states renew their interest and attention towards regulation or stricter control of the virtual currency, users that would use Bitcoin for nefarious purposes have started to migrate to other cryptocurrencies. You see, the reality of a distributed, transparent ledger is great for a system's transparency; however, transparency and easily identifiable - and traceable - wallets and transactions go against criminals' interests. Law enforcement agencies, such as Europol, have already issued warnings and established protocols towards the adoption of software tools to monitor people using bitcoin. As such, criminals are looking towards other less "transparent" cryptos to use as escape routes for their criminal ways.
The most viable alternative for criminals has apparently been Monero, the cryptocurrency that has also been in the world's mouth because it's usually the one being mined in web browsers, absent of users' consent. Monero has been developed with privacy as a main design criteria from the start, encrypting the recipient's address on its blockchain and generating fake addresses, obfuscating the real sender, but going one step further by also obfuscating the amount of the transaction. This means Monero is currently "one of the favorites, if not the favorite" for usage in ransomware attacks, said Matt Suiche, founder of Dubai-based security firm Comae Technologies, said in a phone interview to Bloomberg.
As a result, software solutions that flag coins suspected of being obtained through crime are now basically tagging almost every transaction converting into or out of Monero as high risk, according to Pawel Kuskowski, chief executive officer of Coinfirm, a company that designs solutions to help exchanges and other companies avoid tainted money. That compares with only about 10 percent of bitcoin, he said, in a phone interview to Bloomberg.
All of this is probably part of the reason why Monero quadrupled in value in the closing months of 2017; increased demand and Monero transactions as part of illegal activities increase the pricing of the coin, as any legitimate activity also would. Bitcoin's visibility as both poster-child of cryptocurrencies and criminality-enabler may have been warranted in its initial stages. However, it seems that it's losing the second consideration, and should get critical users aware. Blockchain technology isn't going anywhere, and we now have to look at some factors of the cryptocurrencies we want to support: is perfect fungibility and anonymity what we require of a crypto, or do we want all transactions to be perfectly transparent? Perhaps a balance of the two? It's a complex debate; one that will certainly still see rivers of ink and valid discussion carried over it.
Sources:
Bloomberg, Coinmarketcap
The most viable alternative for criminals has apparently been Monero, the cryptocurrency that has also been in the world's mouth because it's usually the one being mined in web browsers, absent of users' consent. Monero has been developed with privacy as a main design criteria from the start, encrypting the recipient's address on its blockchain and generating fake addresses, obfuscating the real sender, but going one step further by also obfuscating the amount of the transaction. This means Monero is currently "one of the favorites, if not the favorite" for usage in ransomware attacks, said Matt Suiche, founder of Dubai-based security firm Comae Technologies, said in a phone interview to Bloomberg.
14 Comments on Bitcoin's Lack of Wallet Privacy Leads Criminals to Look Towards Other Cryptos
Did you read the article. :p Or is your country just full of crooks? ;)
If you look at crypto prices VS public administration activities, you'll see that cryptos gain the most when large countries regulate them. Regulations means gov interference, but leads to wider acceptance.
The main advantage blockchain has is providing a fast and cheap global transaction system. An international payment made via traditional banking tech will take a day or more, because all the databases that have to be synced and cross-checked. A blockchain system will take minutes - even based on something as slow as Bitcoin.
When you pay for something with a card (online or in a shop), this transaction is "confirmed" in few seconds. But the actual transfer takes 1-2 days. So replacing that even with Bitcoin's 10 minutes makes a difference. :-)
As for cost... well... cryptocurrencies are just way to expensive. Banks will have to create new blockchains just for them and implement a solution (it's not that hard to imagine one).
Bitcoin cash costs less than a dime per transaction, as an example.Regardless of the reason, it's still losing weight as few/no present criminals are using bitcoin.
You can fix this by using a blockchain that has a constant difficulty. Or by resetting it once in a while. This will be possible (and sensible) in a closed blockchain system (accessible only by large financial institutions).
The issue is technological, and really comes down to blocksize. The bitcoin devs have repeatedly refused to up it, probably because they are all miners and LIKE the fees they get.
Their refusal to up blocksize is why bitcoin cash was born. Historically, Litecoin handled these things better as well, but it is now superseeded by bitcoin cash from a tech perspective of transaction processing.