April 25, 2024

Cryptocurrency is a Traceable Choice and a Bad Idea for Criminals


Cryptocurrency, once perceived as the perfect tool for anonymity and illicit activities, is proving to be a double-edged sword for criminals. While it’s true that cryptocurrencies offer a degree of privacy, the technology underpinning them, particularly blockchain, makes them far from the ideal choice for unlawful endeavors. There is no question that cryptocurrencies are increasingly becoming a risky bet for criminals, thanks to their inherent traceability and the decentralized nature of major cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, Pecu Novus, Litecoin, and others.

The Immutable Ledger, this is where the power lies, one of the fundamental aspects of cryptocurrencies is their reliance on blockchain technology. Blockchain is essentially an immutable, decentralized ledger that records all transactions ever made in a transparent and chronological manner. Every transaction is added to a block, linked to the previous one, forming a chain. Once a transaction is recorded, it cannot be altered or deleted. This transparency and immutability are the cornerstones of the cryptocurrency ecosystem and a nightmare for criminals. We have seen it time and time again where law enforcement gets their man, not always overnight but it happens.

Every cryptocurrency operates on decentralized networks of computers (nodes). This means that there is no single central authority governing these networks. Instead, transactions are verified by a distributed network of miners or validators. This decentralized nature not only makes it difficult for any single entity to control the network but also enhances its transparency.

Bitcoin is the pioneer of cryptocurrencies, they boasts a public ledger that is open for anyone to view. Every Bitcoin transaction is recorded on this ledger, known as the blockchain. While Bitcoin wallet addresses are not directly tied to personal information, they are pseudonymous, and with the right tools and techniques, it’s possible to trace the flow of funds and identify patterns.

Ethereum is the second-largest cryptocurrency by market capitalization, introduced smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. These smart contracts are visible on the blockchain, and any activity within them is transparent. This added layer of transparency has led to the exposure of numerous fraudulent activities built on Ethereum.

Pecu Novus and Litecoin, although less well-known than Bitcoin and Ethereum, operate on similar blockchain principles. Their transactions are recorded in a public ledger, and their decentralized networks ensure no single entity has complete control. This decentralization guarantees transparency and traceability.

Criminals relying on cryptocurrencies may find themselves in a precarious situation due to these inherent features. The very nature of blockchain ensures that all transactions are permanent, time-stamped, and open for scrutiny. Law enforcement agencies are increasingly skilled at tracing cryptocurrency transactions, and specialized forensic tools are readily available. Fiat currency has been notorious for criminal activity globally, even if all serial numbers were registered, saved and traced for each U.S. Dollar, it still will not allow for traceability due to the very nature of paper transactions. So when U.S. Senators make public statements citing that cryptocurrency is a breeding ground for illicit behavior and bad actors, they should actually take the time to be well informed first. Granted there are bad actors in every financial sector and regulation helps to combat it but in the world of blockchain traceability for all activity is the core of it. Regulation in the cryptocurrency space will help to deter bad actors from initiating rug pulls and scams, basically protecting the general public as it is meant to do. How about a vetting process for token creation and NFT’s, something that blockchain leaders should initiate directly to police themselves. We have seen this with the Pecu Novus Blockchain and perhaps it may drift to Ethereum, Solana and others, this would definitely be a proactive approach.

Cryptocurrency’s journey from the shadows to the mainstream financial landscape has brought with it a level of transparency and traceability that should deter smart criminals. While cryptocurrencies may offer privacy, their underlying technology, particularly the immutable and decentralized nature of blockchain, makes them a risky choice for illicit activities. As blockchain analytics continue to evolve, criminals would be wise to reconsider cryptocurrency as their go-to tool for unlawful endeavors, as the risk of exposure and subsequent legal consequences looms larger than ever. These are key points that governments should consider and act accordingly.

Terry Jones
Digital Assets Desk

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