When Bitcoin and other cryptocurrencies burst onto the scene, naysayers alleged digital assets were conducive to nefarious transactions, including money laundering.
Indeed, there was a time when Bitcoin was the favored currency of bad actors. This in turn stymied mainstream adoption, albeit temporarily. Data today support the notion that the crypto criminality is on the decline.
“2020 was an incredible year for cryptocurrency. In spite of the devastation wrought by the worldwide Covid-19 pandemic, Bitcoin has shattered its previous price records, largely driven by the increased demand from institutional investors that many in the cryptocurrency community have long speculated would drive the asset to new heights,” reports Chainalysis. “However, as always, cryptocurrency remains appealing for criminals as well due primarily to its pseudonymous nature and the ease with which it allows users to send funds anywhere in the world instantly, despite its transparent and traceable design. But the good news is that cryptocurrency-related crime fell significantly in 2020.”
Decentralized Currencies
The idea of decentralized currencies goes far beyond Bitcoin and Ethereum. Today, all kinds of companies, organizations, and governments are exploring the concept of initial coin offerings, or ICOs.
Businesses and currencies exist for roughly the same purpose: to facilitate the exchange of value. Fiat currencies like the U.S. dollar are positively primitive compared with the promise of blockchain and the emerging token economy, which some technologists have taken to calling an asset operating system.
Greater interest in cryptocurrencies has led to less rule-breaking.
“In 2019, criminal activity represented 2.1% of all cryptocurrency transaction volume, or roughly $21.4 billion worth of transfers. In 2020, the criminal share of all cryptocurrency activity fell to just 0.34%, or $10.0 billion in transaction volume. One reason the percentage of criminal activity fell is because overall economic activity nearly tripled between 2019 and 2020,” adds Chainalysis. “Regardless, the good news is two-fold: Cryptocurrency-related crime is falling, and it still remains a small part of the overall cryptocurrency economy.”
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