Bitcoin has drastically shed it its status as the sole province of criminals, according to the US Drug Enforcement Administration (DEA).
Talking to Bloomberg, DEA agent Lilita Infante explained how the proportion of bitcoin (BTC) activity that can be traced to criminal activity has dropped massively, after accounting for around 90% of transactions just 5 years ago.
Now making up less than 10% of transactions, Infante was keen to point out that illegal use of the coin hasn’t actually dropped in raw terms – in fact it has increased substantially. The coin’s soaring use in speculation, however has seen the ratio change dramatically:
The volume has grown tremendously, the amount of transactions and the dollar value has grown tremendously over the years in criminal activity, but the ratio has decreased. The majority of transactions are used for price speculation.
Infante, who is part of the DEA’s Cyber Investigative Task Force, explained that criminal organisations such as drug cartels are increasingly using digital currencies to help move money quickly, and less traceably across borders.
Although bitcoin – a pseudonymous, rather than an anonymous cryptocurrency such as Monero, Zcash or Dash, affords some degree of traceability, Infante explained that wallet addresses no longer conceal their users identities as they once did – adding that even the privacy coins the DEA “still have ways of tracking them.’’
Bitcoin Usage
Interestingly, while Infante was stressing the distinction between criminal and legal use, the breakdown of bitcoin’s legitimate use is actually more fine-grained than speculation alone.
A study by Chainalysis, the blockchain intelligence company famous for their role in uncovering the Mt Gox hack, showed an interesting split in the use of bitcoin (BTC) vs. rival bitcoin cash (BCH).
Dividing the use of the two coins according to a scale of liquidity from the most speculative coins moved around in small amounts(M0); to coins used by exchanges and services for transactions (M1); coins held for investment (M2); all the way to illiquid lost coins and coins yet to be mined (M3), the study revealed an interesting picture of how the coins were used:
