The same principles governing Bitcoin’s pseudonymous currency system also make its network resistant to criminal infiltration and control. However, few involve people who have tried to spend stolen Bitcoins on black market websites or launder them through exchanges to elude capture by the Feds. However, that was way before the bitcoin ecosystem was not mature then. Now criminals can’t hide behind Bitcoin.
Bitcoin, after all, is designed to be untraceable and therefore not defensible against powerful adversaries. But no such attempts have been successful. That is thanks to a multilayered defense comparable to the walled medieval cities that were virtually impossible to breach. That being said, there are a lot of scam sites so better use a trusted website like Bitcoin Buyer since it is secure and safe for trading.
Bitcoin’s security starts with “multi-signature” transactions —a way of signing off on a transaction so that it requires a broader range of approval than the mere verification of one person’s identity. Multi-signature transactions require approval from nine different computers on the Bitcoin network before they can take place, a safeguard called m of n signing. Here are reasons why criminals cannot hide behind bitcoin.
It can’t be used to purchase black market goods because all Bitcoin transactions are publicly logged on the blockchain. Furthermore, through this transparent ledger, any number of crimes committed with Bitcoin can eventually have traced back to their point of origin. So even if a criminal could launder those funds through an exchange or another currency (like USD or EUR), there are still ways to link those bitcoins back to their original block in the blockchain.
Crime always includes the element of secrecy. Like in the black market, criminals thrive on a shroud of darkness and anonymity to conceal their activities. However, the value of BTC is based on transparency, which makes it difficult for fraudsters to take advantage of it.
A large part of crime relies heavily on anonymity. However, Bitcoin prevents traditional and new types of anonymity, preventing people from linking a victim’s transactions to their identity.
During criminal investigations, the police often trace crimes back by the following money out of—and back into—the accounts used to carry out the crime. It can be tricky since the criminal can often move the funds through multiple accounts before they finally return to the entity that initially received them. Bitcoin makes this kind of laundering significantly more complicated than traditional currencies.
The Bitcoin network limits the number of bitcoins that can enter circulation. Theoretically, this makes it harder for black marketers to obtain large amounts of bitcoins because they are getting scarcer every day.
Some countries have worked hard to impose regulations on Bitcoin transactions to curb illegal activity associated with digital currency. By putting a cap on the number of bitcoins that can move into the market, Bitcoin transactions are made traceable.
Some criminals try to launder their money by withdrawing it from bitcoin exchanges, laundering it through other currencies, converting it into fiat currency, and taking out large sums in cash. Undeniably it is possible, but all these movements are easily tracked on the blockchain.
With so many ways to obtain bitcoins—and with some being even easier than others—it is no surprise that hackers consistently steal bitcoins from exchanges and private wallet owners with little chance of reprisal from law enforcement or other regulatory agencies. But, the value of bitcoins is directly related to the collective consensus in the network. So even if hackers successfully steal bitcoins, their theft would be insignificant compared to the total amount in circulation.
Even with a powerful attack, they could only amass a small number of bitcoins. Ultimately they would have to sell them on the market if they plan on profiting from their endeavors, and you all know how hard it is for criminals to do so legally as this is where feds can easily trace them.
Investigating Cryptocurrency Wallets
Criminals have tried to hide their activities by storing their wealth in untraceable cryptocurrency wallets. But the blockchain allows law enforcement and regulators to track money even if it is not held in a traceable wallet. For example, the blockchain can show where bitcoins have been, who owns them, and what they’ve been used for in the form of a secret code.
The use case of bitcoin in illegal activities has decreased massively as only 0.6% of transactions have accounted for illegal activities. Moreover, privacy-focused cryptocurrencies offer better privacy to criminals, but nowadays, feds can track actual transactions from privacy-focused digital currencies.