Crypto currency and crime – fact or fiction?


When it comes to Bitcoin and investment risks if you’re considering investing in bitcoin, understand that there are unique investment risks.  

Like regulatory risk Bitcoins are a rival to government currency and may be used for black market transactions, money laundering, illegal activities or tax evasion. The reason can be that Bitcoin it’s still as anonymous as cash transactions can be in most situations hard to trace.  

Bitcoin is the unofficial-official currency of the Dark Web, and much like the Dark Web, it’s very difficult to trace. Bitcoin isn’t a currency that has a real, solid form in most cases.  

Bitcoin is encrypted data that’s based on blockchain code, and has mechanisms against double-spending built into every code. They can be transferred from person to person almost entirely anonymously, both online and in person.  

They also can be traded in exchange for “real” money that’s backed by governments. But also Bitcoins are hard to trace, and impossible to track from government-to-government. As a result, that level of anonymity makes it a perfect criminal currency. 

That being said, Danish police have successfully traced criminal activity through Bitcoin in the recent past. So, it may not be as anonymous as it once was. 

Bitcoin offers Pseudonymity 

Users of bitcoin in theory operate in semi-anonymity in comparison to senders of traditional electronic payments. Who are usually identified for verification purposes, and to comply with anti-money laundering and other legislation.  

With bitcoin since there’s no central validator, users don’t need to identify themselves when sending bitcoin to another user. When a transaction request is submitted, the protocol checks all previous transactions to confirm that the sender has the necessary bitcoin as well as the authority to send them. The system doesn’t need to know his or her identity. 

In practice, each user is identified by the address of his or her wallet. Transactions can, with some effort, be tracked this way.  Also, law enforcement has developed methods to identify users if necessary. 

Furthermore, most exchanges are required by law to perform identity checks on their customers before they’re allowed to buy or sell bitcoin. Facilitating another way that bitcoin usage can be tracked, since the network is transparent, the progress of a particular transaction is visible to all. This makes bitcoin not an ideal currency for criminals, terrorists or money-launderers. 


Bitcoin transactions cannot be reversed, unlike electronic fiat transactions. While this may disquiet some, it does mean that any transaction on the bitcoin network cannot be tampered with


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