Crypto and Crime Don't Mix


Many mistakenly associate cryptocurrency with organized crime under the belief that it is somehow private and the authorities cannot trace the activity. This idea is patently false. Crypto is not anonymous, and never has been, and claims that it is or was misunderstood, or misrepresent what cryptocurrency is or how it works.

What part of "public blockchain" is confusing or not understood? Every transaction amount, source, and destination are traceable, can be, and is, tracked. Everyone can see the history of everyone participating, how much they own, and every transaction they ever conducted.

Bitcoin is pseudonymous, meaning that transactions link to the bitcoin addresses and not the individuals behind them. True, there is no "directory" correlating those addresses to individuals, but given sufficient data, it becomes trivial to deduce the IRL identity of everyone involved. Further, every Crypto Exchange enforces Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. As a result, your every crypto transaction and the addresses used are tracked and recorded. You might be able to keep your crypto hidden in a cold wallet, but you expose your address the instant you attempt to spend it.

The New York Times, June 6, 2022, carried an article by Siobhan Roberts that expands on this. The author cites Alyssa Blackburn of Rice University, who has spent several years examining the Bitcoin Blockchain. She and her collaborators have published a paper detailing what they have learned.

Governments and Criminals alike spy on Crypto Holders and track their every transaction. They, along with much of the Crypto community, meticulously follow large Crypto holders, and their moves inform thousands of buying and selling decisions. We call it "Whale Watching."

Blockchain transactions are not private and are only accidentally anonymous, which has given rise to so-called Privacy coins. One example is Monero (XMR).

Privacy is an ongoing arms race, and developers continually research and improve all aspects of privacy. But unfortunately, no software can ever be guaranteed to be 100% bug-free, and no privacy mechanism can be 100% guaranteed.

Bitcoin is NOT private.

In February 2022, the DOJ arrested Ilya Lichtenstein and Heather Morgan in New York for laundering a record $4.5 billion worth of stolen cryptocurrency. Despite the couple's byzantine attempts to obfuscate their trail, the DOJ traced and busted them.

Monero MIGHT be somewhat private today but won't be tomorrow, certainly not once the world learns the techniques used by the authorities to bust the Monero shield. However, cryptocurrency is not private, and determined investigators will always ensure that Crime Does Not Pay.

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