Blockchain Daily

Digital underground exiting Bitcoin in favour of Monero and other private cryptocurrency

Digital underground exiting Bitcoin in favour of Monero and other private cryptocurrency

Bitcoin has long suffered a reputation for enabling the criminal digital underground, despite the complete transparency of the ledger. It has taken years for private investigators and law enforcement to understand Bitcoin. Now that arrests are relatively straight forward to make Bitcoin is no longer a platform that criminals want to use.

Criminals don’t stop committing crime just because one platform doesn’t’ work for them anymore so now, as the St Louis Post-Dispatch has reported, the digital underground are moving to other cryptocyrrencies that provide enhanced privacy. Monero seems to be the preferred choice, with Ethereum and Zcash also popular.

Signs that criminals are moving away from bitcoin

Europol, Europe’s law enforcement agency, published a report 3 months ago which pointed to this behaviour change. There are a few different signs that have signalled the exit of the criminal digital underground:

  1. Monero value quadrupled in value in November and December last year, while Bitcoin only doubled (though worth noting that Bitcoin is still worth considerably more)
  2. Ransomware hackers seem to have stopped asking for Bitcoin, opting for Monero instead. One significant hack was in mid-December last years against WordPress in which hundreds of thousands of users sites and content were held ransom.
  3. Coinfirm has been tagging almost all Monero transactions as ‘high risk’, while only around 10% of Bitcoin transactions have received the same tagging according to Pawel Kuskowski, chief executive officer of Coinfirm. ‘High Risk’ tagging is applied where the transaction is suspected to be involved with crime.

What makes Monero good for criminals?

In a word: privacy. A central tenet of Bitcoin has always been decentralization enforced by a transparent peer to peer network in which all transactions are recorded on the digital ledger tracked against a username. In contrast, where Monero is really clever – some might say devious – is that it not only encrypts the user’s address but also generates a fake address to help obscure the user. Where Bitcoin users, in the past, have been found with commonalities in username across differnet platforms and the locations where transactions are being made, with Monero, it’s not possible to see a true username to match with anything else.

Bitcoin may see increased legitimate business use as criminals disperse away from it, but that the digital underground continues to use blockchain based cryptocurrencies as a method by which to conduct crime continues to taint the industry as a whole.