Despite a 2020 that has pushed the price of bitcoin to overall highs and set new records for stability, it is not too difficult to see Bitcoin FUD spreading. But recently released blockchain analysis shows that the story “bitcoin is for criminals” weaker than ever.
The FUD continues
Yesterday, Janet Yellen, the incoming nominee for U.S. Treasury Secretary, highlighted a general story that many believe sheds an unfair light on the original cryptocurrency, suggesting the government will try to regulate its use.
‘I think a lot [cryptocurrencies] is – at least in a transactional sense – mainly used for illegal financing, ”said Yellen. “And I think we really need to explore ways to limit its use and make sure money laundering doesn’t happen through the channels.”
Last week, European Central Bank President Christine Lagarde said bitcoin was a “very speculative asset that has done funny things and interesting and completely reprehensible money laundering activities.”
Even in some industry-oriented publications, the FUD, “bitcoin is for criminals”, has been distributed, without acknowledging the fact that criminals have been using fiat cash for longer, which presumably regulated financial institutions facilitate major crimes, that anonymous cryptocurrencies are much more would be. useful for criminals like bitcoin or that there are many other arguments that suggest this narrative is unfair.
Cryptocurrency leaves criminals behind
According to a summary of ‘2021 Crypto Crime Report’ by blockchain analysis firm Chainalysis, the share of crime related to cryptocurrency dropped significantly last year.
“In 2019, criminal activity represented 2.1 percent of the total transaction volume of cryptocurrency, or about $ 21.4 billion in transfers,” the firm found. “In 2020, the criminal share of all cryptocurrency activities dropped to just 0.34 percent, or $ 10.0 billion in transaction volume.”
To put it another way: Cryptocurrency transaction volume, which could identify Chainalysis as “criminal”, accounted for only 2.1 percent of all transactions in 2019 (although Yellen seems confident that the technology is “primarily for illegal financing”), by far the highest percentage Chainalysis has found since 2017. In 2020, the figure was less than half of 1 percent, which is in no way fueled by a sharp rise in overall economic activity.
Chainalysis noted that cryptocurrency-designated ransomware activity increased by 311 percent in 2020 compared to 2019, and that even this figure is likely to be low due to under-reporting. But it still represents only 7 percent of the total funds received by criminal cryptocurrency addresses, which itself is a very small portion of all cryptocurrency transactions during the year. Funds received through fraud and dark net markets were by far the leading categories for criminal transactions in 2020.
It is unlikely that the picture painted by this report will significantly change regulators’ views on Bitcoin, or eliminate the appeal of FUD-focused headlines and media coverage. But a clear story is being told by Bitcoin’s 2020, even if it’s not the narrative that everyone will adopt: the journey from BTC to global reserve currency status will surpass its use on the edge of the dark web.
