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27 Jan 2022
Business

Cryptocurrencies’ Dark Side and How to Fix It

Many of us were interested when Tesla stated in early February 2021 that it had purchased $1.5 billion in Bitcoin and would now accept cryptocurrencies as payment. They are not a short-lived trend that will soon fade away. Cryptocurrencies like Bitcoin (BTC), Ethereum (ETC), Ripple (XRP), Bitcoin Cash (BCH), and others are here to stay.

But as Tesla’s massive investment and other market events show, these new digital currencies are developing a solid grip and are already impacting other businesses. As a result, it’s no wonder that they’re becoming increasingly popular. That Bitcoin quadrupled in price and concluded the year at close to $29,000 is another sign of its wide-reaching appeal.For more information on crypto, visit bitcoins cycle.

Watch out for the Dark Side.

Although crypto has several positive attributes, like the ability to make transactions quicker and more cost-effective and its potential to improve financial inclusion for the unbanked and under-banked, there is a downside. It includes criminals and terrorists who frequently use cryptocurrencies as money. These criminal actors may more readily elude detection by authorities since they are unregulated, provide a high level of anonymity, and are simple to use.

In the same way that cryptocurrencies are becoming increasingly popular among legitimate businesses and consumers, they are also becoming increasingly valuable to criminals and others who engage in illegal activity. Chainalysis published a paper on crypto crime, estimating that $10 billion in illicit cryptocurrency transactions will be completed by 2020. It’s impossible to overlook $10 billion in illegal operations, even if they only make up a small percentage of overall worldwide crypto transactions.

Even more so when one considers the sorts of crimes that garnered the most bitcoin money between 2017 and 2020, such as supporting terrorists, buying and selling narcotics and weapons on the dark web, frauds, ransomware, child abuse materials, and domestic extremism.

What is Bitcoin/Cryptocurrency?

Decentralized cryptocurrencies like Bitcoin have been around since 2009.” Bitcoin’s high values and widespread interest in the currency have shattered the market. Cryptocurrencies aren’t the only thing people trade in today’s non-traditional market. There are, in fact, dedicated trading platforms for cryptocurrencies. If you characterize it that way, the bitcoin business as a whole is buzzing with activity.

This narrative has a darker aspect, although these transactions are exceedingly safe. It is all without considering the wild swings in bitcoin’s value or the plethora of different shapes they’re taking on the market. Listed here are some aspects that may not be ideal for the widespread acceptance of bitcoins/cryptocurrencies.

  1. Retail inefficient

We facilitate bitcoin transactions through a consensus-based system. For retail transactions, blockchain technology is prolonged because it requires multiple locations to update and validate ledgers (contracts). Cash and credit cards are far more practical in these situations.

  1. Market deregulation

Trading cryptocurrency is currently not subject to any legitimate market restrictions. Consequently, cryptocurrency transactions are not by any financial institutions licensed by the government (e.g., encashing). Cryptocurrencies are also challenging to trace due to the absence of restrictions, so they are in use for “dark” transactions. As a result, if regulators cannot.

  1. Energy waste

it may reduce a miner’s income by 25% if they use all their power on cryptocurrency mining. It’s not worth it until we have access to clean, renewable energy. For example, it costs around INR 180000 to mine bitcoins in India. A bitcoin-powered India would require an enormous amount of global electricity, which is why the Indian economy can’t operate only on this currency.

  1. Subsidiary Economy

People start using untraceable funds for unlawful activities because they can’t find a way to monitor them. Examples are money laundering, ransom demands, and the Dark Web. It’s a truth that these issues resemble those we face in a cash-based system. It should not use digital money if the situation persists or worsens.

In What Ways May Cognyte Assist?

When it comes to the dark side of bitcoin, Cognyte’s security analytics tools can help law enforcement and government security groups. With over two decades of expertise using security analytics to track down and stop criminals and terrorists, we’ve developed a crypto analytics and intelligence system that’s second to none. And with our unique patent-pending crypto intelligence technology, we are arming these institutions with a unique way to combat illegal crypto risks by recognizing suspicious transactions and de-anonymizing the persons who committed them.

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