Bitcoin Still the Preferred Cryptocurrency of Cybercriminals: Report
One of the best-known, longest-lasting applications of Bitcoin has been its use as money by those who are involved in black market activities on the internet. Indeed, many Bitcoin users interacted with the cryptocurrency for the first time when they decided to purchase some ecstasy or weed from one of the many available darknet markets.
While many of these markets have been shut down by law enforcement agencies over the years, this form of illicit e-commerce is stronger than ever, with a reported $1 billion expected to be spent on darknet markets this year.
Although bitcoin is often referred to as the private or anonymous currency of the internet, the reality is transactions on the Bitcoin network are extremely public. Real-world identities aren’t directly attached to each and every transaction, but anyone has the ability to download all of Bitcoin’s blockchain data, which includes every transaction in the cryptocurrency’s entire history.
New innovations like the Lightning Network and privacy-focused wallets, such as Wasabi and Samourai, are helpful for those who wish to gain a greater degree of privacy, but bitcoin transactions are far from private by default right now.
That said, bitcoin is still the preferred cryptocurrency among cybercriminals, according to this year’s annual Internet Organized Crime Threats Assessment (IOCTA) from Europol. While altcoins like Monero have attempted to gain traction with a focus on providing the highest degree of privacy possible, these alternative cryptocurrencies have been seemingly unable to compete with bitcoin in the key areas of network effects, brand recognition and general familiarity.
“Bitcoin remains the most frequently used currency, believed to be a consequence of familiarity within the customer base,” says the Europol report.
Notably, The Block recently found similar results in their research of cryptocurrency adoption on darknet markets, which found a 91 percent bitcoin acceptance rate at the 31 darknet markets they analyzed.
Criminal Use Cases of Bitcoin
According to the Europol report, cryptocurrencies like bitcoin play an essential role in the underground economy and are used for most criminal-to-criminal (C2C) payments online.
Examples of specific situations where criminals take advantage of the properties of cryptocurrencies include ransomware, DDoS extortion, cryptojacking and darknet markets.
The Europol report also adds that online fraudsters are increasingly moving away from traditional payment rails and toward bitcoin. It speculates that this approach will lead to better results for the fraudsters due to the low level of knowledge the average person tends to have when it comes to how crypto assets work. While the situation is not mentioned specifically in the report, newcomers to the cryptocurrency world are often unaware that blockchain-based transactions are irreversible.
In terms of the darknet markets, the Europol report covers a perceived fracturing of the ecosystem.
“The coordinated law enforcement efforts, together with continued DDoS attacks, have had a significant impact on the dark web in terms of generating distrust and, at the time of writing, the environment remains in a state of flux,” says the report. “The emergence of new multi-vendor top markets is apparent, however, as are increased exit scams, including some of those initially appearing to dominate.”
Earlier this year, a report from Chainalysis showed a decline in darknet market activity as a percentage of all bitcoin transactions; however, the dollar-denominated value of darknet market commerce powered by Bitcoin is still on the rise.
Cybercriminals Use Monero Too
Monero is the only altcoin discussed in the Europol report on more than one occasion. Much of the coverage regarding Monero revolves around cryptojacking, where hackers place software that mines cryptocurrency on the hacker’s behalf on their victim’s computer. Monero is particularly suitable for this sort of activity due to its privacy features and the fact that it’s still possible to mine the altcoin on conventional hardware.
The Europol report also provides an update on the level of Monero adoption by criminals for non-cryptojacking use cases.
“While we have previously reported a small shift towards more privacy-focused cryptocurrencies such as Monero, Bitcoin still remains the currency of choice for both legitimate and criminal use,” says the report. “The main developments regarding this trend are on the Darknet markets, several of which also accept Monero, or in some cases exclusively trade in it.”
“Criminal” Exchanges Are Coming
In a section regarding future threats and developments, the Europol report discusses bitcoin exchanges and how they’re being forced to do their due diligence when it comes to collecting information about their users. With policies related to the 5th EU Anti-Money Laundering Directive (AMLD 5) coming into force by the end of 2019, Europol expects cryptocurrency users who want to preserve their financial privacy to move to peer-to-peer exchange systems.
“[I]t is likely we will see the rise of criminal exchange services operating on the digital underground, exchanging fiat and cryptocurrencies outside the regulated sector,” adds the report.
While law enforcement is able to make things more difficult for criminals who wish to use bitcoin for their unregulated activities, it’s clear that stamping out cryptocurrency completely isn’t a likely scenario, as multiple U.S. lawmakers recently pointed out. At the end of the day, it’s basically impossible to stop all criminal activity on the internet without implementing a complete surveillance state.
The post Bitcoin Still the Preferred Cryptocurrency of Cybercriminals: Report appeared first on Bitcoin Magazine.
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