Bitcoin and the Deep Web- Legacy of the Silk Road
Bitcoin has had the reputation of a black market medium of exchange since its inception. Many people envision tax evasion, drug purchases and other underworld dealing when they hear "Bitcoin". The history of Bitcoin's use on the Deep Web and it's now defunct market, the Silk Road, plays a big role in this misconception.
Between 2011-2014, the Silk Road operated on the Deep Web, which was often accessed using the Tor Browser. On the Silk Road was sold drugs, guns and other illicit services. Bitcoin was used to transact on the markets, and the FBI shut the marketplace down in 2014. The site's founder was captured, and the Deep Web's premier black market was sensationalized in the media and documentaries.
The truth of the matter is that cash, traditional banking, gold and even Amazon gift cards play a larger role in underworld transactions than Bitcoin ever has. A 2019 study performed by MIT that looked at 200,000 transactions on the Bitcoin blockchain found only 2% of the transactions were "illicit". This is down from 44% in 2017 at the height of the Bitcoin ICO and cryptocurrency bull market. This is good news for investors and users of cryptocurrency is that our asset is being adopted and legitimized.
What about real mediums of exchange criminals use? Money laundering is essentially when criminals take money from illegal sources and funnel them through legal or shell businesses to wash the money of scrutiny. According to the Banker's Academy, $500 billion to $1 trillion are laundered through banking operations annually, and anti-money laundering (AML) initiatives are created to combat this practice. With such a huge problem, banking institutions and cash play a bigger role than cryptocurrency ever has.
According to a study, 10% of illicit including drug transactions are done using Bitcoin and cryptocurrency. Roughly 90% of the purchases out of the $100 billion illicit market in the United States are done with cash. Let that sink in. With Bitcoin becoming more and more adopted for commercial and personal usage, that number should decrease. In essence, we should continue AML for cash and related cash transfer methods over cryptocurrency.
Sources:
Picture from Pixabay.
The Silk Road:
https://en.m.wikipedia.org/wiki/Silk_Road_(marketplace)
MIT Bitcoin Study:
https://observer-com.cdn.ampproject.org/v/s/observer.com/2019/08/bitcoin-use-illegal-finance-mit-study-blockchain-ai/amp/?amp_js_v=a2&_gsa=1&usqp=mq331AQCKAE%3D#aoh=15766143213110&referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fobserver.com%2F2019%2F08%2Fbitcoin-use-illegal-finance-mit-study-blockchain-ai%2F
AML Information:
http://bankersacademy.com/resources/free-tutorials/57-ba-free-tutorials/606-aml-usa-sp-741
Bitcoin vs Cash in illicit purchases:
https://cointelegraph-com.cdn.ampproject.org/v/s/cointelegraph.com/news/crypto-vs-cash-how-the-numbers-stack-up-on-drugs-guns-murders/amp?amp_js_v=a2&_gsa=1&usqp=mq331AQCKAE%3D#aoh=15766167461607&referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&share=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fcrypto-vs-cash-how-the-numbers-stack-up-on-drugs-guns-murders
