Connect with us

Bitcoin

Criminals Are Ditching Bitcoin For Another Cryptocurrency

Criminals Are Ditching Bitcoin For Another Cryptocurrency

Monero is quickly becoming the digital coin of choice for criminals as bitcoin’s privacy loses strength.

Bitcoin has lost its luster for some of its earliest, and most avid, adopters – criminals.

Monero, which is designed to avoid tracking, has climbed faster over the past two months as law enforcement has adopted software tools to monitor people using bitcoin. Several analytic firms, like Chainalysis, have been getting better at identifying digital hoards of bitcoin linked to crime or money laundering, and alerting exchanges to prevent conversion into traditional cash.

Monero quadrupled in value to $349 in the last two months of 2017. This rise places the coin among several upstart coins that have risen faster than bitcoin, the world’s most valuable digital currency by market cap. Bitcoin has roughly doubled in the same period. According to coinmarketcap.com, Monero has climbed another 7% so far this year.



Criminals are snapping up the digital currency because bitcoin’s underlying blockchain technology can work against them as it meticulously records which addresses send and receive transactions, including the time and amount, which is good data to use as evidence. With Monero, the recipient’s address on the blockchain is obscured by the real sender with generated fake addresses. It also obscures the amount of the transaction.

Monero is one of several privacy-focused coins, each of which offer different security features. Monero’s main competitor is Zcash, which is also known to have a significant criminal following, can offer even greater privacy. Zcash encrypts the true address of a sender instead of generating fake addresses to obscure them, as Monero does, making it impossible to identify senders by looking for addresses used in multiple transactions. However, Monero developers are making progress toward reducing this vulnerability.

Still, while Princeton University researchers were recently able to develop a tool that helps to analyze Zcash transactions to some extent, they haven’t been able to crack Monero yet, adding to its appeal.

The developers behind Monero have said they created the coin to protect privacy, but that the majority of users use it legitimately. Users—Riccardo Spagni, a core developer at Monero, said in an interview—just don’t want others to know whether they are buying coffee or a car with their coins.



“As a community, we certainly don’t advocate for Monero’s use by criminals,” Spagni said. “At the same time, if you have a decentralized currency, it’s not like you can prevent someone from using it. I imagine that Monero provides massive advantages for criminals over bitcoin, so they would use Monero.”

Criminals, though, are likely only a fraction of Monero’s users, according to Lucas Nuzzi, a senior analyst at Digital Asset Research.

“As with any disruptive technology, many of the initial use cases revolve around illicit activities,” Nuzzi wrote. But as non-criminals grow more concerned about privacy and surveillance, “there is utility in these currencies that go beyond just a means of exchange for illicit goods.”

Monero’s privacy focus has recently attracted North Korean hackers. Hackers from the regime’s Andariel hacking unit recently seized a server at a South Korean company to mine roughly 70 Monero coins, worth about $25,000.



More in Bitcoin

Read This Next

To Top