The Strategist

RAND research: Bitcoin becomes less attractive for criminals

04/15/2019 - 07:22

According to experts of RAND research center, bitcoin and other common digital assets are less suitable for criminals. These tools no longer provide complete anonymity and are controlled by regulators and law enforcement officers. New cryptocurrencies are unreliable and illiquid. However, experts admit that digital assets retain a potential danger to society as they are rapidly developing and transforming.

Most of the known cryptocurrencies no longer correspond to the needs of criminal structures that previously used them as a way to finance illegal activities. This conclusion was made by American researchers from the Center for International Security and Defense Policy of the RAND Corporation in its new report. “We see little evidence of acceptance of cryptocurrency by terrorist organizations and little interest in them,” the research text says. The conclusions were made on the basis of an analysis of the financing channels of the largest international terrorist groups (Al-Qaeda, the IS, Hezbollah, and others), as well as criminal communities engaged, in particular, in drug trafficking and human trafficking.

According to the center, the main problem that has become an obstacle to the use of cryptocurrency assets in the criminal environment is minimization of anonymity of all market transactions. This is particularly true for large sums in cryptocurrency: it is necessary not only to manage them, but also to convert them into fiat funds with subsequent spending, which has become difficult because of increased control from the international law enforcement system. According to analysts of the center, it is already quite difficult to finance terrorist and criminal activities, for example, in Bitcoins.

At the same time, less well-known cryptocurrencies that remain anonymous (for example, MasterCoin, BlackCoin, Monero, Zcash) also have a number of drawbacks that make them unattractive for use in illegal activities. Thus, the gradual inclusion of the world's main cryptocurrencies in the regulatory system will lead to marginalization of unregulated digital assets, blockchains of which will no longer be supported. This process will inevitably lead to the fact that crime will sooner or later find that "the digital world has become much less hospitable." In addition, there are considerable uncertainties and conflicts around new digital assets as they grow. This reduces credibility of the gangs.