Cryptocurrencies have long been associated with criminal activity, but the truth is that blockchain technology actually makes it easier to track money trails compared to traditional payment networks. With the right analytics tools, it is possible to follow the movement of funds on blockchains and identify suspicious transactions. However, the challenge lies in determining the identity of the individuals behind these transactions, especially when they use self-hosted wallets.
In a recent report titled “Predicts 2022: Prepare for Blockchain-Based Digital Disruption,” it is predicted that cryptocurrency thefts and ransomware payments will decrease by 30% by 2024. This is attributed to several key developments in the blockchain space.
One of the reasons for this decline is the transparency of blockchains compared to traditional payment networks. There are only about 23 major blockchains that make up the majority of the market, making it easier to monitor transactions across these platforms. By leveraging real-time machine learning and analytics, it is possible to track criminal activities and identify abnormal money movement patterns.
Furthermore, the emergence of the blockchain intelligence market has provided tools and solutions for authorities to investigate hacks and prevent fraud. Companies like Chainalysis and CipherTrace offer insights that help exchanges and DeFi protocols detect and prevent criminal activities. It is important to democratize these tools so that individual users can protect themselves from falling victim to scams.
Governments are also taking action to curb cryptocurrency-related crimes. The US government has issued sanctions against a Russian cryptocurrency exchange used by ransomware criminals, and law enforcement agencies are increasingly successful in identifying and seizing stolen funds. Criminals are finding it difficult to move stolen funds off blockchain networks without being detected.
Contrary to popular belief, virtual asset service providers (VASPs) like cryptocurrency exchanges play a crucial role in preventing criminal activities. Transactions that go through VASPs are less likely to be associated with criminal behavior compared to those that go through self-hosted wallets. In the future, it may be easier for criminals to launder money through legacy payment networks than through blockchain networks.
Overall, the landscape of cryptocurrency-related crimes is evolving, with advancements in blockchain technology and increased government intervention making it harder for criminals to operate. By leveraging blockchain analytics and fraud prevention tools, it is possible to protect users and prevent illicit activities in the crypto space.