As the world observes the International Day Against Drug Abuse and Illicit Trafficking, we hereby attempt to analyze the correlation between the crypto space and illicit drugs and how it has been affecting people around the globe.
In its 10 years of existence, Bitcoin has found thousands of use cases for itself, inspiring the birth of hundreds of new cryptocurrencies. Right from global money transfers to payment for e-commerce, and what not! It had all that people wanted in fiat currencies, anonymity, transparency, less time consumption, etc. It was also used for holistic programs like funding children in Africa.
However, there is a dark side to Bitcoin, which has evolved to become a grave evil, and that’s drug trafficking. Crypto money is the easiest way to circulate funds being unnoticed, and traffickers, especially in Europe and South America, have started using Bitcoin and other digital coins to transfer money from one place to another.
Just a couple of days ago, a Spanish drug cartel was busted which used two crypto ATMs to transfer money. In fact, there are quite a few crypto-blockchain based online portals, which sell illegal goods, including narcotics. As per research, over 25% of total Bitcoin users and 44% of total transactions are related to illegal activities. This translates into a humongous $72 billion worth Bitcoins used for activities like drug trafficking. To put into context, the narcotics industry in the US churns out over $100 billion annually.
And apart from Bitcoins, the situation might get even worse sooner than we think. Digital tokens like Dash, Monero, and ZCash have taken monetary transactional anonymity to a whole new level. In simple words, they have become gold for narco-traffickers. These altcoins have given a boost to darknet marketplaces, inviting strong criticism from authorities around the globe. The Financial Action Task Force (FATF), in particular, has become quite active in putting a curb on crypt based money laundering or illegal income from activities like drug peddling.
So what can the community do for this?
It is almost impossible for crypto companies to come out with concrete solutions in the short run. Even the criminals took years to understand and misuse cryptocurrencies, and solution to it will take a fair bit of time too. Therefore, any approach taken by the companies should be for the long run.
Initial, companies must make small efforts to implement transactional transparency for government agencies to keep a check of the traders. Secondly, all crypto companies must implement systems on their platform so that the tokens cannot be used on the darknet marketplaces.
However, putting control will put an end to the basic essence of cryptocurrencies. Bitcoin was designed to be out of the control of authorities. It was created to help people free themselves from the clutches of the traditional monetary systems. Altering tokens to control them and allow authorities to have a shot at crypto users will put the entire community back in the monetary prison of traditional systems.
Therefore, it is a big problem, yes, but a solution to it will be unacceptable to almost the entire community. Crypto sympathizers might argue that the amount of Bitcoin and altcoins used for illegal activities is far less than traditional cash. But that might just be a naive argument. Nonetheless, the biggest loss in the tussle of authorities and crypto industry is of the society at large.