Banning cryptocurrencies to counter crime is a nonsensical excuse
As the head of the Australian government’s senate inquiry into digital currency, I have to say that I’m a bit surprised by the report they released yesterday. The report is titled “Strengthening the AML/CTF Act” and it states that the government plans to ban cryptocurrency exchanges, and other businesses related to cryptocurrencies.
At the time of writing this, the cryptocurrency market is worth more than $410 billion (using CryptoCompare’s current rates), and it has been speculated that it could reach a trillion dollar valuation by 2021. Cryptocurrencies have had quite the run over 2017, and old-school financial institutions like the U.S. government aren’t too happy about it. Washington has moved to regulate virtual currency exchanges by getting them to register with the Treasury Department, and has sent out warnings to the public against the dangers of investing in the space.
Although it is not clear what qualifies as a “crime”, there are many worries that cryptocurrencies are being used to finance illegal activities. However, the misuse of cryptocurrencies is more prevalent among criminals than the actual use of cryptocurrencies for illegal activities.
Many governments are trying to ban cryptocurrencies, with current examples being China, India, Turkey and Nigeria. The reason is simple: The decentralized nature of cryptocurrencies poses a threat to the traditional financial system, and since the technology itself is still in its infancy, it seems to attract hackers. Still, banning cryptocurrencies won’t stop hackers and scammers.
Hackers continue to be attracted to cryptocurrencies
Since the advent of cryptocurrencies, hackers have shown a fondness for this form of currency. The apparent appeal of anonymity when receiving payments has created an aura of invincibility for all cryptocurrencies. However, this concept is often misunderstood, as no public blockchain in its current form is private or anonymous. Although transactions using the blockchain are pseudonymous, users will still need to convert their transactions into fiat currency at some point. This often requires proof of identity in the form of official documents, thus destroying anonymity and confidentiality.
Related: Report on crypto-currency exchange hacks 2011-2020
Although most hackers recognize that cryptocurrencies do not respect privacy and anonymity, overall crime remains relatively high. Despite a significant drop in cryptocurrency-related crime by 2020, there is still cause for concern, according to a report from CipherTrace. This is why many governments want to ban cryptocurrencies, hoping that such measures will deter hackers from doing damage.
However, such an outcome seems unlikely. With tools like ransomware, malware and other criminal activities, it doesn’t take much for hackers to change the way they receive payments. Cryptocurrencies offer pseudonymity, but they are not the only way to pay.
These methods provide more privacy
For example, gift cards are an easy and legal way to transfer value from one person to another. Most convenience stores sell gift cards for different services, such as Netflix, iTunes, PaySafeCard, etc. Each gift card has a value and does not need to be purchased in name or converted into cash online. These cards are indeed much more personal and anonymous than cryptocurrencies. However, they are also more easily accessible, making them a bigger problem for governments looking to eliminate hackers.
The same concept applies to prepaid cards from mobile phone providers. Since these cards require no proof of identity for purchase and no receipt for activation, they are essentially anonymous money. Although prepaid mobile phone cards are not always used internationally, they remain a private way to transfer value from one person to another.
If governments really want to deter hackers, they also need to find a way to cut them off from the existing financial system. Even in 2021, bank accounts and payment cards can be hacked and used too easily. Hackers and other criminals can gain access to a bank account in a variety of ways, including. B. via mobile Trojans, counterfeit applications, phishing, keyloggers, man-in-the-middle attacks, etc. As long as hackers have the opportunity to make money without immediate consequences, they will continue to explore the various options available to them.
Related: Don’t blame cryptocurrencies for ransomware
. Putting the criminal role of cryptocurrencies in perspective.
While governments are adamant that bitcoin (BTC) and other cryptocurrencies are the main cause of online crime, the reality is often different. According to a recent report by Chainalysis, only 0.34% of total transactions in the cryptocurrency market will involve illegal activity by 2020. This is a big drop from the 2% in 2019. Incidentally, Chainalysis research shows that fewer and fewer criminals are interested in bitcoin and other crypto assets.
If we dig deeper, it is clear that ransomware is still the main form of cybercrime and is a very serious threat and problem. With more and more people working from home as a result of COVID-19 restrictions, new opportunities are opening up for criminals looking to make a quick buck. This does not automatically mean that cryptocurrencies should be abandoned, as most consumers have no idea how the industry works.
Related: COVID-19 : Decentralisation becomes the norm as workplaces adapt to the new normal
Conclusion: Banning crypto-currencies is not a solution
Any government that tries to ban cryptocurrencies will fail for a variety of reasons. First, it is impossible to stop people from using crypto assets because governments have no control over these networks. There are no central figures or CEOs who can be pressured to close, making it almost impossible for governments to act. While regulators may make it difficult for service providers to operate, these companies are not essential to supporting cryptocurrencies.
Also, don’t ignore the many ways hackers and scammers make money. If the aim is to prevent illegal activities, combating the abuse of traditional funding must be a top priority. Cryptocurrencies represent a much smaller market for criminals than banking services and products, as well as gift cards and other forms of pseudocurrency. Combating cybercrime is an urgent task as costs continue to spiral out of control, but the focus should not be on cryptocurrencies.
Any attempt to restrict cryptocurrencies because criminals use them is a mistake. If that is the goal, other approaches can be used instead of banning something. Since cryptocurrencies cannot be used without the traditional financial system, it is easy to see where governments should focus their attention. Unfortunately, none of them seem willing to admit that the system they support is responsible for most of today’s criminal activity.
This article contains no investment advice or recommendations. Any investment or business transaction involves risk, and readers should do their own research before making a decision.
The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent those of Cointelegraph.
Mervick Homes is a blockchain entrepreneur, author and branding expert. In 2018, he founded Startup Fortune, a global startup platform that enables entrepreneurs around the world to connect and collaborate.The United Kingdom is on its way to banning cryptocurrency trading. The proposed draft law is aimed at “illegal” uses of cryptocurrencies, such as money laundering and terrorism financing. The first target is Bitcoin, the most popular cryptocurrency. The ban, which is expected to come into force in 2020, will come in the form of an outright ban of exchange trading, meant to stop criminals from using crypto to move money around. However, it will also include a freeze on crypto fundraising and on the ability to move cryptocurrencies in and out of the UK.. Read more about what does cryptocurrency mean and let us know what you think.
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