Experts: Privacy Coins Like Monero Becoming Currency of Choice for Criminals
Is Bitcoin no longer a preferred vehicle for criminals to commit fraud or crime? That may soon be the case, as virtual currencies like Monero and Zcash have been the recent favorites of criminals. These cryptocurrencies are specifically designed to elude any sort of tracking mechanism.
Bitcoin Is Traceable, Monero Isn’t
Privacy coins like Monero and Zcash have seen their values rise to new highs over the past few months due to rising interest from criminals. In the past, Bitcoin has always been criticized for being “criminals’ currency.” As a result, law enforcement agencies have developed techniques to track bitcoin transactions as best they can.
Accordingly, Bloomberg’s Rob Urban recently discussed how bitcoin is losing favor among criminals. He said:
“Bitcoin is famous for being anonymous, but there is a difference between anonymous and untraceable.”
He added the whole idea of Bitcoin was to track transactions publicly on its blockchain network. Moreover, he noted Monero creates “false trails” to deceive law enforcement agencies. When asked if regulators are going to take serious action against such activities, Urban replied that “cryptocurrencies are outside the realm of regulations.”
Riccardo Spagni, a core developer of Monero, has explained that the virtual currency was developed to safeguard users’ privacy. “As a community, we certainly don’t advocate for Monero’s use by criminals,” Spagni said.
Spagni did concede partially, though:
“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.”
Monero and Zcash: In With the New
When asked how Monero is used in the criminal underworld, Urban replied: “It’s very popular for ransom.”
Naturally, the increase in Monero’s dark web popularity is due to its inherent security features. To this end, Monero and Zcash have been particularly popular among digital racketeers that take over and lock the computers of individuals.
These extortionists unlock affected computers only if a ransom payment is made. According to security-minded Wordfence blog, on December 18th, 2017, hackers aggressively coerced 190,000 WordPress websites to yield Monero.
The blog remarked that this attack was “the most aggressive campaign we have seen to date, peaking at over 14 million per hour.”
How Monero and Zcash Differ from BTC
Bitcoin’s underpinning blockchain technology was initially designed to record transactions on the public ledger. The digital ledger also stores addresses of the sender and receiver of a payment with the exact time. Investigators have developed databases and tactics to use this data to tackle criminal activities.
Monero, created in 2014, encrypts addresses and produces fake addresses to shroud the sender. Additionally, the cryptocurrency feature can also conceal the amount of the transaction. Hence, providing a safe haven for wrongdoers and regular privacy-minded users alike.
Zcash is rumored to already have a vast criminal following, too. That’s because Zcash encrypts the actual address instead of creating a fake address like Monero.
Lucas Nuzzi, the senior analyst at Digital Asset Research, indicated that illegal use may only account a tiny part of privacy coin’s use, though.
“As with any disruptive technology, many of the initial use cases revolve around illicit activities. There is utility in these currencies that go beyond just a means of exchange for illicit goods. ”
In October 2017, the law enforcement agency of the European Union, Europol, highlighted the use of Zcash, Monero, and Ethereum by criminals in the digital underground space. Although, the enforcement agency said bitcoin is still favored digital currency for illicit activities for now.
Per the report:
“Cryptocurrencies continue to be exploited by cybercriminals, with Bitcoin being the currency of choice in criminal markets, and as payment for cyber-related extortion attempts, such as from ransomware or a DDoS attack. However, other cryptocurrencies such as Monero, Ethereum and Zcash are gaining popularity within the digital underground”.
Will law enforcement agencies stop illegal use of cryptocurrencies, or is that altogether impossible? Let us know what you think below.
Images via The Register, getmonero.org