Does it surprise you that one-quarter of Bitcoin users and one-half of Bitcoin transactions involve illegal activities? According to data from an Australian research group, Bitcoin is wrapped up in approximately $72 billion worth of illegal activity each year. This is comparable to the cost of the illegal drug market in Europe and the United States.
Interestingly, Bitcoin has lost $72 billion in value since the start of 2018, reports Business Insider. That’s got to be a coincidence, right?
Economics and finance experts Sean Foley of the University of Sydney, Jonathan R. Karlsen of the University of Technology Sydney, and Talis J. Putniņs of the Stockholm School of Economics in Riga carried out the research, reports The Next Web.
As part of its research, the team analyzed algorithms using network clustering and detection-controlled estimation. They explained: “While cryptocurrencies have many potential benefits including faster and more efficient settlement, regulatory concerns centre around their use in illegal trade (drugs, hacks and thefts, illegal pornography, even murder-for-hire), a potential to fund terrorism, launder money, and avoid capital controls.”
The researchers noted that cryptocurrencies are not necessarily promoting black market transactions. Instead, they may simply be an alternative payment for crimes that have been around for a long time.
The team added: “A crucial piece of this puzzle is understanding the extent to which the online illegal trade simply reflects migration of activity that would have otherwise occurred on the street, versus the alternative that by making illegal goods more accessible, convenient to buy, and less risky due to anonymity, the move online could lead to growth in the aggregate black market.
“Our estimates of the amount of illegal trade facilitated with Bitcoin through time contribute to understanding this issue, but further research is required to relate these estimates to trends in the offline black market.”