Criminals Drop Bitcoin in Favour of Other Cryptocurrencies for Anonymity

Criminals are dropping bitcoin in favour of other cryptocurrencies in a bid to achieve greater anonymity for their criminal activities.

That’s according to the co-founder and president of Blockchain Intelligence Group. He estimates that the number of illegal transactions involving bitcoin fell from half the total volume to around 20 percent last year.

In an interview with CNBC, Shone Anstey, co-founder and president of Blockchain Intelligence Group, said:

“Now it’s significantly less than that.”

This is despite the fact that the overall transaction volume in bitcoin has grown. At the time of publishing, on the 31st August, bitcoin is trading at $4,614, a 0.77 percent rise in 24 hours. Over the past seven days its value has increased by 10.52 percent. Its market cap is now worth $76.3 billion.

After bitcoin recently soared above the $4,600 mark it would be natural to think that criminals would favour it more. However, it appears that that isn’t the case.

Criminals Look Elsewhere

Instead, it seems that criminals are now turning their attention to other cryptocurrencies. According to a U.S. Homeland Security official criminals are ‘looking more closely at other currencies like monero and ethereum.’

The official said:

“What the criminals are starting to see, and some of the trends we’re picking up as well, is that bitcoin also works equally just as much against you as it does for you.”

According to Chainalysis, the leading provider of anti-money laundering software for bitcoin, the rise of cybercrime in ethereum has risen with initial coin offering (ICO) financing. In a blog post, it states that total cybercrime revenue rose from $100 million in June to $225 million in August this year.

The highest grossing exploit was the DAO hack in 2016 after the DAO had sold over a billion tokens worth $150 million. Taking advantage of a vulnerability, criminals managed to steal around $74 million worth of DAO tokens from 11,000 victims.

Smart coding company Parity has also been subjected to a security breach. On the 19th July, it reported that more than 155,000 ether, worth $35 million, had been stolen.

Chainalysis states that as ICOs are time sensitive access to the sale necessitates investors to trade their ether quickly for alternative tokens. As a result, investors may find themselves tricked into providing their credentials to fake websites.

This was certainly the case for victims of the CoinDash ICO, which occurred prior to the Parity hack on the 17th July. A hacker was able to steal over $10 million after changing the contract address of the ICO project. Investors unaware of the situation continued to place their funds into the hacked CoinDash account. Consequently, around 43,500 ether was sent to the fake address.

Chainalysis adds:

“These credentials are then used to drain accounts. The average financial loss incurred per victim has increased by 20% from $6,700 in June 2016 to $8,000 since the DAO.”

Since the DAO, Chainalysis estimates that there has been around 30,000 victims of cybercrime on ethereum, each losing an average of $7,500.

Monero Gains in Value

Since the beginning of 2017 monero’s value has increased significantly. At the time of publishing its trading at $140, which is an 8.45 percent rise in 24 hours. Over seven days its value has increased by 60 percent. Its market cap is worth just over $2 billion.

As can be seen from the chart below, monero was trading at $16.40 at the beginning of 2017. Then its market cap value was worth nearly $224 million.

Its explosive growth could be down to the fact that it is designed to be more private than bitcoin. This means it’s completely anonymous and virtually untraceable. Consequently, this makes it the perfect altcoin for criminals to use.

The highest it has reached is $154, up over 1,000 percent this year, according to CoinMarketCap.

For those craving the need for secrecy on the dark web criminals are turning to monero. Darknet marketplace AlphaBay was one site that permitted people to use monero and ethereum as alternatives to bitcoin. However, AlphaBay was shut down by law enforcement on the 20th July. According to a report, authorities in the U.S., Canada and Thailand coordinated raids on the 5th July, which saw equipment being seized. Europol claim that since 2014, when AlphaBay was founded, an estimated $1 billion in transactions has been processed.

Authorities Get Savvy

AlphaBay is not the only darknet marketplace that authorities have shut down.

According to the U.S. Justice Department and Europol, another large dark web marketplace was also seized this year. Known as Hansa, it listed thousands of vendors selling illegal drugs, illicit products and counterfeit identification documents.

Following that was the announcement from the U.S. District Court for the Northern District of California. On the 26th July, a grand jury had charged Russian national Alexander Vinnik and the bitcoin exchange he is alleged to have operated, BTC-e, with money laundering and other crimes related.

Derek Benner, Homeland Security Investigations (HSI) Acting Executive Associate Director, said:

“Homeland Security Investigations is strongly committed to tracking down criminals who seek to strike at the foundations of global financial security through complex money laundering schemes. The resulting indictment is a clear representation of why our close law enforcement partnerships are vital to our shared missions. HSI will continue to aggressively target those who deliberately seek to exploit financial systems for personal gain.”

The Homeland Security official added:

“We’re getting a lot better through law enforcement tracking those [criminals] and holding the exchanges more accountable. I think [bitcoin]’s a lot more legitimate than people give it credit for.”

Bitcoin Will Still be Used

Even though a July report from the EU suggested criminals were rarely using cryptocurrencies, they will still find it attractive. This is because they can convert it easily into cash without any middle men.

However, while bitcoin was perceived to be anonymous when it first emerged, it doesn’t offer the same level of anonymity that monero does. So much so, that Llew Claasen, the executive director of the Bitcoin Foundation recently said at a conference:

“Bitcoin is not completely anonymous and it is fairly easy for someone, say a revenue officer, to work backwards to find who was responsible for a transaction.”

Featured image from Shutterstock.

Bitcoin Price Soars to New All-Time Record High Above $4,600

The number one digital currency has gone and done it again. The bitcoin price has scaled to over $4,600 for the first time, pushing its market cap value to over $76 billion.

At 13:54 UTC, on the 29th August, the bitcoin price was recorded at $4,602. As a result, the combined market value soared to $164.4 billion.

At the time of publishing its price has dropped to $4,542. However, it marks a significant time for the digital currency.

Since the beginning of 2017, the bitcoin price is up by around 350 percent from roughly $1,000 on the 1st January. It has since quadrupled in value. On the 13th August, bitcoin finally managed to scale the $4,000 mark amid strong Japanese interest. Geopolitical turmoil in North Korea has also impacted its price as investors continue to consider it as a safe haven.

The week prior to that the bitcoin price had re-scaled the $3,000 mark when it reached $3,200 for the first time. Since then it has continued its upward trajectory, pushing the currency to new heights.

Ethereum Scales $360

Ether prices have also surged to new heights not seen in two months.

At the time of publishing, ethereum is trading at $369, pushing its market cap to $34.8 billion. In 24 hours it has risen by 7.30 percent whereas in seven days it has increased by 17.24 percent.

As can be seen from the chart below, ethereum’s price dropped to a low of $149 on the 16th July. Since then it has steadily been climbing up in price back to its current listing. Prior to dropping to $149, ether prices were trading below $400, at $391. It has yet to re-scale to that previous high. However, with its steady price gains it’s expected to see new heights.

Litecoin Climbs Above $60

Fifth-placed litecoin has also recorded new highs. Strong trading has helped to push its price over the $60 mark for the first time.

This price rise is due to increased trader interest from Japan and Korea. According to a report, Korean exchange Bithumb was responsible for over 20 percent of trading in litecoin in the past 24 hours.

At the time of publishing, litecoin is trading at $62.51, with a market cap value of $3.2 billion. In the past 24 hours its value has decreased by 1.07 percent. Meanwhile, in seven days its has risen by 34.13 percent.

At its peak, litecoin was trading at $64.92 on the 28th August. Yet, considering litecoin was trading just above $4 at the beginning of 2017 this is a significant milestone. It remains to be seen how much further the currency can go.

Charlie Lee, the founder of litecoin, recently took to social media to express his delight.

New Price Heights

What we are witnessing now, however, is just the start. According to Ronnie Moas, Standpoint Research founder, he predicts great things for the market.

Back in July, Moas said that bitcoin would reach $5,000 by 2018. He also said that ethereum would rise to $400 whereas litecoin double to $80.

At the time Moas said:

“$5,000 could happen in a few months. It’s only starting to gain traction right now. It’s starting to spread like wildfire right now.”

He determined that its price would go up as demand increased for its coins. At present, 16.5 million coins out of the capped 21 million has been issued.

Since making his prediction in July, Moas has increased the value to $7,500. This was after the bitcoin price scaled $4,000. He believes, though, that by 2027 each unit of bitcoin will be worth $50,000.

Furthermore, Moas thinks that the combined market cap will reach $2 trillion in 10 years. At a conservative estimate, he thinks that one percent of the $200 trillion global market will be invested in cryptocurrencies.

He said:

“A lot of people say there is a bubble out there. I see a bubble when you get down below the top 50 cryptocurrencies. There are more than 800 names right now. In my view, what happens outside the top 50 is irrelevant.”

Whereas, Aurelien Menant, CEO of regulated digital currency exchange Gatecoin, has said in the past:

“I would not be surprised to see the bitcoin price doubling again to around $6,000 by the end of the year.”

One bullish analyst thinks bitcoin’s price will reach $15,000 by the end of 2017. Even though there are only four months left of the year veteran trader masterluc has great confidence in bitcoin. Masterluc is of the opinion that bitcoin will continue its bull run into 2019. At which point he thinks that its worth will between $40,000 and $110,000.

Long-Term Price Heights

Others, however, have been thinking long-term for the currency’s future. So much so, that Dennis Porto, bitcoin investor and Harvard academic thinks it will scale $100,000 by February 2021. He thinks this is possible by simply following Moore’s law.

However, Kay Van Petersen, Saxo Bank analyst thinks it will reach $100,000 by 2027. Many may have confidence in Van Petersen’s prediction considering he correctly predicted when bitcoin would reach $2,000.

Some less bullish estimates include one from Tom Lee, a strategist at Wall Street firm Fundstrat. He thinks that bitcoin’s worth will be between $20,000 and $55,000 by 2020.

In a report, Lee said:

“We believe one of the drivers [of bitcoin] is crypto-currencies are cannibalizing demand for gold. Based on this premise, we take a stab at establishing valuation framework for bitcoin. Based on our model, we estimate that bitcoin’s value per unit could be $20,000 to $55,000 by 2022.”

At the time Lee’s prediction was considered bullish. However, since then others have made bigger predictions for the currency.

It remains to be seen who is right. Yet, at present it seems that the market will continue its upward trajectory to reach new heights.

Caution Urged

Interestingly, Llew Claasen, the executive director at the Bitcoin Foundation, has urged investors to be cautious with their investments.

Speaking at a recent conference in Africa, Claasen spoke about the potential bitcoin has in the continent. Yet, he stated that users should only invest what they can afford.

He said:

“To be honest bitcoin is not a great form of cash right now. Don’t think of it as cash, think of it as a digital form of gold that enables you to save outside of the current financial climate.”

Featured image from Shutterstock