Glenn Hutchins, co-founder of global tech investment firm Silver Lake, has tried to refute the traditional claim that Bitcoin is primarily used for criminal activity. We are talking about activities such as money laundering, fraud and tax evasion.
Speaking at the Davos Forum 2021, which is taking place in a virtual format this year, he stressed that critics of cryptocurrency usually ignore the immutability of the blockchain underlying the technology. Let’s talk about what is happening in more detail.
First, a little explanation. The first cryptocurrency is indeed very often criticized – and even now. The most popular arguments against Bitcoin are its volatility, that is, dramatic changes in value, user anonymity, which is actually only partial, and the coin’s participation in financing various illegal activities.
At the same time, most often the authors of the criticism do not understand the basics of blockchain operation. That is, they do not take into account the fact that any transaction in the cryptocurrency network leaves an eternal mark, which means, in theory, these are greater risks for fraudsters than in comparison with cash. Glenn Hutchins raised this topic the day before – and he did it competently.
Why they don’t like Bitcoin
Here is one of the quotes from an expert in which he talks about the real situation in the world. The cue is from Decrypt.
In the United States, 80-90 percent of $ 100 bills are used to fund organized crime and tax evasion. There is a very good reason for this – the bills are not traceable and are interchangeable. Bitcoin, however, leaves a permanent, unchanged record of every transaction, so almost all criminals using it will sooner or later come across. It is fundamentally wrong to say that Bitcoin is mainly used for criminal purposes.
Cryptocurrency really allows you to get on the trail of those who have gone beyond the law. As we learned in December 2020, the acquisition of BTC allowed the arrest of criminals from Mexico, who were previously under the gun of the authorities. It’s funny that the criminals themselves fell for a simple mistake: they simply forgot that large transactions would attract the attention of security officials. Well, the peculiarities of the blockchain and the work of local cryptocurrency exchanges made it easy to find the authors of the translations.
The newly appointed new US Treasury Chairman Janet Yellen is also confident that cryptocurrency is a tool for scammers. However, a recent study by the analytical company Chainalysis, with whose activity we are already familiar, contradicts this statement. According to her 2021 Cryptocurrency Crime Report, the criminal share of total digital asset turnover fell to 0.34 percent, or the equivalent of $ 10 billion in transaction volume.
At the same time, the report points out that ransomware-related crypto payments have grown in the past year, while the vast majority of common illegal cryptocurrency transactions have been associated with the darknet and the general category of “fraud”. But so far, compared to the financial flows of cybercriminals in cash, Bitcoin still remains a drop in the ocean.
We believe that criticism of Bitcoin as almost the main instrument for financing illegal activities is unfair. First, not all criminals and fraudsters can devote enough time to get a good understanding of the blockchain and security of funds. Secondly, crime existed long before January 2009, when the first cryptocurrency network was launched, that is, BTC is definitely not a reason for scammers to become active. And to say otherwise is to knowingly present false facts.
I would like to believe that the situation will change over time. And the more large companies invest millions of dollars in Bitcoin and other cryptocurrencies, the sooner this will happen.