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Is there any truth to the claim that cryptocurrencies are primarily tools for criminal activity? While it’s undeniable that cryptocurrencies have been used for illegal purposes—such as paying ransoms or laundering money—this issue is not unique to crypto. Criminal activities occurred long before the advent of digital currencies, and traditional currencies like the US Dollar have been similarly exploited.
Critics of Bitcoin often overlook their own institutions’ past involvement in dubious financial practices. For instance, HSBC, one of the world’s largest banks, prohibited its customers from buying MicroStrategy stock due to its connection with cryptocurrencies. Yet, HSBC has a documented history of profiting from money laundering operations tied to drug trafficking.
The issue here is that it’s easy for major banks or government officials to criticize cryptocurrencies for facilitating illegal transactions while conveniently ignoring the extensive involvement of established financial institutions in billions, if not trillions, of dollars’ worth of illicit transactions.
How much of cryptocurrency usage is actually tied to criminal activities? In 2019, it was reported that approximately 2.1% of all cryptocurrency transactions (around $21.4 billion) were related to criminal activities. This figure dropped to 0.4% ($10 billion) in 2020. Comparatively, economist Ken Rogoff, known for his skepticism toward Bitcoin, estimates that about one-third of all US currency in circulation is unaccounted for, likely used in criminal or tax evasion activities. Although it’s difficult to determine the exact percentage that goes to criminal purposes, it’s reasonable to assume that it exceeds 0.4%. The UN Office on Drugs and Crime estimates that between $800 billion and $2 trillion is laundered globally each year.
Cryptocurrency can indeed be used for illicit financial transactions, but this doesn’t mean that cryptocurrencies are inherently problematic or should be dismissed. Criminal activity will occur regardless of the financial tools available. The issue lies with the criminal behavior, not the currency itself.
Moreover, the potential of cryptocurrencies extends far beyond financial transactions. The underlying blockchain technology has the capacity to revolutionize various sectors by fostering systems that are more transparent, equitable, and beneficial to people rather than just serving financial executives and shareholders.
Acknowledging that cryptocurrencies are occasionally misused is important, but it’s equally crucial not to overlook the positive impact and future potential of crypto and blockchain technology.
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