Chainalysis Blog

Since I cannot edit my other reply to this comment anymore, here is one more counterpoint: Nigeria is 11th in terms of Crypto adoption [1] while its government is hostile to Crypto [2]. A great example of how Crypto can help ordinary people fight shitty regimes with unstable currencies. [1] https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index… [2] https://www.bloomberg.com/news/articles/2022-11-27/nigeria-sec-to-avoi…

Loads of people use it though! Forget speculation for a second. Here's a great study on remittances: https://blog.chainalysis.com/reports/africas-grassroots-cryptocurrency… Here's a summary of one on stablecoins: https://www.outlookindia.com/business/-news-210105

See [1]. $14B in illicit activity in a year sounds like a lot, but it's about a single percent of $1T, and Chainalysis is tracking $1T worth of transactions per month in crypto.[2] [1] https://blog.chainalysis.com/reports/2022-crypto-crime-report-introduc… [2] https://blog.chainalysis.com/reports/series-f/

It's worth noting your second reference only mentions illicit activity volume in passing, linking to this study as a source: https://blog.chainalysis.com/reports/crypto-mixer-criminal-volume-2022… It's also worth noting the headline of that link: "Crypto Mixer Usage Reaches All-time Highs in 2022, With Nation State Actors and Cybercriminals Contributing Significant Volume" Quoting from later in that study, "Overall, if we label cybercriminal organizations with known nation state affiliations, we can see that these groups make up a significant and growing share of all illicit cryptocurrency sent to mixers." It's not 10-30% as you summarized. It's 12% last year increasing to 23% this year, or nearly doubling from a 1/8 to 1/4 share. This source does not support the position that illicit traffic is an insignificant share of mixer traffic.

Companies like Chainalysis have unwound and track the large majority (probably 80%) of Bitcoin transactions. Bitcoin’s lack of fungibility and any semblance of transactional privacy is actually one of the arguments against its suitability as a currency. You can read some of their public reports here: https://blog.chainalysis.com/?tab=articles-tab

The phrase 'according to the treasury' and Ctrl-V are doing a lot of work there. The government says a lot of things. The other day the Secretary of State claimed Tornado Cash was a DPRK sponsored hacking group before deleting the tweet. Not everyone in authority has a real great understanding of the technology involved. https://web.archive.org/web/20220808155413/https://twitter.com/SecBlin… > We are talking about an entity that according to the treasury has laundered more than 7 Billion USD, assisted criminals and neglected complying to...(AML/CFT) obligations willingly and repeatedly. The Tornado Cash mixer contracts have been immutable since May 2020. It's a dumb piece of software that can't be modified or upgraded. Its authors have no control over who uses it on the blockchain. https://tornado-cash.medium.com/tornado-cash-is-finally-trustless-a6e1… It's kind of a strange accusation to say that someone has 'willingly and repeatedly' neglected to comply with legal obligations by failing to do something that's technically impossible to accomplish. All the GitHub users did was write code, and simply writing code, while not executing it to do something illegal, seems like it would be pretty well protected by the First Amendment, since code is speech. Turning people's lives to shit over what a software tool they invented gets used for later, after it's completely out of their hands, is pretty wild. You copied and pasted Brian E.…

Another day, another answer to “What is Bitcoin good for?” This time the answer is “In case the government of the current global hegemon imposes economic sanctions against your company or your country.” Right now that's the US, but probably ten years from now it will be the People's Republic of China. — ⁂ — When reading the below, think about this: what has gone wrong with the New York Times that in an hour some random guy in Argentina can put together a much more trustworthy and complete picture of the Russian infotech economy, and its relationship with cryptocurrencies, than a Business-section article by two of their reporters? How did the New York Times fall to a level where it publishes articles that say things like, “blockchain technology, a form of computer code that is publicly viewable by anyone, anywhere”, or quotes an “expert” saying, “A Treasury designation of a crypto wallet address is not foolproof. That designated actor can still open up a new wallet elsewhere. You can do that quite easily,” without even mentioning that normally every Bitcoin transaction creates a new crypto wallet address? — ⁂ — The ransomware-as-a-source-of-national-revenue thing is a red herring. The article itself says, citing https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-… (use Reader mode): > Last year, about 74 percent of global ransomware revenue, or more than [US]$400 million worth of cryptocurrency, went to entities…

The percentage of cash that's used for criminal activity is much smaller than the percentage of BTC that is used for such. I'm including darknet markets, ransomware, and outright exchange thefts in this. ~170 billion USD worth of BTC exists. ~9 billion USD worth of BTC has been stolen from various exchange hacks. ~140 million USD worth of BTC has been stolen through ransomware attacks. ... And as for commercial transactions: Darknet markets make up ~40% of all non-theft, non-exchange related BTC commerce. [1] Cash may rule the drug world in absolute numbers, but in relative numbers, the overwhelming majority of cash is used in the real economy. When nearly half the BTC that's used to transact is used for illegal purposes, it's pretty easy to see why banks aren't interested in touching it. Why risk losing your banking license, for collecting fees from such a tiny market segment? [1] https://blog.chainalysis.com/reports/darknet-markets-cryptocurrency-20…

We can't secure banking, there are just a lot of undo processes, holds, and internal processes and cross-comms that make it so people don't lose all their money all at once and potential losses can generally be reversed, insured, bailed out, covered by someone else, or balanced out / hedged against. Even with that, fraud is rampant and heists worth billions do still occur digitally[1]. And these are financial systems that evolve constantly over centuries at this point. And the attackers still win sometimes. The biggest thing the measures do is significantly decrease the known ROI on a target. For example, a credit card can be cancelled. Even if the bank doesn't notice and the person doesn't notice and you do get 100k off it, the fact attackers don't know that still reduces the value of the stolen credit card and therefore the incentive to steal them. Further the gain of 100k by an attacker may be split amongst cardholder, card issued, insurance, merchants, etc. so no one person actually loses 100k. These things all matter when building and securing new systems. If you look at the cryptocurrency space in general, you can see what happens when you replace a credit card or swift with transactions that are similtaneously immutable, very valuable, and easily anonymous enough. The monetary value on anyone's Coinbase account, let alone all the Coinbase accounts, is so high that we've seen attacks[2] usually reserved for nation-state actors and by actual nation state actors[3],…

You realize Bitcoin/Ethereum are simply computer software right? And you missed the essential caveat; aprox 4.11% of Bitcoin addresses control 96.53% of all BTC in circulation. This is a conservative estimate, as anyone familiar with how Bitcoin addresses and wallets work, would know one user is likely controlling many addresses. A perfect example of this, is a few days ago 1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a created a script to subdivide 111,114 BTC into several hundred addresses, from 60,000 / 30,000 / 20,000 / 10,000 / 5,000 / 500 and then to 100 BTC accounts, over the course of a few hours. [2] Following the movement here now leads to recent deposits into the Binance and Bitfinex wallets. And most importantly, on the computer science behind Ethereum - In any DLT network with an adversarial threat model it's impossible to create a smart contract with any functionality relying on external data inputs (betting on the outcome of a sports game, or tracking any real world data input) within the network as there's no way to validate the authenticity of that data unless a trusted 3rd party is designated, at which point the network becomes useless. Not even to mention the question of why anyone would want to use a token with such wildly fluctuating market price, and who's supply is controlled by a small userbase of oligarchs. Additionally, the entire cryptocoin market has an Achilles' heel.. Tether, and Bitfinex are widely suspected of counterfeiting aprox $4,000,000,000 USD…

Here's a data driven view: https://blog.chainalysis.com/reports/2023-crypto-crime-report-introduc… also many linked sources here: https://www.cato.org/blog/overstating-crypto-crime-wont-lead-sound-pol… crypto = crime narrative is provably false but how many search or care for the truth?

I already did. DPRK and Russia aren't imaginary. https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-… https://www.nytimes.com/2022/06/30/business/north-korea-crypto-hack.ht…

>This is not even 3.000 users according to the article "Machankura is already being used by roughly 2,900 African users across more than seven countries" You cant gauge popularity or total adoption of Bitcoin across the continent by using early metrics of one recently released wallet application that targets a small subset of Bitcoin users. "3 of the top 20 countries in the Crypto Adoption Index are African. Kenya is #1" [0] "users in lower middle and upper middle income countries often rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility, and fulfill other financial needs unique to their economies. These countries also tend to lean on Bitcoin and stablecoins more than other countries." [0] [0] https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index…

> It's people who leave their money on crypto exchanges that lose their coins. People who hold their own coins lose them as well. It was estimated that 3.7 million bitcoin have been already lost irreversibly [1]. That's a staggering number. It's roughly 20% of the entire supply. [1] https://blog.chainalysis.com/reports/bitcoin-market-data-exchanges-tra…

https://blog.chainalysis.com/reports/2022-biggest-year-ever-for-crypto… Seems like most of this theft is happening when people port currency between exchanges and the bridge is vulnerable.

The illicit share of all cryptocurrency transaction volume in 2022 was 0.24%. https://blog.chainalysis.com/reports/2023-crypto-crime-report-introduc…

Despite its reluctance to name the top five money-laundering exchanges in its most recent report, in another report in February of last year Chainalysis did point to a collection of Russia-based exchanges it says have cashed out large sums of criminal proceeds. https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-…

Only about 0.15% of crypto transactions last year were illicit, compared to 5% with fiat money. Cash is by far the pinnacle of "crime money", definitely not cryptos. https://blog.chainalysis.com/reports/2022-crypto-crime-report-introduc…

It never mattered if you live in a country with a stable currency and access to modern financial services. If that is you, you are in a very small minority of the world population. For the rest of the world, there seems to be some value... https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index…

> The normies are into crypto because of hype and FOMO. Hype and FOMO are indeed drivers of growth, but those alone would not explain why rates of crypto adoption are highest in countries with large unbanked populations. Take a look at this website, which ranks countries by rates of crypto adoption: https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index… Then compare it to this chart from Statistica, which ranks countries with highest unbanked populations: https://www.statista.com/statistics/1246963/unbanked-population-in-sel… Notice that there is a lot of overlap. While Bitcoin adoption in countries with strong national currencies like the US or EU is likely driven by FOMO and hype, its main appeal is as an investment/store-of-value for those who lack access to them otherwise, and that is why Bitcoin adoption is highest in unbanked populations.

In theory, there's no difference between theory and practice. In practice, though, the proof of the pudding is in the eating, and "According to the University of Technology Sydney, about 46% of criminal activity of each year is connected to Bitcoin.[0]" Other sources, more devoted to "this is good for crypto, actually" say the percentage is tiny-tiny, apparently by counting every transfer between any two addresses, including several that might all be related to a single real-life transaction. They seem to also have a pretty high standard for what they count as "illegal activity." Even so, they'll admit it's at least $14 billion of activity in a year. 0. https://bitcoinafrica.io/2020/03/04/crypto-illegal-activity/ 1. https://blog.chainalysis.com/reports/2022-crypto-crime-report-introduc…

> Governments control everything.... they are slowly trying to block crypto too. I'm always amazed that anyone thought cryptocurrencies would somehow be the one form of currency that wouldn't be regulated. It's clear that crypto can't self-regulate, and continues to actively hurt lots of people. As of July, $1.9 billion in crypto has been "stolen" — up 60% from a year ago¹, in quotes because we know a good percentage of these were inside jobs. ¹ https://blog.chainalysis.com/reports/crypto-crime-midyear-update-2022/

Am I the only one who found the "Taproot" [1] hint interesting? In this sentence: > As President I will dedicate myself to helping Signal build a long taproot so it can grow and thrive in dynamic climates. [1] https://blog.chainalysis.com/reports/bitcoin-taproot-upgrade/

Your statement isn’t really accurate. https://blog.chainalysis.com/reports/defi-dexs-web3/

Here's a thorough analysis of NFT wash trading. The activity is overstated, it's there, but the majority of volumes are not wash sales: https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-…

The leading blockchain surveillance company put out a crime report that estimated just 0.15% of cryptocurrency transactions involved illicit activity. > In fact, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower. https://blog.chainalysis.com/reports/2022-crypto-crime-report-introduc…

Cryptocurrency regulation is being discussed in the US, in the EU, in Russia. 50% millenials hold crypto in the US https://cointelegraph.com/news/low-millennial-financial-well-being-dri… Top cryptocurrency users are in Vietnam, Pakistan, Ukraine and India https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index… While cryptocurrencies may not matter for you, or people around you that you identify as normal, based on the facts the topic matters a lot for lawmakers, politicians and large audiences you may not know.

We are working on an insurance product for crypto. :-( The more we dig into it the more scams we find. Everywhere. Wash trading, click baiting, pump and dump, code is law, etc. You will find the biggest bazaar there is in the crypto world. Biggest than the Nevarro bazaar. The anonymous ecosystem is a paradise for scammers and money launderers. And a terrifying "crypto lord" on Telegram or Twitter may just be your nicest coworker. I am not sure we will ever find a backer. So far we are working on the private risk management side of the venture. I would expect more mainstream users, and they will hammered day one. Look at what is going with NFTs, all the wash trading pushing price ups (source: https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-…

Bitcoin revolutionized the drug trade, there’s huge value there. People living in repressive societies like Russia are now able to safely buy weed thanks to cryptocurrencies enabling Hydra. Before these people would risk prison to get a little stoned, but now they can just buy GPS coordinates on the internet and pick up their drugs without ever interacting with anyone. It’s not a coincidence that most of the users come from such countries, not the west https://blog.chainalysis.com/reports/darknet-markets-2021-geographic-b…

I'm guessing that very much depends on the jurisdiction. Those people that took $30m this week and all the previous thefts this year alone, they all had a plan for how to move that money and I've not seen many of them get caught... According to https://blog.chainalysis.com/reports/2021-crypto-scam-revenues/ - scammers took in $7.7b in 2021 alone, if they couldn't do anything with those funds, doubtful they'd go the effort of stealing them :)