There are many uses for Cryptocurrency and each has its own illicit uses. Most Cryptocurrency is an independent unit and can be traded in pairs. It was designed to function as an alternative currency that would stand parallel to conventional money. This allows for easy transfer of funds from one place to another without the need for traditional money transfers. The cryptocurrencies cannot be printed in bulk amounts like regular currency would and must be exchanged via private networks. These features make it unique and the cryptocurrencies that were created were not intended for regulated use by governments.
The Dark Side
Although cryptocurrency offers some distinct advantages, there exists a darker side to it as well. Cryptocurrencies are being utilized for fraudulent activities, forgery, money laundering, getting illegal products and services, hacking and virtual scams. The lack of regulation leaves room for people to take advantage of this digital currency and use it for their unlawful activities, which resulted in the suspicion of Bitcoin and other cryptocurrencies.
Crypto in Online Exchanges and Wallets is not Safe
The first instance of misuse was done by users who realized they were using an unregulated electronic transfer system. This allowed them to access accounts belonging to other individuals. Regulators have now attempted to curb these kinds of behavior by closing down the virtual exchange platforms but this only slows down the exchange process. More problems have arisen when it comes to misuse and hackers have found a way to open the digital wallets used by millions of people worldwide. The reason why this has become such a problem is that these wallets contain private information which can be accessed by hackers. A small incident might be enough to cause mass chaos and the balances of many wallets and exchanges have been lost due to these hackers.
Fake Hot Wallet Services
Another issue was when a hacker made a fake hot wallet service that allowed him to access the funds inside it. This resulted in the opening of unauthorized accounts in the victims’ names and he was able to withdraw a large amount of money which resulted in the devaluation of the national currency. Many governments have now taken action against these fake hot wallet services but even legitimate hot wallet services aren’t entirely safe. The only option left is for people to store their bitcoins in cold storage in an offline location.
Counterfeit to Crypto and Back Again
A common issue has been created by the sale and distribution of counterfeit electronic currencies like Bitcoin. There have been cases where the United States government has been the victim of these scams. Users will counterfeit actual currency and use that fake currency to buy cryptocurrencies which they can then sell on an exchange and receive non-counterfeit currency in return.
Attempting to Break the Blockchain
Hackers have been trying for quite some time to break into the secure computers of multinational banks, which are the backbone of the Forex industry. They have been unsuccessful in this attempt so far. However, a new class of “cyber-terrorists” has been trying to penetrate the decentralized system of the blockchain. These criminals are trying to hack into the blockchains using a wide range of tools that they commonly use including malware programs and fake peer-to-peer applications. The biggest threat that these hackers are causing is the devaluation of the US Dollar and they have been successful in doing so.
Identity Theft of American Citizens
Some experts believe that the biggest problem that the government is facing regarding currency crime is related to foreign IP addresses. Hackers are often sent by foreign investors to steal the identities of Americans who are making transactions online with currencies they are interested in. Foreign criminals use different IP addresses when conducting their criminal activities, which means that it is hard for the government to trace the criminal transactions back to their source. Experts believe that the main reason why there are still so many crimes related to Bitcoin is that the US economy is still dependent on foreign investments and the only way to stop this from happening is to curtail the foreign investment flowing through our borders.
There are still many people who are not aware that Bitcoin has any flaws at all and the government doesn’t really have a strong enough hand in fighting this crime. One of the biggest problems that the government has is arresting people who are involved in unlawful activities related to cryptocurrencies. This is difficult to do since most of these criminals tend to just disappear rather than be caught by law enforcement. It is hard to track down the people behind the transactions of cryptocurrencies like Bitcoin since their real IP addresses are hidden. Therefore, it is very hard for authorities to arrest people involved in unlawful activities involving cryptocurrency, which makes individuals who are legitimately investing in cryptocurrencies look just as suspicious to regulatory and law enforcement agencies.