The Use Case for Digital Currency
January 12, 2022
A question I have been asked by those in my law enforcement lectures is, “What’s digital currency good for?” This question is easy to answer, and I think the officers in my sessions know the answer. The question is designed to elicit my opinion as a student of intelware. The former world chess champion Gary Kasparov says that crypto means freedom. Why? Math protects you.
Okay, but the answer I give is, “Criminal activity.”
Sure, one can gild the lily and say that digital currency offers an alternative to traditional legal tender. Digital currency is a way to work around the traditional banking system. Digital currency is a way to automate many financial transactions via smart contracts.
The reality is that digital currency solves one big problem for bad actors: Keeping otherwise noticeable financial transactions less visible to government entities and financial institutions.
What’s the factual basis for my view?
Navigate to “Crypto Crime Trends for 2022: Illicit Transaction Activity Reaches All-Time High in Value, All-Time Low in Share of All Cryptocurrency Activity.” Here’s the relevant statement:
Cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020.
The write up adds:
Cryptocurrency usage is growing faster than ever before. Across all cryptocurrencies tracked by Chainalysis, total transaction volume grew to $15.8 trillion in 2021, up 567% from 2020’s totals. Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency. But the fact that the increase was just 79% — nearly an order of magnitude lower than overall adoption — might be the biggest surprise of all.
The answer to the question, in my opinion, is, “Criminal activity.”
Stephen E Arnold, January 11, 2022
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