5 Ways How Cryptocurrencies Can Curb Crime
In April 2021, Michael Morell, an EX-CIA director, ruled out the idea that Bitcoin and crypto are a major way for criminals to conduct illegal transactions. Instead, the main reason is that Bitcoin and the crypto world are too transparent for criminals to conduct their activities.
More or less, despite the numerous negative notions that people have towards crypto, the features of its tech are surprisingly integral in the fight against fraudulent activities in society.
This guide will look into five ways how crypto can help in reducing crime.
Easy Tracking of Criminals Funds
One of the primary reasons that make crypto a great tool for curbing crime is its ease of tracing. Since the inception of crypto, many people have believed that tracking transactions of crypto assets are hard because of their blockchain base. Although many applications like coin mixers are designed to make crypto untraceable, it’s still relatively easy to track crypto transactions.
For instance, a criminal on the run may choose to use crypto assets to pay for the services and goods they purchase on their way, i.e., buying gas, getting food, commuting fees, etc. To track such criminals, government agents may follow the last locations of payments and conduct all their necessary investigations.
In the long run, the government will be able to catch up with the criminal. Therefore, criminals do not want to use crypto due to its traceability.
The Crypto World is Complex
The complexity of crypto is another issue that makes it hard for criminals to use it for illegal activities. In fiat, transactions involve only a few straightforward steps, mostly completing payments in cash. Therefore, even with the strong regulations set against money laundering, much fiat money is still used in such illegal activities.
Contrarily, crypto assets have tons of complexities involved, making it hard for criminals to use them. Primarily, for a person to start using cryptocurrencies in purchases, they must first possess a wallet, an exchange platform, and many other tools.
The transactions in crypto could also take some time depending on the values, and criminals often do not like such delays. Therefore, the complexity of cryptocurrency makes it hard for the assets to be used as tools for trades for criminals.
Blockchain has Tamper Proof Features to Secure Assets.
Another reason cryptocurrency is a great asset for curbing crime today is the tamper-proof features installed in crypto tools. Generally, blockchains are decentralized, transparent, and immutable, meaning assets are free from alteration.
The assets hosted in the blockchains are stored in highly secured tools that make it hard to tamper with them. For instance, the wallets involved have public and private keys which are stored safely for utter security.
When opening any crypto-related accounts, there are KYC details involved, and in some cases, there is 2-factor authentication to strengthen the security. Therefore, in crypto, the policies involved for protecting the assets are advanced, ensuring the platform will have top security.
A decline in Corruption Cases
Corruption has proven to be a serious menace globally today, with many countries and government agents being involved in corruption. Developing countries lose billions of dollars annually because of the fraudulent government agents engaged in corruption.
However, with the introduction and development of crypto, corruption will reduce vastly. For instance, blockchains are transparent networks, meaning authorized parties, including auditors and investigators, can access all data stored. In addition, the immutability and permanence of blockchain ensure that all relevant data remains stored in the chain.
Discovering a fraudulent transaction in the blockchain is easy. Moreover, even years after the transactions, the investigators can note possible fraud or illegal transactions since the data is permanent.
End of Counterfeiting
Counterfeiting has been a huge problem in the supply chain, with some companies receiving counterfeit products. The increase in counterfeits has created a vast drop in the quality of goods and services offered, especially in developing countries globally.
The art industry especially suffers so much from the increasing numbers of fake pieces of art. Most painted pieces cost millions, and as such, finding counterfeit ones means serious losses for the investors. However, blockchain aims to end the issue of counterfeiting in the art industry and supply chains.
Blockchains have new products called NFTs, which are digital forms of identification and ownership of art. NFT assets are almost impossible to counterfeit since they have unique identifications on the blockchain.
Blockchain can record all details about a particular supply when it comes to supply chains before they leave from the seller, and the buyer can have all information beforehand. Therefore the buyer has information about the full packaging and size of the product even before they leave the station.
Problems that Could Arise with Crypto
Although there are many benefits that crypto would bring to the financial world once they go fully mainstream. Among the problems facing the network include;
- Hacking- Crypto accounts and wallets face the issue of hacking which has been increasing recently.
- Loss of funds in scams- There are already scams that have vastly affected the crypto, NFT, and Defi industry.
- Manipulation of the prices of the assets- In some cases, market manipulations are considered a crime. This is because manipulations are so common in crypto.
However, even with such problems, using crypto is still better than using fiat when it comes to transactions—since holding fiat is risky and sometimes may lead to death when attacked. However, crypto holdings are safe and not easy to steal.
The use of crypto in transactions can help in reducing crime that is so common in the financial world. Foremost, crypto is highly transparent, meaning the transactions done in crypto are easy to follow and track criminals. Moreover, because of the complexity of the crypto world, criminals would not choose it as a way of payment.
Blockchain, a crypto hub, has tamper-proof features meaning that helps in securing the assets. Using blockchain and crypto, it’s possible to end the issue of counterfeiting and corruption. After looking into the crypto world, it’s clear that crypto-assets can help curb crime in several ways.