ALEXANDRIA, Va.—Bitcoin may be losing steam, but it’s still popular with criminals, according to a New York Times report.
The value of the digital tokens has steadily dropped, and trading on cryptocurrency exchanges has slowed. But the Bitcoin economy remains strong for the sale of illegal drugs and other criminal activity on the “dark web.”
The amount of cryptocurrency spent on dark web markets, where stolen credit card information and illegal drugs can be purchased with Bitcoin, rose 60% percent to reach a new high of $601 million in the last three months of 2019, reports Chainalysis, a firm that tracks every Bitcoin transaction and advises government authorities.
The growth of illegal transactions demonstrates the difficulties that Bitcoin has had in moving past its reputation as a currency for crooks, even as Wall Street institutions have begun buying and selling the digital tokens. The Bitcoin-fueled illegal activity also points to the struggles that authorities face in containing new kinds of bad behavior that cryptocurrencies enable.
Bitcoin has played an important part in the so-called ransomware attacks, in which hackers steal or encrypt computer files and refuse to release them unless they receive a Bitcoin payment.
Illicit activity accounts for only 1% percent of all Bitcoin transactions, but that nearly doubled from the previous year. Illegal activity also seems to be one aspect of the Bitcoin economy that is impervious to changes in price, according to Chainalysis’s new Crypto Crime Report.
Some expected the digital token might be popular in countries such as Venezuela or Argentina, where local currencies are unstable. But in those places, interest has recently fallen off. Bitcoin prices and trading did spike in the middle of last year. The price of Bitcoin rose from around $4,000 to more than $12,000, but the price of a Bitcoin has recently hovered around $9,000.
The ledger of all Bitcoin transactions is the blockchain, which publicly records every transaction. Names are not assigned to Bitcoin addresses, but firms like Chainalysis have tracked criminals by tracing transactions through the blockchain to places that know the identity of their users, like Bitcoin exchanges.
Some new dark web markets are forcing customers to use alternative cryptocurrencies that leave less of a trail, but most criminals seem to be undeterred by Bitcoin’s downsides. The spread of fentanyl, which is blamed for the opioid crisis in the United States, was made possible, law enforcement has said, by Chinese labs selling the drug online for Bitcoin.