Bitcoin’s dubious reputation as a shadow currency

10. November 2020

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Bitcoin in shadow

The black markets are thousands of years older than Bitcoin. Nevertheless, the crypto currency does not get rid of its reputation as a currency for illegal machinations in the Dark Net.

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Like every innovation created on the planet, Bitcoin has attracted critics. Part of this criticism focuses on the idea that the currency makes it easy for lawless people to buy illegal goods in the so-called „Dark Net“. Some people even claim that Bitcoin was originally created to facilitate illegal activities such as drug dealing, money laundering, arms dealing and even assassinations.

Of course, Bitcoin cannot solve these problems. In fact, such „dark“ transactions still take place with Bitcoin. But then, as now, these criminal transactions are mainly conducted with US dollars and other fiat currencies, and no one would think of claiming that currencies were invented for these purposes.

In other words, it is very likely that some people use BTC for seriously dubious purposes. This does not mean, however, that Bitcoin is evil by nature.

Nevertheless, there are websites that offer highly illegal products, such as „Silk Road“, developed by Ross Ulbricht in 2010. No doubt drug dealers and other criminals used Bitcoin in their early days to conduct transactions in the „Dark Net“ over encrypted networks. When you visit „Silk Road“ to investigate, it definitely feels dark and scary.

In 2015 Ulbricht was indicted and sentenced to two life sentences for drug trafficking and money laundering, among other things. But is this conviction an indictment of Bitcoin or of Ulbricht? The black markets are thousands of years older than Bitcoin. Illegal trade is one of the largest economies in the world and has existed since the dawn of human civilization.

Bitcoin and its bad image

The illegal activity proves in some ways that Bitcoin was, at least at that time, a really effective way to conduct transactions without anyone looking over your shoulder. So it may have been easier for a while to engage in illegal trade with Bitcoin, but Privacy Coins like Monero have long outstripped the largest crypto currency in the illegal dark net trade.

Drugs, weapons, counterfeit goods, luxury goods, pharmaceuticals, cigarettes, art, car parts, etc. are markets worth at least one trillion US dollars a year. This existed long before the creation of BTC and contributes to the geopolitical instability of the whole world. Bitcoin may have initially favored the online black market in part by disguising transaction paths. But if one wanted to impose the stigma of „illegal“ on the currency, one would have to do the same with the US dollar or euro. It is obvious that this is an absurd conclusion. And so Bitcoin, too, is gaining an increasingly better image as its adaptation and acceptance increases.