The price of the No. 1 digital currency, bitcoin, has been on a punishing tailspin of late, falling 40% in 2018 and more than 70% since its peak in December of 2017. And perhaps adding insult to cyber injury, the popular virtual currency finds itself out of favor with another group of users.
According to a recent report, illicit activity that is typically associated with bitcoin is on the decline, with the cybercrime industry and money launderers moving away from bitcoin
to so-called privacy coins, like Monero—coveted by the underworld for the anonymity of transactions—luring away those who once turned to bitcoin for such features.
“It was clear from this research and from other sources that Bitcoin’s moment in the criminal sunshine may be declining in favor of other types of VC,” officials at virtualization-based security firm Bromium wrote in a recent news briefing on cryptocurrency usage.
“One reason why criminals avoid Bitcoin relates to the transparency of the blockchain and the increasing number of tools for detecting how funds are transferred via bitcoin wallets,” Bromium wrote.
The document accompanied a news release on a report titled “Into the Web of Profit” that was conducted with the help of Dr. Mike McGuire, senior lecturer in criminology at Surrey University in Guildford, England.
The report found that up to $200 billion in illegal profits are laundered each year, and while virtual currencies are the primary tool for laundering, criminals are shifting to less known coins such a Monero.
The market cap of Monero is currently just over 1% of all cybercurrencies, compared with bitcoin, which makes up 42.9%. However, three years ago, bitcoin dominated the digital-asset sector, accounting for 86.5% of all currencies, compared with Monero at 0.11%.
The continuing debate surrounding regulation of cryptocurrencies continually cites bitcoin; namely because of its standing in the market. However, criminals, which are often early adopters of technology are getting ahead of the game.
“Anonymity is also key, with platforms like Monero designed to be truly anonymous, and tumbler services like CoinJoin that can obscure transaction origins,” said Dr. McGuire wrote.
While not as anonymous, launderers are now using online gaming currencies to shift profits around the world. Gamer currencies that are converted into cryptocurrencies can be difficult to trace because of jurisdiction issues.
Additionally, the report notes digital-payment systems as a problem for those chasing launderers. Micro laundering, where the size of the proceeds laundered is so tiny that it’s hard to detect on systems that process many millions of transactions a day. According to markets-and-consumer data provider statista, there were 7.6 billion transactions on PayPal Holdings Inc.
in 2017, and since 2012, online payment system has processed more than 28 billion payments.
Results of the study will be further detailed at the RSA Conference in San Francisco on April 20.