Financial crimes are hard to be contained in the crypto world

We are all happy about the capabilities of cryptocurrencies and how they are going to be the future. Even though there are many things to praise, there are also things that can worry us in the crypto world. I'm not trying to be negative here but the fact is that we have both good things as well as bad things in the crypto world similar to how crimes happen with FIAT too. Some financial reports say that crimes are equally high with FIAT too and we cannot completely blame cryptocurrencies as the medium for financial crimes.

By nature, cryptocurrencies have a decentralized nature and the identity doesn't need to be revealed. Even though there is transparency available in the crypto world and it also makes transactions easier, it is also possible to do financial crimes without someone knowing it. In this article, we are going to see about some methods we have or some means through which financial crimes happen.

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Free to create anonymous wallets

Wallet creation is one of the basic features of cryptocurrencies. To store and transact using cryptocurrencies, we need to have a wallet. This wallet creation is anonymous. There are a few blockchains that do KYC on wallet creation too but most of the decentralized blockchain has a facility to create anonymous wallet. Unlimited wallets can be created anonymously and it can be used for doing transactions. Some blockchains that have the facility to use usernames can make the wallets look understandable but otherwise many blockchains including Bitcoin have a wallet address that is more like an alphanumeric value that cannot be easily remembered.

Multiple ways to do crimes

Today there are facilities available to do crimes through multiple ways. People use cryptocurrencies as their mode of payment when they commit crimes. People try to use crypto to transact huge amount of black money and it can be kept anonymous because it moves from one wallet to another wallet and ultimately it becomes untraceable. Some activities are still traceable if we know the source and destination and if the transfer was from wallet to wallet, the path can be easily traced but if the transaction goes through an exchange, it can be hard to trace.

The crime is either directly with money handling using crypto or something that happens in the real world and the money transfers also happen in the crypto world. When I say real-world transactions, it can be drugs, weapons, etc. With the current setup, it is hard to keep all these things from happening.

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People hide their identity

Some people intentionally try to hide their identity. They don't want to get exposed. It is sometimes not even about doing any financial crimes but people don't want to expose themselves because cryptocurrencies are not widely accepted by everyone and anytime it can create issues. When the authorities are trying to find some traces, if they find an account or wallet doing some activity, they cannot question anyone. It is hard to map a real person against a wallet or account because it can even be someone who doesn't have their identity exposed.

Outcome of Decentralization

Decentralization is important and it helps in many aspects but at the same time, decentralization is also something that can support all these financial crimes because there is no authority to impose any regulation or restriction. Even if the government tries to impose regulations and restrictions, there will always be some loopholes through which people can escape and continue to do what they are doing. Due to decentralization, it can be hard to hold anyone accountable.

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