Random Blog on Crypto (Part 14) : Can cryptocurrencies be used for illegal activities?
Cryptocurrencies have a critisim of being used in illegal activities. Crypto got significant attention over the past decade as an innovative and smart way in the world of finance and technology. No one ignores the importance of cryptocurrency in the financial system and the innovative decentralized technology of blockchain. But there are some criticisms of blockchain behind some issues related to the cryptocurrency.
The first issue of cryptocurrency is the money laundering issue. In the blockchain technology and cryptocurrency system the encrypted data is shown to all so it is very difficult for anyone to track who is transferring money to others. Basically the transaction is open to all but it is encrypted. If anyone wants to know about the sender and receiver then it is not possible. From this point of view money laundering can happen here and that's why it can be used for illegal activities of money laundering like sending or receiving money illegally. Thus escaping from taxation of this money transfer from one country to another country.
The second problem with cryptocurrency is tax evasion. In this kind of transaction, the assets are not being recorded in a proper channel that's why the taxation authority will face a lot of difficulties in finding the total assets of any person. As long as the central system is not regulated by the government like CBDC, it will be difficult to understand how much is being transported and how much is available to any of the users of crypto wallet. The taxation will be very difficult. And there is a huge possibility of tax emission.
Most of the cases, we can see cyber-attacks by attackers trying to get their demand payment in cryptocurrency because it is untraceable. So this is another way of getting the use of cryptocurrency illegally. Another issue is the trading of illegal goods and services like drugs or any other illegal things like weapons in the dark web. Such trade happens with crypto to escape the identity.
Crypto has a lot of issues but most of the cases it can be mitigated if the government wants to regulate the system under certain conditions and the system like Central Bank Digital Currency (CBDC)
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It was good to know about cryptocurrency first and second issue money laundering issue and tax evasion. There were very few ideas about But knowing through your post is very helpful.
Personally I believe that cryptocurrency can be used for illegal activities because it will be hard to trace the scammer when this is done