For several years, many believed that Bitcoin is the safest method for criminals to hide their activities due to the huge level of anonymity that goes together with making Bitcoin transactions. Because of that, authorities all over the world had a problem with cryptocurrencies. However, things have started to change in the last year or so with the introduction of the blockchain technology that serves as Bitcoin’s public ledger of all the transactions that have been done with this digital currency.
Because of that, hiding your activities and hiding in general from authorities has become almost impossible even for those criminals who use Bitcoin. Now, authorities are capable of tracking each transaction done with Bitcoin and once they found out the digital address it is not hard for them to discover the real address and the identity behind the digital address. Despite that, the number of criminal acts that somehow involved Bitcoin grew in the same period which begs the questions whether or not those people are aware of the fact that each transaction with Bitcoin is being followed.
Most recently, hackers have been attacking people’s and company’s computers and taking over control over those computers until the owner of the computer pays a certain amount of money and in a huge number of cases that ransom had to be paid in Bitcoins because criminals believed that Bitcoin transactions cannot be traced. True, Bitcoin users are able not to provide information about their identity but they have to use certain pieces of information that enable investigators to trace them and bring them to justice.
With the use of software for the analysis of blockchain data, investigators are able to trace criminals in a huge number of cases which was not the case just a couple of years ago. One such software is Chainanalysis and it helps investigators to understand how Bitcoin users do transactions and how could those pieces of information help investigators to locate criminals. Since 2015 when Chainanalysis launched their service, they have been working with different U.S. authorities including the Federal Bureau of Investigation, U.S. Internal Revenue Service, the Drug Enforcement Administration, Immigration and Customs Enforcement, the Securities and Exchange Commission, as well as with some agencies outside of the United States such as Europol.
Even though blockchain technology still provides a huge level of anonymity, authorities are now able to gather information about criminals which was not the case before. All Bitcoin transactions are still anonymous but the very transaction is recorded in the ledger and it is publicly available. However, there is no personal information in that ledger and that is one feature that still guarantees anonymity for people who are not involved in any criminal activities.
Gathering information from transaction record and tracing criminals might be a long process at this point, but the software development is going so fast in the right direction and that process will become shorter and shorter as time goes by. Once, Bitcoin was a safe heaven for different types of criminals but the times are changing and authorities are getting more sophisticated finding the criminals despite their anonymity in online transactions.
Written by Vedran Ostojic
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Interesting facts on bitcoins