[HN Gopher] Illicit activity a tiny part of cryptocurrency use
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Illicit activity a tiny part of cryptocurrency use
Author : steelstraw
Score : 42 points
Date : 2022-01-06 20:21 UTC (2 hours ago)
(HTM) web link (www.axios.com)
(TXT) w3m dump (www.axios.com)
| PragmaticPulp wrote:
| Misleading headline. Very misleading.
|
| They took a list of addresses that were known to be associated
| with illicit activity and calculated what percent of transactions
| went to those specific addresses:
|
| > Transactions involving illicit addresses represented just 0.15%
| of cryptocurrency transaction...
|
| Unless you believe they've identified all of the illicit
| addresses (they haven't) then this report is worthless for
| anything other than those specific addresses.
| [deleted]
| amluto wrote:
| The calculation of licit activity is a bit dubious, too. For
| example, the foreign exchange market has an overall volume of
| $6 trillion or so. It does not follow that the US GDP is only
| about 1% of total currency transactions and is therefore
| immaterial (or alternatively that currency in general is
| useless because 99% of global transactions are unproductive).
|
| I'm also suspicious that Chainalysis doesn't understand the
| UTXO model. If you have $1bn of Bitcoin in a single "account"
| (UTXO) and you spend $1, you just "transacted $1bn". I don't
| know if there are good stats on what fraction of "total volume"
| consists of cryptocurrency holders simply making change for
| themselves. It's not immediately obvious from the blockchain
| which transactions outputs are actually intended for parties
| other than the originator of the transaction.
| cwkoss wrote:
| Chainalysis is very misleading, and a lot of naive people are
| taking their claims at face value.
|
| Any chain analysis software either:
|
| - Has insider information from all of the major exchanges, or
|
| - Is just guessing about almost everything, so their analysis
| is based on many layers of questionable assumptions.
| steelstraw wrote:
| What's the alternative? This shows what % is known to be
| illicit. No crime stats about anything capture 100% of illicit
| activity, yet it's still useful information. Anything else is
| just guesswork.
| bombcar wrote:
| Conceding a significant (perhaps most) of cryptocurrency use is
| for speculation, and little is used for "economic" activity of
| any type, it would follow that most can't be "illicit".
|
| This may change now that most speculation is "off book" at
| exchanges anyway now.
| [deleted]
| jl6 wrote:
| Not reporting capital gains on a cryptocurrency sale would also
| be illicit, and I doubt they checked everyone's tax returns.
| TacticalCoder wrote:
| > Not reporting capital gains on a cryptocurrency sale would
| also be illicit...
|
| That's really a US-centric view of things. There are places
| with 0% tax on capital gains and no need to report any.
| ska wrote:
| It's not really US-centric, although it is an assumption. At
| least a large fraction of jurisdictions require reporting of
| this, and may also require it for transfers, FX etc.
|
| It's probably a reasonable assumption that a significant
| amount (majority?) of blockchain activity is breaking tax and
| reporting laws somewhere, albeit some of it a mostly
| technology-outpacing-legislation way rather than intentional.
| olliej wrote:
| I suspect even the places with 0% tax on gains, you're
| required to report the income.
|
| That said: The places with 0% gains are generally low
| population, as an individual you don't get to choose where to
| report taxes - you report taxes wherever you are resident.
| Getting to avoid taxes remains a privilege for corporations
| and those rich enough to justify exciting trust games.
| BLKNSLVR wrote:
| That's yet another example where the mighty US dollar would
| dwarf cryptocurrency.
|
| Along with money laundering and buying drugs.
| woofcat wrote:
| >Transactions involving illicit addresses represented just 0.15%
| of cryptocurrency transaction volume in 2021 despite the raw
| value of illicit transaction volume reaching its highest level
| ever. As always, we have to caveat this figure and say that it is
| likely to rise as Chainalysis identifies more addresses
| associated with illicit activity and incorporates their
| transaction activity into our historical volumes.
|
| So basically this report is pretty useless.
| NovemberWhiskey wrote:
| The ratio here appears to be "transactions used for criminal
| purposes divided by all transactions on blockchains". I'm not
| sure that's a very interesting number, even assuming you can be
| definitive about the former (which the reports admits it isn't).
|
| I would love to see, for example, "purchases of illegal goods and
| services divided by all goods and services on blockchains".
| cheriot wrote:
| I'd be interested in the % of crypto transactions that are pure
| speculation. People do use it to pay for goods, sign contracts,
| etc. Are there more _legal_ value creating transactions than
| illegal ones?
| mgraczyk wrote:
| This metric basically just tells you how liquid the currency
| market is. Look at forex markets for traditional currencies.
|
| USD/EUR trading is over $3B daily. Does that tell you anything
| about USD as a currency, beside there being liquid markets?
| periheli0n wrote:
| What is the methodology behind determining whether crypto
| transactions were illicit? I thought the whole point of using
| crypto was that transactions could not be traced.
|
| Edit: The report seems to imply that they somehow identified
| "illicit addresses", but do not say how. Perhaps I'm too
| scientific but I would really like to see a "Methods" section in
| this report. The lack of that makes it very difficult to draw
| reliably conclusions from that piece.
| anonporridge wrote:
| > I thought the whole point of using crypto was that
| transactions could not be traced.
|
| A commonly believed false narrative. Bitcoin transactions are
| intrinsically more traceable and verifiably incorruptable than
| anything that exists in the traditional financial world, which
| is teaming with fraud and criminal behavior, both explicitly
| illegal and criminal behavior sanctioned by government
| insiders.
|
| The hidden message from Satoshi in the genesis block gives a
| better foundation for the reason they created it.
| https://en.bitcoin.it/wiki/Genesis_block
|
| > The Times 03/Jan/2009 Chancellor on brink of second bailout
| for banks
|
| Privacy lovers are mostly using Monero now.
| periheli0n wrote:
| Yes, of course that's what the blockchain is about, but there
| is usually no information attached to a transaction that
| would identify it as illicit, like a note saying "this was
| for banned substances", "thank you for placing the bomb", or
| "Enjoy your new superyacht, Sergej". Therefore it is not
| possible to trace illicit transactions, unless one defines
| illicit as referring solely to using stolen crypto.
| mrkramer wrote:
| >What is the methodology behind determining whether crypto
| transactions were illicit? I thought the whole point of using
| crypto was that transactions could not be traced.
|
| The whole purpose of Bitcoin is to decentralize trust though
| p2p distributed and decentralized database called blockchain
| and to solve "double spend" problem.
|
| Read Bitcoin whitepaper.
| NovemberWhiskey wrote:
| That's not the point at all - every transaction on a
| distributed ledger can be tracked. It's not necessary to know
| ownership of an account to know whether a transaction is
| illicit; for example, a theft from an exchange or a hack on a
| DeFi contract.
| pydry wrote:
| It depends on the crime. If I bought drugs on a darknet
| exchange how would the researcher know to include that in the
| 0.15%?
|
| They don't. Not unless, e.g. that exchange gets busted and
| leaks _all_ of its data.
|
| This title should really be "easily identified illicit
| transactions constitute 0.15% of trading volume".
|
| Which I'd say counts as a lot.
| spicybright wrote:
| Those kinds of heists are probably 1% of illicit
| transactions. We're talking more about buying drugs and
| exchanging crypto between two seemingly clean wallets.
| periheli0n wrote:
| OK, in that case "illicit" is defined as related to fraud in
| the crypto exchange itself. It does not refer to activities
| like e.g. buying banned substances, oligarchs circumventing
| sanctions, etc.
|
| If this is really the message of the article, then it is
| misleading, perhaps even deliberately so, to make crypto look
| good.
| gtvwill wrote:
| That's a very narrow definition of an illicit transaction. I
| mean you seem to ignore simple facts like how ownership alone
| can dictate if a transaction is illicit.
|
| Bit hard to tell me your not sending money to foreign nation
| States or supporting terrorism if you can't prove you know
| the identity of owners of the accounts your transacting with.
| shkkmo wrote:
| This seems like a article that is intended to be misleading. The
| report itself acknowledges a huge level of inaccuracy.
|
| > As always, we have to caveat this figure and say that it is
| likely to rise as Chainalysis identifies more addresses
| associated with illicit activity and incorporates their
| transaction activity into our historical volumes. For instance,
| we found in our last Crypto Crime Report that 0.34% of 2020's
| cryptocurrency transaction volume was associated with illicit
| activity -- we've now raised that figure to 0.62%.
|
| A more correct summary is: .15% of transaction activity was with
| addresses identified by Chainalysis as associated with illegal
| activity.
|
| There are huge assumptions here about Chainalysis's ability and
| criteria for detecting illicit activity.
| pydry wrote:
| I'm very curious how they measured darknet transactions for stuff
| like child abuse or drugs and how they came out so low.
|
| I'm a bit suspicious that the more easily identified transactions
| (e.g. ransomware with publicized addresses) seem to be orders of
| magnitude higher.
| epgui wrote:
| Short answer is they didn't measure that.
| noyeastguy wrote:
| This would have to be a shallow definition of illicit. I think
| wasting energy, hoarding GPUs, baiting unsophisticated investors
| could be all be considered illicit activity. By that definition
| all of cryptocurrency is illicit.
| kube-system wrote:
| Chainalysis is using the prevailing definition of illicit.
| noyeastguy wrote:
| https://www.merriam-webster.com/dictionary/illicit "In any
| case, illicit may be used of behavior that is either unlawful
| or immoral."
|
| Putting carbon into the atmosphere (to the detriment of
| unborn people) in order to circumvent the laws of society and
| intentionally create a speculative bubble meant to pray on
| the unsophisticated investors and rob them of wealth is the
| definition of immoral behavior. Cryptocurrency was designed
| to disrupt laws (and has been used, see selling drugs on
| crypto, ransomware), so it must also be considered unlawful.
| kube-system wrote:
| > in order to circumvent the laws of society
|
| You have embedded your conclusion in your premise. "Doing
| [x] 'in order to break the law' is illicit." is true for
| any activity [x].
|
| > Cryptocurrency was designed to disrupt laws (and has been
| used, see selling drugs on crypto, ransomware), so it must
| also be considered unlawful.
|
| 1. We don't really know the intentions of the people who
| invented the first cryptocurrencies. Their stated intent
| was not for illicit uses.
|
| 2. Human intent doesn't transfer through technology to
| other people via the transitive property through use of a
| technology.
| BLKNSLVR wrote:
| Hoarding GPUs?
|
| That's just capitalism at work; the market; supply and demand.
| jbkiv wrote:
| I would be interested in learning more about that. I have been in
| discussion with Chainanalysis and other companies. We are
| building an app / risk management process for average investors
| in crypto and NFTs. Think about a very secure wallet, with cold
| storage, and a near real time app that would trigger an alert if
| you are transferring crypto to a wallet tagged as high risk. We
| are building a database of what we call good/bad wallet
| addresses. Just created wallet? Flagged, transaction may be
| delayed 12 or 24 hours,etc... Can we be wrong? Of course and in
| that case we would insure that/you would get reimbursed. Example:
| somebody hacked into your wallet as you were seeking help on
| discourse, got the QR code, tries to transfer the funds to a new
| wallet. Bang, transaction on hold and you have to approve it. Any
| of you working on a list of dubious wallet addresses?
| rednerrus wrote:
| Illicit activity is the only value add to cryptocurrency.
| technion wrote:
| I noted yesterday that if you sign up to Independent Reserve,
| they have an "account reason" section and
| "ransomware/cryptovirus" is actually a valid account sign up
| reason from the pull down. I was surprised to see it so openly
| documented.
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