Blockchain Technology’s Role in Reducing Criminal Activities
The impact of cryptocurrency on criminal activities is greatly debated for various reasons. This debate some people support the idea that cryptocurrency promotes criminal activities (Butler, 2019), while others argue it reduces criminal activities; however, the main impact of cryptocurrency is reducing criminal activities for various reasons. First, the blockchain technology characteristic of cryptocurrencies aids in the reduction of criminal activities. Blockchain technology is an online ledger on which all cryptocurrency transactions are recorded; additionally, different types of cryptocurrencies use similar algorithms to establish this blockchain technology (Kuo Chuen, Guo & Wang, 2017). Subsequently, legal and illegal transactions are recorded in the online ledger, including criminals’ transactions; thus, as criminals turn to cryptocurrencies for their transactions, the recording of these transactions reduces the chances of the criminals transacting using cryptocurrency. Criminal activities include money laundering, whereby individuals may conduct illegal transactions as a way of evading paying their taxes. Therefore, all transactions will be recorded, presenting digital evidence that can be used to trace criminal activities based on illegal transactions.
Regulations and Regulators Role in Reducing Criminal Activities
Secondly, the presence of regulations and regulators on cryptocurrencies contributes to the reduction in criminal activities. Initially, blockchain technology was created for the security of users, eliminating the essence of censorship and preventing duplicate transactions. Censorship illustrates the presence of third parties who regulate transactions, and therefore, the absence of censorship indicates the lack of a third party to regulate transactions. The presence of regulators and regulations brings in the censorship that will guard transactions, curbing illegal transactions (Belomyttseva, 2015); the ease of participating in illegal transactions will be reduced in the presence of censorship (Marian, 2015). Additionally, financial institutions develop guidelines such as regulations that oversee criminal activities and illegal transactions, including criminal activities funding, tax evasion, and laundering money (Sprenger & Balsiger, 2018), and the push for regulations on cryptocurrency platforms without regulation is significant in reducing criminal activities. These targets are achievable when individuals monitor exchanges between cryptocurrencies and institutions. Subsequently, the presence of regulators, such as financial institutions and regulators, will reduce criminal activities by reducing illegal transactions that fund criminal activities.
Reduction of Cash Use Role in Reducing Criminal Activities
Thirdly, the use of cryptocurrencies reduces the use of cash, thus limiting criminal activities. Funding is necessary for successful criminal activities, and it can be in the form of cash or digital currencies, such as cryptocurrencies; however, certain currencies are preferred over others. Cash or money has been used to fund criminal activities long before cryptocurrency was introduced; it is the preferred mode of transaction for various reasons; consistently, one reason for its preference is the lack of transaction charges. Cryptocurrencies were introduced to eliminate transaction charges, and tangible cash transactions also lack transaction charges, enabling criminals to transact (Hendrickson & Luther, 2021) without the fear of losing money. The other reason is the untraceable characteristic of cash that allows criminals to transact without the potential of discovery of transactions (Butler, 2019). Once transactions are untraceable, criminals conduct illegal transactions freely, in addition to tax evasion. Subsequently, cryptocurrency records all transactions, and therefore, criminal transactions are also recorded, thereby limiting and reducing criminal activities.
Susceptibility of Cryptocurrency Use by Criminals
In contrast, some properties of cryptocurrencies fuel the debate on the role of cryptocurrencies in increasing criminal activities. First, the cryptocurrency index (CRIX) increases the chances of criminal activities occurring all over the world. The purpose of CRIX is to enable individuals all over the world to access digital currencies, including cryptocurrencies. Consequently, overlooking the advantages CRIX provides to the economy and societies around the world, it allows any individual, including criminals globally, to access cryptocurrency platforms, enabling them to transact illegally and promoting criminal activities (Kuo Chuen, Guo & Wang, 2017). Further, the anonymity of the participants in the transactions leaves cryptocurrency transactions susceptible to criminals’ use (Weaver, 2018). In