Cryptocurrencies have long been classified as a haven for criminal activity, due to their lack of censorship and central authority.
Chief among these is Monero, which uses ring signatures and other obfuscation methods to make transactions untraceable and provide users with an unprecedented level of privacy for a blockchain system.
Due to this level of privacy, Monero has been used by hackers to clean their cryptocurrency after stealing funds from exchanges or wallet providers.
However, apart from the occasional hacker using the blockchain to privately make off with their funds, there is not that much criminal activity happening on the Monero blockchain.
Monero’s core team and community members view privacy and decentralisation as core concepts of digital currency, and have built the blockchain to deliver a true fungible cryptocurrency.
To find out more, MyBroadband spoke to Monero lead maintainer and cryptocurrency expert Riccardo “fluffypony” Spagni about the use of Monero by criminal entities.
Moving cash illegally
Monero is a lot like physical cash in that it is untraceable, fungible, and anonymous, but its trade is not limited by a centralised entity.
Some have argued that the ease of making anonymous cross-border payments with Monero has resulted in it being used by criminal entities.
Spagni said that moving value across borders can be as simple as carrying physical cash or a few expensive diamonds, however.
“You can absolutely move cash around for illegal activities, you don’t need to carry it around in a briefcase – you can use high-end art, diamonds, and other items,” he said.
“Monero is certainly less cumbersome than physical cash, but it is functionally no different in this regard.”
Spagni said he doubted criminal enterprises were using Monero to move their illegally-obtained money around the world.
“I don’t think criminals are flocking to Monero.”
“I mean if they were, we’d have a significantly higher market cap,” he joked.
“The reality is that criminal organisations have been operating using cash, bank accounts, and other assets for hundreds of years,” he said.
He said cryptocurrency is just another potential tool in their arsenal, but it’s not one they seem to be adopting at length.
“I think the pickup amongst criminal organisations is still pretty low, and I don’t think that is going to change any time soon.”
However, if regulators implement harsh regulation against cryptocurrencies, this will make matters worse, said Spagni.
“If regulators take a heavy hand with a cryptocurrency like Bitcoin and they decide to outlaw the cryptocurrency, it is not going to stop criminals from using it – it is only going to stop legitimate use,” he said.
“Ultimately, regulators who over-regulate end up forcing out people who have a legitimate need for the technology and opening it up to criminal enterprises who are just not going to stop.”