Why Bitcoin is Not A Great Payment Method For Online Drugs

When federal agents brought down the Silk Road platform, many people in the Bitcoin space hoped that using this disruptive digital currency for drug trafficking would slowly come to an end. Unfortunately, it turns out that is not the case;  online drugs sales are still on the rise and pseudonymous and anonymous payment, such as Bitcoin, are still very popular in that market.

Silk Road Shut Down

Silk Road will always remain a bit of a black page in the Bitcoin history books. While the idea of an open and free peer-to-peer marketplace sounds great, there is always someone trying to use it for nefarious activities. Or, in the case of Silk Road, it became mainly used for illegal activities such as drug trafficking and other goods and services that shouldn’t see the light of day.

However, once Silk Road – and later on, Silk Road 2.0 – was shut down, things started going back to normal in the world of Bitcoin. More and more positive news was appearing left, right and center and people slowly started to believe these illegal activities were a thing of the past. But, as they say, old habits die hard, and so does this one.

Even though Bitcoin is not exactly an anonymous currency – but rather pseudonymous – it is still a preferred payment method on the Deep Web and dark markets. As you would come to expect from such places, there is hardly any legal activity going on on the Deep Web, and people active in this “grey zone” will try to protect their identity in every which way they can.

Bitcoin Is Less Suitable For Illegal Purchases

This is where online drug sales come into the Bitcoin picture once again. The online sale of drugs has been on a steady rise over the past few years, mostly because those prices are far cheaper compared to buying it on the street. Plus, by using a payment method such as Bitcoin, you can partially hide your real identity to the rest of the world.

To clarify a few things, the same can also be said for cash. If you buy drugs on the street from a dealer, and you pay him/her in cash, they will never know your identity either. Bitcoin is less suitable for any activity compared to cash, but it often gets hammered for its “anonymity”. Last time we checked, there is no personal information on a fiat currency bill either.  Cash is more anonymous compared to Bitcoin and digital currency.

Granted, fiat currency bills have a serial number on them, which can be tracked by any bank. However, once that money leaves the bank, it can only be re-checked when it comes into the hands of a bank clerk. Whatever happens in between is a total mystery, and there is no way to find out where the money went, or what it has been used for.

On top of that, over 90% of all fiat currency bills have traces of cocaine or other drugs on them. Not that you can tell whether or not your bill is “tainted” by looking at it, but that is a worrying number most people tend to “spontaneously” forget. As a result, you could very well be labelled as an accomplice in illegal activities simply because you have the wrong fiat currency bill in your possession at the wrong time.

Maybe an open ledger infrastructure such as Bitcoin and the blockchain don’t sound so bad after all, right?

Source: The Sydney Morning Herald

Images courtesy of The Sydney Morning Herald Shutterstock