Criminals are dropping bitcoin in favor of other digital currencies that are harder for law enforcement to use in tracking activities in an anonymous corner of the internet known as the dark web, analysts said.
Although hard numbers on criminal activity in digital currencies are difficult to pin down, Shone Anstey, co-founder and president of Blockchain Intelligence Group, estimates that illegal transactions in bitcoin have fallen from about half of total volume to about 20 percent last year.
“Now it’s significantly less than that,” he told CNBC earlier this month, noting that overall transaction volume has grown globally.
A U.S. Homeland Security official confirmed to CNBC in a phone interview on Thursday that criminals are “looking more closely at other currencies like monero and ethereum.”
“What the criminals are starting to see, and some of the trends we’re picking up as well, is that bitcoin also works equally just as much against you as it does for you,” said the official, who didn’t want to be named.
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Bitcoin is built on the blockchain, a public record of all transactions available online. Users also need a public address of numbers and letters in order to receive payments. As a result, intelligence agencies can track the movement of funds to addresses that hackers provide and catch the criminals when they try to cash out through more regulated entities such as exchanges or banks.
Jonathan Levin, co-founder of blockchain analytics firm Chainalysis, noted that recent law enforcement crackdowns have “made a dent in the trust” in dark web markets, where people primarily use cryptocurrencies for payment.
On July 20, the U.S. Justice Department and Europol announced the closure of two of the largest dark web marketplaces, AlphaBay and Hansa, which listed tens of thousands of vendors selling illegal drugs, counterfeit identification…