There are many reasons why a cyber hacker or money launderer would prefer to use Bitcoins.
In 2020, hackers broke into the Twitter accounts of Jeff Bezos, Warren Buffett, and several other influential people in the world and posted an account that was linked to a cryptocurrency wallet.
Since no bitcoin wallet is linked to real identities, how could anyone trust such a transaction?
The answer is simple. Cryptocurrency wallets are powered by blockchain technology. And what makes blockchain stand out is the high level of trust it brings to the game. No one can authorize a transaction on your behalf without your account keys. Blockchain is equally secure. So, for every transaction you want to make, it must be authorized by you first. More specifically, the high-level security of your wallet makes it impossible to recover it if your account keys are lost.
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Cybercriminals , however, have found various loopholes in cryptocurrency wallets due to their anonymous nature. While some of them also demand cryptocurrency from their victims as ransom.
Here are four reasons why hackers and money launderers use crypto wallets to their advantage.
1. Anonymity
Cryptocurrency addresses are anonymous. You don't know the name or address of the wallet owner. All you see is a string of letters and numbers. The anonymity doesn't stop there.
Some cryptocurrency wallet providers and cryptocurrency payment gateways (CPGs) – platforms where you can convert cryptocurrencies to fiat (real money) and make withdrawals – do not have a Know Your Customer (KYC) policy in place. Monero is one of them.
KYC policy allows a company to upload real identities of its customers, such as their address and ID, on its website. In case of fraud, the customer is easily traceable and traceable.
2. Fast money transfer
In traditional money transfers, the process can take up to 5 days, while cryptocurrency transfers can take up to 10 minutes depending on how busy the network is and the transaction fee. As we understand, for hackers and money launderers, it is necessary for the funds to move at lightning speed.
3. Borderless transactions
How many times have you struggled to get paid or send a payment to a country thousands of miles away? If you haven’t experienced it yet, the challenge is truly daunting. Which can be quite annoying. In contrast, with cryptocurrency transactions, the same is not true. There are no borders and there is no need to worry about payment policies or third-party financial institutions.
4. Isolated states
An isolated state is a country that has little to no contact with other countries. North Korea is an example of this. It is difficult to stay informed about changes happening in such a state. Hackers from such a state may find it easy to launch cyberattacks on other countries.
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What are the challenges that hackers have to face?
1. Monitoring
Hackers and money launderers move digital assets, such as cryptocurrencies, through multiple digital wallets before finally converting them to fiat to cover their tracks. This makes tracking particularly difficult. Despite multiple moves of a cryptocurrency through different wallets, some innovative software can detect illicit cryptocurrency activity on the blockchain up to the point of conversion to fiat.
2. Secret address tracking
Some bitcoin recipients may use secret addresses to receive encrypted payments. A secret address is an encrypted address that a recipient can create from their primary cryptocurrency wallet and use only once to receive a payment. The Blockchain does not store encrypted addresses, so you cannot trace the payment to the recipient. The address is deleted once the payment is received. This means that the identity of the recipient remains hidden.
For example, Monero, a privacy-focused cryptocurrency, provides secret addresses. It officially revealed on its page that “secret addresses are part of Monero’s inherent privacy.” Monero allows a sender to generate random, one-time addresses on behalf of the recipient for each individual transaction.
Additionally, crypto tracking software must wait for a cryptocurrency recipient to convert the cryptocurrency to fiat before it can verify the recipient's identity in the real world, which happens thanks to some KYC policy.
3. Absence of KYC policy by some cryptocurrency gateway platforms (CGP)
There are CGPs that do not implement the KYC policy. Such platforms enable cyber activities related to finance without requiring one’s real identity. Therefore, a hacker would prefer to open a cryptocurrency wallet on a platform where this policy is not implemented. Since cryptocurrency wallets are not linked to a real identity, these wallets are ideal for cybercrimes aimed at money transactions.
4. Crypto Mixers
Crypto , etc. – from different people and put them into one transaction. This makes it extremely difficult to track how much cryptocurrency each person has. There are also shapeshifters who convert Dogecoin, for example, into Ethereum to make crypto detection more complicated.
In conclusion, like any other sector in the world, there will always be some gaps, no matter how small. Nevertheless, cooperation between CGPs, national governments and cryptocurrency platform owners will go a long way in tackling cryptocurrency.
Source: hackernoon.com
