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28 May 2020

Crypto, Cash and Drugs: Crypto Use Grows as Drug Trade Digitalizes

Crypto, Cash and Drugs: Crypto Use Grows as Drug Trade Digitalizes

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One of the most common accusations is that cryptocurrencies perpetuate the sale of illicit drugs, a view recently expressed by United States Treasury Secretary Steven Mnuchin.

taking decisive action against illicit drugs being purchased with cryptocurrency happened in 2013, when FBI agents rushed into the San Francisco Public Library to arrest Ross Ulbricht, a man who played a central role in the digitalization of the international drug trade.

In 2019, darknet markets are still selling illicit drugs that can be purchased with cryptocurrency, but U.S.

According to Ciphertrace’s report on Anti-Money Laundering, or AML, almost all drugs sold on darknet marketplaces are purchased with cryptocurrencies.

Professor Talis Putnins, co-author of an influential University of Technology Sydney reporton cryptocurrency and illegal drugs, told Cointelegraph that cryptocurrencies have had a big impact on the way drugs are purchased:.

The University of Technology Sydney report estimates that around 46% of illegal activity per year is associated with Bitcoin.

While it is fair to note that this figure does not represent illegal drug sales alone, the report found that Bitcoin is the most commonly used cryptocurrency for purchasing drugs on the darknet.

Putnins also noted to Cointelegraph that, although the use of Bitcoin for illegal purposes has increased, legal transactions using the cryptocurrency are also on the rise: .

A jointreport between Europol and the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) found that when compared with the annual retail value of the EU drug market, darknet sales volumes are still modest but have potential to grow.

The 2019 Global Drugs Survey notes an all-time high of 27.1% of surveyed drug users obtained illegal substances for the first time via the darknet in the last 12 months, up from 19.9% the previous year, which highlights the trend of the increasing digitalization of drug trade.

The increase in both darknet sales and wider drug usage among respondents indicates that the digitalization of the drug trade is making narcotics more accessible — thanks to anonymous buying and selling as well as untraceable payments using cryptocurrency. .

Moreover, according to the Global Drugs Survey, the ready availability of drugs on the darknet that are purchasable using cryptocurrency has increased their use and made them more attractive to those considering first time use: .

A Ciphertrace report found that, while there is a variety of cryptocurrencies used on so-called dark markets, Bitcoin remains the coin of choice in 76% of transactions

While the view that cryptocurrency is just a payment system like any other may be more or less correct, its anonymity undeniably makes it more attractive to individuals looking to buy or sell illegal drugs

However, as technology advances and anonymous cryptocurrencies become more widely accepted, privacy coins have the potential to impact the structure and development of dark markets and the illicit drug trade in a significant way. 

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