Why Bitcoin and Crypto Often Used for Money Laundering? Here's the explanation

Bittime – Cryptocurrencies, especially Bitcoin, are often associated with money laundering by some parties. However, how valid is this claim?

This article will discuss whether it is true that Bitcoin and cryptocurrency are often used for money laundering, and what the mechanism is.

What is Money Laundering?

Money laundering is the process of converting money obtained from illegal activities into money that appears legal.

The main goal is to hide the source of the money and reintegrate it into the financial system so that it can be used without arousing suspicion.

Money laundering consists of three main stages:

- Placement: The proceeds of crime are put into the financial system.
- Layering: The money is rotated through various transactions to hide its origins.
- Integration: The "clean" money is reintegrated into the financial system and can be used to purchase assets or other investments.

Read Also: Bitcoin Market Has Turned From Bearish To Neutral

Bitcoin and Crypto's Relationship to Money Laundering

The claim that Bitcoin and cryptocurrencies are used for money laundering stems from their digital and anonymous nature.

However, the blockchain technology that underlies Bitcoin actually operates on the principle of transparency and immutableness, which actually makes money laundering activities more difficult compared to traditional financial systems.

Is Bitcoin an Effective Tool for Money Laundering?

Several factors make Bitcoin often used as a tool for money laundering, namely:

1. Blockchain Transparency

Blockchain is a digital ledger that is open and accessible to anyone. Every transaction made using Bitcoin is visible to the public, although the user's identity remains anonymous.

This makes Bitcoin a non-ideal choice for money laundering because transactions can be traced.

2. Regulation and Compliance

Many countries have implemented strict regulations on cryptocurrency exchange platforms. For example, exchanges are now required to carry out Know Your Customer (KYC) processes and comply with Anti-Money Laundering (AML) regulations.

With this regulation, it is increasingly difficult for money launderers to hide their identity through Bitcoin transactions.

Risks of Using Cryptocurrencies for Money Laundering

Although there are some cases where Bitcoin and cryptocurrencies are used for money laundering, the risks and difficulties are greater compared to traditional methods.

For example, using a privacy coin like Monero which offers a higher level of anonymity. However, many exchanges no longer support transactions with privacy coins, making this method increasingly impractical.

Real Cases of Money Laundering with Crypto

Several high-profile cases, such as the one involving the BTC-e exchange, show that cryptocurrencies have indeed been used for illegal activities, including money laundering.

However, these cases tend to be the exception rather than the general rule, especially with increased surveillance and increasingly sophisticated digital forensic technology.

Read Also: Is it true that Tomarket Airdrop will distribute 350 billion tokens? These are the Facts

Psychological Factors and Misconceptions

There are several psychological factors that make people believe that Bitcoin is often used for money laundering:

- Negativity Bias: People tend to pay more attention to negative news and ignore positive news about Bitcoin.
- Illusory Truth Effect: Hearing misinformation repeatedly makes it sound true, even if it is not based on fact.
- Dunning-Kruger Effect: This lack of in-depth understanding leads some people to overestimate their knowledge of Bitcoin and money laundering.

Conclusion

While there are some cases where cryptocurrencies are used for money laundering, the claim that Bitcoin is often used for these activities is not entirely accurate.

Transparent blockchain technology and increasingly stringent regulations actually make Bitcoin a less effective tool for money laundering.

As technology and regulations develop, Bitcoin and cryptocurrencies are increasingly difficult to use for illegal activities without being detected.

Therefore, there is a need for better understanding and proper education to overcome the wrong stigma against Bitcoin and cryptocurrencies related to money laundering.

How to Buy Crypto on Bittime

You can buy and sell crypto assets in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Learn How to Buy Crypto on Bittime.

Monitor price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.