B++ Logo
Feedback

Bitcoin and Criminal Use

Bitcoin is often framed as the currency of choice for criminals: drug dealers, ransom attacks, money launderers. Critics cite Silk Road, darknet markets, and ransomware as evidence that Bitcoin is inherently a tool for illicit activity. This framing is misleading. Bitcoin is just money. What people do with it is their decision. The vast majority of illicit financial activity globally occurs in US dollars and the traditional banking system, not in Bitcoin.

Money Is Neutral

A Tool, Not an Actor

Money is a tool. Like a knife, a car, or a phone, it can be used for good or ill. A knife can prepare dinner or commit violence. A car can transport family or flee a crime. Cash can pay rent or bribe an official. We do not blame the knife, the car, or the dollar bill for the choices of the person using it.

Bitcoin is no different. It is a protocol for transferring value. It does not judge. It does not refuse. It executes the rules that consensus agrees on. Holding Bitcoin responsible for criminal use is like holding the English language responsible for fraud because someone wrote a phishing email in it.

Responsibility Lies With the User

The person who chooses to break the law is responsible. The protocol that blindly processes valid transactions is not. Bitcoin does not know or care whether a UTXO was earned by mining, trading, or theft. It only checks signatures and rules.

Blaming Bitcoin for crime confuses the instrument with the actor. The controversy is not really about Bitcoin: it is about whether we hold money itself responsible for its users' choices. The answer is no.

The USD Reality

Where Illicit Activity Actually Lives

Most illicit financial activity globally occurs in US dollars and the traditional banking system. Money laundering, sanctions evasion, corruption, drug trafficking, and fraud have used fiat currencies and banks for decades, long before Bitcoin existed.

UNODC, FinCEN, and similar bodies consistently report that the bulk of illicit financial flows moves through correspondent banking, shell companies, and cash. Cryptocurrency represents a small fraction of illicit activity by volume. The US dollar remains the dominant currency for global crime precisely because it is the dominant currency for global commerce.

Bitcoin did not invent financial crime. It is one of many instruments that exist in a world where some people break the law. To single it out is to ignore where the problem actually lives.

Why Bitcoin Gets the Blame

Transparency

Bitcoin's blockchain is public. Every transaction is recorded. When Bitcoin appears in a crime (a ransom payment, a darknet sale), it is visible, traceable, and widely reported. Headlines follow.

The same cannot be said for cash. A briefcase of dollars changes hands in private. No public ledger. No headlines. Illicit use of fiat is largely invisible, so it is largely unremarked. Bitcoin gets blamed not because it is used more for crime, but because when it is used, we can see it.

Novelty

Bitcoin is new. "Crypto" attracts political and media attention. Fiat banking is ordinary; its role in crime is old news. The novelty of Bitcoin makes it a convenient villain and a useful narrative for regulators and politicians who want to justify AML and KYC rules that extend state control over financial rails.

The Narrative Sells

The "Bitcoin for criminals" story fits agendas: more surveillance, more KYC, more gatekeepers at the borders of the network. It is easier to rally support for cracking down on something that sounds dangerous and unfamiliar than to address the systemic role of fiat and banking in illicit flows.

The Traceability Irony

Bitcoin is one of the least attractive currencies for sophisticated criminals who want to evade detection.

  • Public ledger: Every transaction is recorded. Blockchain monitoring and chain analysis can trace flows, cluster addresses, and link them to exchanges.
  • KYC at off-ramps: Converting Bitcoin to fiat usually requires an exchange or similar service that collects identity under KYC and AML rules. That creates a durable link between on-chain activity and real-world identity.
  • Cash is more anonymous: Physical cash leaves no permanent record. For someone who wants to obscure the origin of funds, cash is far more convenient than a transparent, permanent blockchain.

This is why the narrative is ironic: the same transparency that makes Bitcoin's use in crime visible also makes it traceable. The idea that Bitcoin is the preferred tool for serious, organized crime does not hold up. It is used in some crimes because it is convenient for cross-border, digital payments, but so is the traditional banking system, at far greater scale.

The Real Question

The question is not "Is Bitcoin ever used by criminals?" Any valuable tool is. The question is: Should we hold money itself responsible for its users' choices?

The answer is no. Bitcoin is neutral. It is a protocol. It does not have intentions, and it does not pick sides. The controversy is really about whether we treat money as a tool (something humans use, for better or worse) or as a moral agent to be blamed or praised.

Those who condemn Bitcoin for criminal use while ignoring the role of the US dollar and the banking system in the vast majority of illicit finance are not making an honest argument about crime. They are making an argument about which forms of money they wish to control.

Resources