The government can now track your crypto transactions, find your wallet, access it and seize the crypto in it. How does that make you feel?
Probably not great.
As I have written earlier, Bitcoin is not the safe haven from tyrannical governments many believe it is. Far from it. The latest ransomware attack news has revealed this to be a myth.
Now that crypto is becoming mainstream, governments are learning how to track, control and disrupt blockchain transactions. The bombshell news on the Colonial Pipeline ransomware attack is all the proof anyone should need.
Law enforcement recently announced the seizure of 63.7 Bitcoin from the hackers’ digital wallet, out of a 75 Bitcoin ransom.
Hackers were reportedly paid about $4.4 billion in Bitcoin. Since Bitcoin crashed this week, the sum recovered was worth a little over $2.3 billion.
Authorities were not willing to disclose how they managed to trace the wallet and find the private key used to unlock it. But, this is not the first time law enforcement was able to seize Bitcoin used in illegal transactions. What made this story different was the publicity.
Now, the world is aware that governments have the ability to track transactions, identify digital wallets and seize the funds in them.
Bitcoin Was Never ‘Secure’
For most people, Bitcoin is still a mystery. But, the reality was and remains that the currency is not entirely private, nor entirely secure at this stage.
All cryptocurrency transactions are stored on a public ledger known as the blockchain, which makes transactions easy to trace.
When Bitcoin initially began being used back in 2011 and 2012, its primary function was to serve as a ‘currency’ for illegal transactions on the dark web. Silk Road, an underground ‘dark web’ website that sold illicit drugs among other things and was eventually shut down by the Feds, employed bitcoin as its currency of choice because, at the time, law enforcement didn’t understand how to track and trace the blockchain ledger.
Law enforcement has caught up, as the Colonial Pipeline recovery proves.
In fact, former senior Justice Department official Sujit Raman even told the Wall Street Journal that, “When cybercriminals use Bitcoin, that can sometimes be more traceable than just using cash or fiat currency.”
This should give pause to cyber criminals…but, it may also give pause to crypto holders, since a “crypto crackdown” could affect their investment.
China has already announced it will crack down on cryptocurrencies, and it has already taken steps in that direction. Turkey, India and other countries announced similar measures.
Crypto Needs To Change, Fast: Security, Privacy Paramount
The decentralized nature of cryptocurrencies is one of their major appeals. It’s one of the reasons libertarians were some of the earliest supporters–and adopters–of crypto.
Bitcoin has been hailed as a non-inflationary currency, one that the Fed can’t manipulate. It has also been deemed a form of “digital gold.”
Meanwhile, smart contracts on Ethereum blockchain are being hailed as the future of banking and finance, free from intervention by governments and central banks.
Privacy and decentralized finance were the original selling points for crypto…so without those two important hallmarks, what is left?
Certainly the technology itself is remarkable but, it’s critical to find ways to improve upon it. Investors need to find ways to get the ‘bad guys’ out, while still allowing for privacy and decentralization.
It’s a tricky scenario and bitcoin, and other cryptos, could face significant volatility in the years ahead as investors contemplate the future of digital currency.
It’s critical that the digital cryptos community support projects that will enhance security, functionality and privacy. It’s the only way for cryptos to truly survive in the long run.