Digital currency and criminal activity
Some people say that digital currency is a problem because it is used for criminal activity because of its anonymous trading structure. Let’s look at some facts about digital currency and illicit activities.
What people have said about digital currency
Earlier this year, Janet Yellen, now Secretary of the Treasury said, “I think that many (cryptocurrencies) are used, at least in a transaction sense, mainly for illicit financing.” Secretary Yellen also said, “Cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”
When speaking about bitcoin, Berkshire Hathaway Vice Chairman Charlie Munger said, “I don’t welcome a currency that’s so useful to kidnappers and extortionists,” and is “contrary to civilization.”
The Wall Street Journal in June of this year said, “(T)he strongest argument against [digital currency] may be that they have become far too good at one thing: enabling crime.”
What are the facts about digital currency and criminal activity?
Chainalysis, a blockchain data platform that provides data and research to government agencies and cybersecurity companies, has found that in 2019, around $21.4 billion worth of digital currency transfers were due to illicit activity. In 2019, the digital currency market was valued at $1.02 trillion, meaning that only 2.1% of all cryptocurrency transactions were used for criminal activity.
Chainalysis estimates that about $10 billion worth of digital currency transactions were used for criminal activity, which is only 0.34% of the 2020 $2.94 trillion digital currency market.
In comparison, the United Nations estimates that $1.6 trillion in cash is laundered every year.
The overwhelming majority of digital currency crime
Any criminal activity estimated in the billions of dollars is too much. However, of the small portion of crypto criminal activity, scams are the largest majority of digital currency crime – not money laundering, terrorism, trafficking, or other unlawful activities.
Coinbase says, “Despite the perceived appeal of cryptocurrency for money laundering, an estimated 99 percent of cryptocurrency transactions are performed through centralized exchanges subject to the same AML/CFT regulations as traditional banks.”
Cloud Rush mines for Filecoin because we believe that adding new digital storage to the world helps make a difference. The new data storage created by Cloud Rush miners makes data storage safer, data easier to retrieve, and the decentralized network is harder to censor.
Filecoin mining machines use standard hard-drive storage and require 60 to 70% less power than standard mining equipment. Filecoin is built to improve computing for the long term.
On top of that, the cost to create new Filecoin tokens is a fraction of the current market value of coins/tokens.
A 16T (terabyte) machine plan from Cloud Rush has an initial out-of-pocket cost1 of only $3,319. (A token pledge [priced at 5FIL/T as of 10/18/21] is also required at the commencement of mining; please contact Cloud Rush for details.) The estimated mining cost-per-token is $21.50 or less. On October 18, 2021, Filecoin was available for purchase for $62.64. You can see where this is going.
Disclaimer: This blog is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
1 Out of pocket costs are defined as machine buy-in price and the first year’s hosting fee. The remainder of the term’s hosting fees will be due yearly upon the anniversary date of the contract.
2 Cost-per-token price is based on Filecoin market price of $62.64.