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The world of cryptocurrencies and blockchain has exploded in recent years. However, a lack of understanding surrounding this technology has led to many false beliefs and misconceptions, leaving many people with unwarranted suspicion and anxiety about their digital assets. To address this situation, Binance is on a mission to provide Web3 education accessible to all and to increase understanding of crypto.
Through these efforts, Binance aims to clear up common misconceptions and promote greater crypto literacy. Their goal is to eliminate confusion and improve the public’s understanding of crypto. This is because a good understanding of the basics and thinking critically will help people better understand and ultimately use cryptocurrencies. It is time to bust the crypto myths.
Myth: Crypto is only used by criminals
The use of cryptocurrencies for illegal activities has been a concern since the beginning of this new form of digital currency. Public perception that cryptocurrencies are inherently associated with criminal activity (money laundering, drug trafficking, cybercrime, etc.) can be largely traced back to early media coverage of cryptocurrencies, particularly in the infamous Silk Road market.
Silk Road was an online black market that operated on the dark web from 2011 to 2013, providing a platform for the anonymous buying and selling of illegal goods and services using bitcoin. The market was notorious for its involvement in drug trafficking, and the association of crypto with Silk Road’s illegal activities contributed to the negative reputation of cryptocurrencies in the mainstream media.
The anonymity and decentralized nature of crypto has generated concerns that it encourages criminal activity. Much of the media focus on high-profile cases of crypto-related crime, contributing to the notion that digital assets are used primarily by those seeking to engage in illegal activity while avoiding detection.
Reality: data shows that crypto is used primarily by ordinary people
The reality is that crypto is primarily used by ordinary people and exists as a legitimate tool for a variety of everyday transactions; Binance alone has over 120 million registered users. As with any emerging (or existing) technology, criminals will always use it for malicious purposes. Nevertheless, fraud accounted for only ~0.15% of crypto transactions in 2021, down from 0.62% in 2020 despite the rapid growth of the industry, and money laundering accounted for 0.05%.
And don’t just take Binance’s word for it. Here’s the data from chainalysisan independent blockchain analytics firm, and Chainalysis’ data is often used by government agencies such as the U.S. Federal Bureau of Investigation (FBI), Drug Enforcement Administration (DEA), Internal Revenue Service Criminal Investigation (IRS CI), and the National Crime Agency (NCA) in the UK to investigate and combat crypto-related crime. They use it to investigate and combat cryptography-related crimes.
In the traditional fiat space, $800 billion to nearly $2 trillion is laundered each year, which is equivalent to about 2-5% of global GDP (according to a report by the UN Office on Drugs and Crime (UNODC). Compare this to crypto, which is a minuscule 0.03% of that amount. Criminals do not like crypto because the fact that transactions are publicly and permanently recorded actually benefits the investigating authorities. In contrast to traditional financial investigations, the transparency of crypto makes it easier to identify bad actors.
Criminals do not like transparency”
Blockchains are inherently transparent. All transaction data is recorded in a public ledger. Anyone at any time can inspect the entire codebase. Using cryptography for malicious purposes leaves an excellent trail for prosecutors to establish a conviction.
Europol and the Basel Institute on Governance have stated that cryptography is the key to combating organized crime. It does not go unnoticed to move large sums of money. In fact, crypto exchanges remain one of the main allies in the fight against criminal activity. For example, in 2021, Binance helped crack down on57} cybercriminal group {/netabare}{/netabare}58} laundered $500 million in ransomware attacks.
Law enforcement continues to be the spearhead in the collective fight against crime. Acquiring the necessary resources, skills, and tools and working closely with crypto companies has become a top priority for investigative agencies around the world. In the United States, the Treasury Department has requested increased funding to track and combat crypto crime, and the Department of Justice and the FBI have created a dedicated National Cryptocurrency Enforcement Task Force.
In addition, the Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing, has issued standards for virtual assets similar to Fiat’s. However, implementation has been slow, and of the 200 countries committed to FATF standards, only 19 have implemented standards for virtual assets (as of March 2023).
Final Thoughts
The notion that crypto is primarily a hotbed of illegal activity is grossly exaggerated. In fact, the vast majority of crypto transactions and investments are legitimate and focus on real-world use cases that have the potential to transform the global economy. The advent of blockchain technology has opened up new opportunities for financial innovation, but cryptocurrencies are only one aspect of this rapidly evolving landscape.
From decentralized finance (DeFi) to non-fossil tokens (NFT), the potential applications for crypto and blockchain technology are vast and diverse. The industry has only begun to scratch the surface of the possibilities. While there are certainly risks and challenges, it is important to be open-minded and willing to learn and adapt in order to fully realize the potential for positive impact of this exciting new technology. We also need to put in place appropriate guardrails to keep out bad actors that are not part of the financial services ecosystem.
Fact:Crypto is used primarily by ordinary people. Independent data shows that only 0.15% of crypto transactions involve illegal activity. If you are a criminal, you are more likely to be caught using crypto than using cash or the traditional financial system.
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