On Friday, as the Bitcoin price fell by around six percent against the U.S. dollar, several reports claimed that the dominant cryptocurrency dropped in value due to bomb threats.
One report from Business Insider Australia, for instance, stated that following an email blast of bomb threats in New York, the price of the crypto asset endured a correction.
Wrong Argument Against Bitcoin
A common misconception that Bitcoin (BTC) by nature is anonymous or impossible to track is simply not correct.
As a consensus currency, Bitcoin is based on a decentralized network called the blockchain that is sustained by an open-source community of developers, miners, and node operators.
When a miner approves the settlement of a transaction by including it in a block, the transaction is broadcasted to the public blockchain network via nodes which relay information across the network.
Through the utilization of the public blockchain network and blockchain explorer tools, anyone on the network is able to track, trace, evaluate, and analyze the wallets that receive a suspicious transaction.
Some startups like Chainalysis place tags on certain wallets or transactions that are said to be related to criminal operations and follow the trail. If a tagged wallet sends a transaction to a Know Your Customer (KYC)-enabled fiat-to-crypto exchange, then the authorities can request the exchange to freeze the funds until the investigation comes to an end.
Last month, when an initial coin offering (ICO) that raised over $20 million turned out to be an exit scam, major mainstream media outlets in South Korea notified Upbit, the country’s largest crypto exchange, on the situation. Almost immediately after receiving the information, Upbit froze the wallet and the funds in it.
The inability of the operators of the exit scam to liquidate their Bitcoin holdings to fiat ultimately led the criminal group to plead guilty to the authorities and reimburse investors affected by the exit scam.
In the case of New York bomb threats, wherein individuals were asked to pay a Bitcoin ransom, the transaction can be traced to the group that issued the threats if the group ever tries to convert the dominant cryptocurrency into the U.S. dollar.
The NYPD said in an official announcement:
“Please be advised – there is an email being circulated containing a bomb threat asking for bitcoin payment. While this email has been sent to numerous locations, searches have been conducted and NO DEVICES have been found.”
Moreover, if the bomb threats caused the price of Bitcoin to decline in an unlikely situation, the termination of the investigation would have led the value of the asset to recover because it discovered no devices connected to the bomb threats.
Bad Narrative
Most of the criticism against Bitcoin with ties to the potential use case of the asset in criminal cases remains a weak argument because the infrastructure around the asset class has strengthened and it has become nearly impossible to convert BTC to USD without triggering KYC and Anti-Money Laundering (AML) systems.
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