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The eight most popular types of cryptocurrency transactions are not what you expect

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Even now that the Bitcoin bubble has long since risen, the increasingly desperate fans of cryptocurrency (crypto) are still exhorting the virtues of the apparently rosy future of technology.

Given the lack of intrinsic value of crypts beyond what is needed to extract ithowever, such exhortations seem to be little more than desperate "hodlers" (krypton holders) who seek to increase their speculative value.

However, our type of cryptographic transaction n. 1, speculation, is far from being the only reason to conduct transactions with crypts.

Eight common types of cryptocurrency transactionsJason Bloomberg

Crypto Transaction Type # 2: Darknet transactions

The Darknet consists of parts of the Internet that the standard search engines can not reach – those dark corners of the Web where providers of smuggling from illegal drugs to child pornography do business.

In fact, if it were not for crypto, the Darknet would be a mere shadow of its current self – and Bitcoin will remain the currency of the kingdom. "Bitcoin is the most common form of payment for drug sales on obscure net markets and is emerging as a desirable method for transferring illicit drug proceeds internationally," according to the US Drug Enforcement Agency (DEA & # 39; s ) 2017 National report on the evaluation of cyber threats. "Bitcoin is the most widely used virtual currency due to its longevity and growing acceptance among legitimate companies and institutions around the world."

Crypto Transaction Type # 3: Money Laundering

Remember the stacks of illegal currency from Scarfaceor after all, breaking Bad? In the past, turning criminal gains into legitimate assets that required the processing of mountains of money.

Not much anymore. Today, despite (or maybe why of) strong improvement in the application of anti-money laundering legislation (AML), the money laundering action has largely shifted towards cryptography. "97% of the criminal Bitcoin received directly from [crypto] the exchanges flowed in those located in countries with weak AML laws ", writes CipherTrace Cryptocurrency Intelligence in its report Anti-money laundering report for cryptocurrency 2018 Q3. "Trade in cryptocurrency in countries with weak AML regulation receives almost 5% of their payments directly from criminal sources".

In particular, given the Chinese restrictions on the movement of capital, cryptography has become quite popular to circumvent its laws. "CUBS [Chinese Underground Banking Systems] Money brokers sell Bitcoins to drug traffickers for money earned from drug sales in the United States, Australia, and Europe. This drug money is then sold to Chinese citizens in exchange for Bitcoin, whose Chinese citizens use to transfer the value of their activities outside of China, "according to the DEA report." Many companies based in China produce used goods in TBML [Trade Based Money Laundering] the schemes now prefer to accept Bitcoin. Bitcoin is very popular in China because it can be used to anonymously transfer value to foreign countries, avoiding controls on Chinese capital. "

Crypto Transaction Type # 4: Ransomware

The ransomware could now be less popular than cryptojackingbut it still remains a powerful form of criminal extortion – and it's easier than ever. "Ransomware easy to use as a service" can be purchased at low prices on Darknet and at least one provider offers customer support for users of its malware " writes Michael Baker, founder and director of Mosaic451, a provider of bespoke cybersecurity services and consulting and a member of the Forbes Technology Council. "Potential hackers who do not want to buy off-the-shelf ransomware can hire black-hat coders for custom development – all these services are bought and sold using – you guessed it – cryptocurrency."

Even our phones are not safe from this dangerous cryptographic application. "It is likely that the ransomware will point to connected devices containing personal data such as photos, e-mails and even information on fitness advancement," according to The cyber threat to the UK 2016/2017 business report from the National Cyber ​​Security Center of the National Crime Agency in the United Kingdom. "The ransomware on connected watches, fitness trackers and TV will be a challenge for manufacturers," the report continues. "This data may not be intrinsically valid and may not be sold on criminal forums, but the device and data will be valuable enough for the victim who will be willing to pay for it."

Crypto Transaction Type # 5: Evading Sanctions

Not surprisingly, countries like North Korea are desperate for hard currency, and the crypt gives them a way to get it. "Crypto-currencies have the added advantage to the DPRK [North Korea] to give them more ways to evade US sanctions " second Lourdes Miranda, cryptocurrency analyst and investigator on financial crimes at MirandaFinIntel Consulting, and Ross Delston, AML's certified lawyer and specialist, who frequently works as an expert witness. "The DPRK can create its own crypto-currencies or use the established ones like Bitcoin." Having their crypto-currency would also facilitate their ability to open online accounts under the guise of a non-antagonist nation using anonymous communications to hide 39; user and use on the Internet. "

Furthermore, while the United States and many of its allies have sanctions against countries such as North Korea and Iran, there are also economic sanctions against much larger economies such as Russia that encourage Putin's empire to make serious investments in crypts.

These investments, in fact, take place at the national level. "[The] The Russian government is going to take a step to start diversifying the financial reserves in Bitcoin from Russia [is] forced by US sanctions to empty US Treasury bonds and [take] back US dollars " second Vladislav Ginko, economist at the Russian presidential academy for the national economy and public administration, which is ironically financed by the Russian government itself. "These sanctions and the willingness to adopt modern financial technologies lead Russia to invest its reserves in Bitcoin".

Crypto Transaction Type # 6: Crypto Theft

Money laundering, ransomware and state-sponsored tax evasion have an incredible James Bond flavor for them – but what about the simple theft? "CipherTrace revealed a triple increase in cryptocurrency theft during the first half of 2018 compared to the entire 2017", according to the Anti-money laundering ratio of cryptocurrency 2018 Q3 from CipherTrace Cryptocurrency Intelligence. "CipherTrace estimates that this trend will bring the total stolen and reported in 2018 to over 1 billion dollars by the end of [2018]".

The FBI, in fact, warns against a type of theft aimed at holders of small amounts of cryptography. "Virtual currency is increasingly being targeted by technical support criminals, with individual loss of victims often in thousands of dollars", according to Public Service Announcement of FBI I-032818-PSA since March 2018. "Victims contact fraudulent virtual currency support numbers, usually located via open source searches, fraudulent support requires access to the victim's virtual wallet and transfers the victim's virtual currency to another portfolio for a temporary storage during maintenance: Virtual currency is never returned to the victim. "

Crypto Transaction Type # 7: Hacking Crypto Infrastructure

Why worry about stealing Crypto if you can simply print more for yourself? This is exactly what a particular group of criminals did at the beginning of 2019 by targeting the weaknesses of Ethereum Classic, the second most popular cryptography behind Bitcoin. "We observed repeated deep reorganizations of the Ethereum Classic blockchain, most of which contained double expenses," relationships Mark Nesbitt, Security Engineer at

Coinbase
. "The total value of the double spent that we have observed so far is 219,500 ETC (~ $ 1.1M)."

Double spending means taking the same encryption unit and spending it twice – the online equivalent of running your green tickets through a copier. A crime without victims, perhaps? You are the judge

Conclusion: what happened to the Transaction Type # 8 encryption?

Let's not forget the eighth type of cryptographic transaction: legal transactions that exchange crypto for goods and services – you know, how true money.

Some crypto fans will make you believe that the use of cryptography in your local coffee shop or even sending funds to your relatives in Venezuela for the purchase of food in that area will be the & # 39; prominent use of cryptography at some point in the near future.

I do not believe it. "Cryptocurrencies will probably become a more important part of the realm of cybercrime," concludes Yaya Jata Fanusie, director of analysis for the Center for Sanctions and Illicit Finance at the Foundation for the Defense of Democracies. "All police and intelligence departments dealing with computer problems need to deepen their knowledge on cryptocurrencies and blockchain technology."

Intellyx publishes the Cortex biweekly newsletter, advises companies on their digital transformation initiatives and helps sellers communicate their stories of agility. At the time of writing, none of the organizations mentioned in this article are Intellyx customers. The author does not own, nor does he intend to possess, cryptocurrencies or other cryptographers, neither long nor short. Credit image: Jason Bloomberg.

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Even now that the Bitcoin bubble has long since risen, the increasingly desperate fans of cryptocurrency (crypto) are still exhorting the virtues of the apparently rosy future of technology.

Given the lack of intrinsic value of crypto in addition to what it takes to extract it, however, such exhortations seem to be little more than "junkers" (holders of crypto) who try to increase their speculative value.

However, our type of cryptographic transaction n. 1, speculation, is far from being the only reason to conduct transactions with crypts.

Eight common types of cryptocurrency transactionsJason Bloomberg

Crypto Transaction Type # 2: Darknet transactions

The Darknet consists of parts of the Internet that the standard search engines can not reach – those dark corners of the Web where providers of smuggling from illegal drugs to child pornography do business.

In fact, if it were not for crypto, the Darknet would be a mere shadow of its current self – and Bitcoin will remain the currency of the kingdom. "Bitcoin is the most common form of payment for drug sales on obscure net markets and is emerging as a desirable method for transferring illicit drug proceeds internationally," according to the US Drug Enforcement Agency (DEA & # 39; s ) National report on the evaluation of drug threats in 2017. "Bitcoin is the most widely used virtual currency due to its longevity and growing acceptance among legitimate companies and institutions around the world."

Crypto Transaction Type # 3: Money Laundering

Remember the stacks of illegal currency from Scarfaceor after all, breaking Bad? In the past, turning criminal gains into legitimate assets that required the processing of mountains of money.

Not much anymore. Today, despite (or maybe why of) strong improvement in the application of anti-money laundering legislation (AML), the money laundering action has largely shifted towards cryptography. "97% of the criminal Bitcoin received directly from [crypto] the exchanges flowed in those located in countries with weak AML laws ", writes CipherTrace Cryptocurrency Intelligence in its report Anti-money laundering report for cryptocurrency 2018 Q3. "Trade in cryptocurrency in countries with weak AML regulation receives almost 5% of their payments directly from criminal sources".

In particular, given the Chinese restrictions on the movement of capital, cryptography has become quite popular to circumvent its laws. "CUBS [Chinese Underground Banking Systems] Money brokers sell Bitcoins to drug traffickers for money earned from drug sales in the United States, Australia, and Europe. This drug money is then sold to Chinese citizens in exchange for Bitcoin, whose Chinese citizens use to transfer the value of their activities outside of China, "according to the DEA report." Many companies based in China produce used goods in TBML [Trade Based Money Laundering] the schemes now prefer to accept Bitcoin. Bitcoin is very popular in China because it can be used to anonymously transfer value to foreign countries, avoiding controls on Chinese capital. "

Crypto Transaction Type # 4: Ransomware

Ransomware may now be less popular than cryptojacking, but it remains a powerful form of criminal extortion – and it's easier than ever. "Easy-to-use Ransomware as a service" can be purchased at low prices on Darknet and at least one provider provides customer support for malware users, "writes Michael Baker, founder and director of Mosaic451, a tailor-made IT security service provider and counseling and a member of the Forbes Technology Council. "Potential hackers who do not want to buy off-the-shelf ransomware can hire black-hat coders for custom development. All these services are bought and sold using – you guessed it – cryptocurrency ".

Even our phones are not safe from this dangerous cryptographic application. "It is likely that the ransomware will point to connected devices containing personal data such as photos, e-mails and even information on fitness advancement," according to The cyber threat to the UK 2016/2017 business report from the National Cyber ​​Security Center of the National Crime Agency in the United Kingdom. "The ransomware on connected watches, fitness trackers and TV will be a challenge for manufacturers," the report continues. "This data may not be intrinsically valid and may not be sold on criminal forums, but the device and data will be valuable enough for the victim who will be willing to pay for it."

Crypto Transaction Type # 5: Evading Sanctions

Not surprisingly, countries like North Korea are desperate for hard currency, and the crypt gives them a way to get it. "Crypto-currencies have the added advantage to the DPRK [North Korea] to give them more ways to get around US sanctions, "according to Lourdes Miranda, cryptocurrency analyst and financial crimes investigator at MirandaFinIntel Consulting, and Ross Delston, a certified AML attorney and specialist who frequently serves as an expert witness." The DPRK it can create its own crypto-currencies or use those consolidated as Bitcoins. Having their crypto-currency would also facilitate their ability to open online accounts under the guise of a non-antagonist nation using anonymous communications to hide user positions and use on the Internet. "

Furthermore, while the United States and many of its allies have sanctions against countries such as North Korea and Iran, there are also economic sanctions against much larger economies such as Russia that encourage Putin's empire to make serious investments in crypts.

These investments, in fact, take place at the national level. "[The] The Russian government is going to take a step to start diversifying the financial reserves in Bitcoin from Russia [is] forced by US sanctions to empty US Treasury bonds and [take] back US dollars, "according to Vladislav Ginko, economist at the Russian presidential academy for the national economy and public administration, which is ironically financed by the Russian government itself." These sanctions and the willingness to adopt modern financial technologies bring Russia to invest its reserves in Bitcoin ".

Crypto Transaction Type # 6: Crypto Theft

Money laundering, ransomware and state-sponsored tax evasion have an incredible James Bond flavor for them – but what about the simple theft? "CipherTrace revealed a triple increase in cryptocurrency theft during the first half of 2018 compared to the entire 2017", according to the Anti-money laundering report for cryptocurrency 2018 Q3 from CipherTrace Cryptocurrency Intelligence. "CipherTrace estimates that this trend will bring the total stolen and reported in 2018 to over 1 billion dollars by the end of [2018]".

The FBI, in fact, warns against a type of theft aimed at holders of small amounts of cryptography. "Virtual currency is increasingly being targeted by technical support criminals, with individual loss of victims often in thousands of dollars", according to Public Service Announcement of FBI I-032818-PSA since March 2018. "Victims contact fraudulent virtual currency support numbers, usually located via open source searches, fraudulent support requires access to the victim's virtual wallet and transfers the victim's virtual currency to another portfolio for a temporary storage during maintenance: Virtual currency is never returned to the victim. "

Crypto Transaction Type # 7: Hacking Crypto Infrastructure

Why worry about stealing Crypto if you can simply print more for yourself? This is exactly what a particular group of criminals did at the beginning of 2019 by targeting the weaknesses of Ethereum Classic, the second most popular cryptography behind Bitcoin. "We have observed repeated and profound reorganizations of the Ethereum Classic blockchain, most of which contained double expenses," reports Mark Nesbitt, Security Engineer at
Coinbase
. "The total value of the double spent that we have observed so far is 219,500 ETC (~ $ 1.1M)."

Double spending means taking the same encryption unit and spending it twice – the online equivalent of running your green tickets through a copier. A crime without victims, perhaps? You are the judge

Conclusion: what happened to the Transaction Type # 8 encryption?

Let's not forget the eighth type of cryptographic transaction: legal transactions that exchange crypto for goods and services – you know, how true money.

Some crypto fans will make you believe that the use of cryptography in your local coffee shop or even sending funds to your relatives in Venezuela for the purchase of food in that area will be the & # 39; prominent use of cryptography at some point in the near future.

I do not believe it. "Cryptocurrencies will probably become a more important part of the realm of cybercrime," concludes Yaya Jata Fanusie, director of analysis for the Center for Sanctions and Illicit Finance at the Foundation for the Defense of Democracies. "All police and intelligence departments dealing with computer problems need to deepen their knowledge on cryptocurrencies and blockchain technology."

Intellyx publishes the bi-weekly Cortex newsletter, advises companies on their digital transformation initiatives and helps sellers communicate their stories of agility. At the time of writing, none of the organizations mentioned in this article are Intellyx customers. The author does not own, nor does he intend to possess, cryptocurrencies or other cryptographers, neither long nor short. Credit image: Jason Bloomberg.

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