A few years after the Bitcoin whitepaper appeared in 2009, the markets of the darknet got a kick of their kind. Agora and Silk Road I went on a spree, selling drugs and other outlawed goods to whoever wanted to buy. They had a catch; the transactions were “untraceable,” or so they thought, because they used Bitcoin. Now that the authorities traced and arrested the operators, and brought down the sites, do you still think Bitcoin is an underworld currency?
Many people that want to buy goods or procure services from the darknet using cryptocurrencies often ask themselves the question “can Bitcoin be traced?” This is so because many such dealings are dark and involve not just counterfeit goods but also very illegal stuff. And, Bitcoin being the currency of choice in these streets, it is only fair to find out if using it can leave you vulnerable.
Soon after the invention of Bitcoin, many people quickly adopted it because one school of thought held, rather, wrongly that the coin is anonymous. A substantial portion of the individuals that adopted the currency because of this reason wanted to transact on the darknet marketplaces. However, these people did not have much luck in the long run because they were nabbed and the marketplaces taken down by the authorities.
Below are a couple of case studies where using Bitcoin because of its pseudo-anonymous nature was not enough to keep thugs from being nabbed by the authorities.
The Silk Road Rollercoaster
Anyone familiar with the stories of cryptography from around 2013 must have heard the name Ross William Ulbricht. If you have not, then here is an overview.
Ross is a computer programmer and a convicted felon who created and operated the darknet marketplace called Silk Road. The site was a platform for buying and selling illegal drugs. Its important aspects were accessibility only via TOR and reliance on Bitcoin as the choice currency.
The website was seized by the FBI in 2013, the same year Ross was arrested. Among the charges that the state brought against him were computer hacking and conspiracy to traffic narcotics. Authorities allege that the platform facilitated $1 billion worth of illicit commerce.
Ross was found guilty of all the charges and was sentenced to double life in prison and another 40 years without the possibility of parole. The creation of Silk Road and its overnight success happened a paltry four years after Bitcoin debuted.
An attempt by Thomas White and Blake Benthall to resurrect the marketplace was also thwarted by the authorities. Available information indicates that before the authorities shut Silk Road II, the platform was processing about $100,000 of illicit trade each day.
Like their predecessor, White and Benthall were charged with among other crimes, conspiracy to traffic narcotics, money laundering, and computer hacking.
Ransom in Bitcoin
Fast-forward to 2019 when the bizarre story of the kidnap and eventual killing of William Sean Creighton happened. Sean was an American entrepreneur who operated a sportsbook in Costa Rica.
He was waylaid on his way from work. His story later rented the airwaves for a couple of reasons; first, kidnapping is a rare phenomenon in Costa Rica, and second, during the entire fiasco, the police arrested a dozen individuals that included Sean’s wife, his mother, and grandmother.
The kidnappers asked Sean’s family to pay $5 million ransom, in Bitcoin. The family only managed to send $1 million and even after sending the cash, Sean was never released.
While the kidnappers moved to locations all over South America and Europe, the victim’s body was found only a few kilometers from where he was kidnapped.
As a cryptocurrency enthusiast, you are probably wondering how the police nabbed the kidnappers event though ransom was paid in Bitcoin. Such a thought make you question the limitation of cryptocurrencies.
Does Bitcoin Have Limitations as an Anonymity Currency?
The situations highlighted here above put to question, the suitability of cryptocurrencies as the safest payment methods for dark deals.
Theoretically, Bitcoin validates the claim of value contained in a digital wallet. All you need to access such value is a private key. However, you need to exercise extra caution if you want your transactions to remain anonymous; a situation that lends relevance to the process of tumbling Bitcoins using crypto mixers.
If you earlier harbored the question “can Bitcoin be traced?” it is safe to assume that you now have an answer. Yes, Bitcoin transactions can be traced. However, the latest innovations allow you to keep your transactions anonymous.
Aside from the innovations, which this narrative will explore in a bit. It is important to note that privacy and anonymity can be achieved by using a new cryptocurrency wallet every time you transact.
The Transaction Flaws that Gave the Crooks Away
Anyone transacting using Bitcoin should know that the anonymity element fails the moment you introduce the tangible world. Tracing the administrators of both Silk Road I and II and taking the marketplaces down took painstakingly long because the said admins understood the facts of cryptography.
The thugs that nabbed Sean, on the other hand, it seems are not as knowledgeable about the anonymity and workings of Bitcoin. Though they demanded ransom in the form of Bitcoin, they most likely gave away their identity while they were converting the cryptocurrency into fiat.
Every Bitcoin transaction is permanently etched in the public ledger. When Sean’s family sent the ransom, they probably did so into a traceable cryptocurrency wallet whose address the kidnappers provided. This information was probably passed to the police.
Regardless of your reason for using Bitcoin, if you value privacy then it is important to use a crypto mixer to tumble Bitcoins. The process keeps you anonymous putting you above the reach of blockchain analysts. The goons that nabbed Sean did not have this information. Also, this narrative should not sound like a PSA targeting hoodlums that transact using Bitcoin. On the contrary, it is an educative peace on how to be anonymous and transact privately.