Evolution of Law Enforcement is Driving Changes in Cryptocurrency

There's an important transition that's happening with law enforcement's ability to deal with digital currencies, and we're seeing this just in the past month with two huge seizures. China just recently seized about $4.5 billion worth of cryptocurrency from criminals who were running a massive fraud scheme. And several weeks back, the US government announced that it had recovered about 70,000 Bitcoin totalling over $1 billion worth from an old dark web, uh, site and arrest that they had, that they had done previously. And what this is showcasing is really 3 things. First off, law enforcement's capabilities to deal with digital currencies is greatly increasing. Their tools, their processes, and it's manifesting in these huge, huge seizures. And this has been a long road. It's taken law enforcement more than 10 years to get to this point, to be able to have those capabilities. Seizing a billion dollars worth of assets, financial assets, money, is not something you just trip over. So these kind of capabilities, originally when digital and cryptocurrencies came out, law enforcement and regulators and Government officials were, were fearsome because they were simply afraid because their normal tools and processes didn't apply. And so they have had to adapt, and that's a good thing because digital currencies and cryptocurrencies bring a lot of wonderful benefits to consumers, to the industry, to markets, and to the global economy. But it took a while, and And the journey's not over, it's really just beginning. But we're seeing the, the fruits of that labor really emerge, especially with these major seizures. So it's great that law enforcement are able to then target criminals, whether it's the thieves, whether it's embezzlers, whether it's fraudsters for local or national crimes. You even tax evaders, all those kinds of criminals can now be better targeted by law enforcement to keep those kinds of crimes down, to keep the victimization down, which is a good thing. That puts a necessary pressure in place because, well, criminals, they are very persistent and they will go after anything that isn't locked down and they will use whatever tools and mechanisms that really help themselves. The other piece is the perception that cryptocurrency is evil. It's primarily used by criminals, and that's just a false narrative. And unfortunately, it dates back to right around 2016, where some initial preliminary data came out and said, oh, you know, a huge percentage, over 40% of Bitcoin transactions are tied to criminal activities. That wasn't correct. In fact, the latest data even last year that came out showed that it was right around 1% of Bitcoin was used in some type of criminal activity, and that's far less than cash, than other means of currency that we currently have. In fact, if you look at the money laundering aspects of it, for every $1 in Bitcoin that's used in money laundering, over $800 in cash and traditional US fiat is used for money laundering. So it's cryptocurrency and digital currency much less. The fears really have subsided and law enforcement has actually made the turn. They've realized, wait a second, we can actually, especially with the public, you know, logs, the public transaction type cryptocurrencies like Bitcoin, they can track transactions forever, and that's huge. That's something that they were never able to do. Criminals typically can hide their money pretty well, so you'd never see law enforcement seize, you know, vast amounts of money, not like they can do with cryptocurrency. Now again, there are some difficulties, and there's some other nuances like privacy coins and so forth, which are a much smaller valuation as compared to Bitcoin. But Bitcoin has a public ledger. So when, uh, cybercriminal is identified and their accounts are identified, law enforcement can go back in perpetuity and see all the transactions they've ever done going to these accounts. And that has been just a massive capability, and that's why you're seeing some of these big seizures, is some of the inherent tools that are built in. Bitcoin is anonymous, but it's not private. And so the cryptocurrency, you know, criminals that dove into it many years ago, they thought, hey, I'm safe, I'm gonna put my money here, I'm gonna do transactions here, the government can't get me. That's absolutely false. They're learning their lesson, and law enforcement is absolutely taking advantage of it. So we're gonna see law enforcement embrace digital currencies and cryptocurrencies even more because it actually aids them. In going after the assets of criminals. So that's a good thing. Now, the last thing is really about the fact that this is good news for the legitimate use and proliferation of digital and cryptocurrencies. And again, we're seeing a lot of traction here. Uh, Bitcoin is nearing its all-time high again, closing in on $20,000, uh, per Bitcoin. We're seeing investment firms, uh, move into Bitcoin and cryptocurrency. We're seeing a lot more exchanges and a lot more regulation and controls around those. Many traditional financial institutions are starting to look that way. PayPal just opened up and is allowing their customers to buy cryptocurrency and sell cryptocurrency. So again, there is a massive growth potential, and this helps that legitimate use and growth of crypto and digital currencies. In fact, we're now just starting to see countries come out with their own digital currencies to replace their, their paper fiat. Um, the Bahamas just came out with their— as, as the first nation— their digital currency, and it's backed by their national bank. We're seeing China and Russia explore, and they're probably going to move to it as well. So you're seeing major countries move down this path of digital currency adoption as well. So you've got cryptocurrency, digital currencies from nations, but this is all exploding for very, very good reason. Again, these types of currencies provide great benefits, so that's a good thing. But for every good thing, there's also a drawback. So now here's the warning about all this, and it goes back to, to, you know, a principle of money and thieves. Right, basically the Willie Sutton principle, uh, who was a bank robber in the '40s and '50s, is the thieves will go wherever the money is. And Willie Sutton, he was famously misquoted when he was asked, why do you rob banks, Willie? And he said, well, that's where the money is. Well, because of this growth that we're seeing, massive growth in digital currencies, cryptocurrencies, the criminals they're turning their sights because again, they can also benefit from these kinds of technologies. And instead of stealing thousands of dollars or hundreds of thousands of dollars, they can steal millions or tens of millions or hundreds of millions in a single crime. In fact, we're moving very close to that $1 billion mark where some very, very smart, you know, organized digital thief or team of thieves will steal in a single attack a billion dollars. We'll probably see that in the next year or two, but we need to be wary from a cybersecurity perspective. This is an entirely new facet. It's, it's a new playing field, and the fintech industry also has to be wary because again, this is an entirely new game. And the stakes are higher. And so we have to, moving forward, be very proactive and get ready, because the prediction is starting next year we're going to see a lot more, a major increase in attacks against cryptocurrency assets, legitimate uses of cryptocurrencies and storage and exchange and everything else for digital and cryptocurrencies. This is just the way the world is going to evolve, and we have to adapt. The faster we adapt to be able to put that appropriate pressure on the cyber criminals to reduce those impacts, the better off we all are. But this is what we're gonna see beginning in 2020. Again, another major spike in this trend of attacking digital and cryptocurrency assets.