Each US Dollar in Bitcoin Spent on the Darknet Equates to $800 in Laundered Fiat

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A report published by Messari has revealed that for each U.S. dollar in Bitcoin (BTC) spent on the darknet, at least $800 of fiat is laundered. The report, published on July 16, also shows that most Bitcoin spent on the darknet is largely comprised of legitimate transfers.

The report was released in response to a statement made by the U.S. Treasury secretary, Steven Mnuchin, who said that cryptocurrencies like Facebook’s forthcoming Libra are “a national security issue.”

‘Fiat Dwarfs Bitcoin’s Contribution to Illegal Activities’

In response to Mnuchin’s statements, Messari noted,

“Bitcoin’s contribution in illegal activity was dwarfed by strongest of fiat establishments.”

This is keeping in mind that Messari considered the total volume of BTC spent on the darknet was made up of mostly legitimate transfers.

The report further showed that there has been an appreciable increase in the global stock of narrow money, a term used to refer to physical money such as banknotes and coins. While the European Union claims the first spot with 877,500,000 stocks, China follows closely with 794,700,000. Japan and the U.S. trailed in the third and fourth positions respectively.

The report, titled ‘Bitcoin in the Grand Scheme of Things,’ further explains that the federal balance sheet had an increase of 13,664 percent of currency issuance since 2009 when BTC was launched. This amounted to currency issuances of $1.69 trillion by the Federal Reserve compared to BTC’s supply gain of $12 billion.

The US Has Major Reservations About Bitcoin

In a press conference held on July 15, 2019, U.S. Treasury secretary, Steven Mnuchin, said

“Cryptocurrencies such as bitcoin have been exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs and human trafficking.”

The U.S Treasury secretary was particularly critical of the launch of Facebook’s digital currency Libra. In response to Mnuchin’s statement, the social media giant said that it expected criticism from regulators and lawmakers, which is why Libra was announced a year before its launch.

Following the press conference, the cryptocurrency market showed little price movement but stayed in the red throughout the day. Barry Silbert, Founder at Digital Currency Group, said that the secretary’s statement presented “complete and total validation of Bitcoin.”

Do you believe Bitcoin’s use cases have diversified significantly enough that illicit activities do not make up a significant portion of all transactions? Let us know your thoughts in the comments below.

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Rahul Nambiampurath is an India-based Digital Marketer who got attracted to Bitcoin and the blockchain in 2014. Ever since, he's been an active member of the community. He has a Masters degree in Finance.

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