Do You Still Think Only Criminals Use Cryptos?

Cryptos have been dubbed the currency of criminals.

Many out there still think they are only used for hacking…money laundering…drugs…you name it.

They think that Satoshi Nakamoto (the pseudonym used by Bitcoin’s creator) is a master mind criminal — or a group of criminals — that woke up one day and decided they were going to make their life easier.

So, they created 21 million bitcoins, which can only be mined through powerful computers using complex algorithms.

They went on to set up the blockchain, a decentralised ledger, a shared public database that records and holds every transaction…all to make it easier for them to send money all over the world.


Forgive me for being sceptical.

Of course, there are people using cryptos for illegal purposes. Yet if this was its main purpose then the crypto market would be bigger, much bigger.

The fact is that criminals still favour cash…and banks.

Danske Bank, Denmark’s largest bank, is currently embroiled in a money laundering scandal. The US Department of Justice is investigating the bank for dubious transactions made from their Estonian branch.

It looks like 15,000 ‘suspicious’ customers moved about US$235 billion through their accounts in eight years.

It could be the largest money laundering scandal ever.

On the other hand, the market cap for cryptos at time of writing is about US$218 billion.

In other words, Danske could have been laundering the whole crypto market from its Estonian branch. That’s just one bank…

Danske is not alone.

Battle of the Titans: Who wins when bitcoin and gold head-to-head…and how can you profit? Find out more.

Dutch bank ING was recently fined $1.2 billion after they admitted there was money laundering done through their accounts. We don’t really know the exact amount, but prosecutors think it could be in the hundreds of millions.

For obvious reasons, it is impossible to quantify how much illegal money is running through banks…or crypto exchanges. Yet according to Cryptoslate, banks launder way, way more money than cryptos.

They found that banks have laundered up to $2.7bln a day, every day, for the past 24 months. Illicit funds making their way through crypto exchanges in the same two-year span totals just $9mln in comparison. Simple maths tells us that the banks’ laundering over that same two-year period amounts to $1.97trln. 

Cryptos and Blockchain to reach mass adoption in 2019?

Yet while some may be looking at cryptos as tools for bad guys, others are embracing them.

In a recent speech to the United Nations, Malta’s Prime Minister, Joseph Muscat, said cryptos could help sort good business from bad business.

As he said:

Blockchain makes cryptocurrencies, the inevitable future of money, more transparent since it helps filter good business from bad business.  But these Distributed Ledger Technologies can do much more.  It can provide new solutions to healthcare systems where patients have real ownership of their medical records.  Emissions trading systems can be taken to the next level.  We can help verify that humanitarian assistance is reaching its intended destination.  We can make sure that nobody is deprived of their legitimate property because of compromised data.  Corporations will be able to become more accountable to their shareholders.  States will need to move from hoarding information on citizens to regulating an environment where citizens trust the handling of their data.

And as a new report by crypto-company Ripple, named ‘Blockchain in Payments Report’, stated, blockchain could be at the verge of reaching mass adoption this year.

According to the report, the cross-border payments market is worth around US$47 trillion. Many organisations are looking at blockchain to modernise this industry with faster payments.

The report looked at 700 global payment professionals in 22 countries.

The results were that more organisations around the world are looking to adopt digital assets to their payment flows. Almost half said they were already producing, piloting or close to signing with a blockchain provider.

The thing is that blockchain and cryptos are a lot faster and cheaper.

Cryptocurrencies became very popular last year as bitcoin came close to reaching US$20,000.

Yet they have been trading much lower this year, at around US$6,000–US$8,000.

If you think you have missed the boat on cryptos, I have good news for you.

While there has been a crackdown on Initial Coin Offerings (ICOs), there is still a lot of investment going on behind the scenes.

Bitcoin or Gold: How You Could Profit From 2018’s Biggest Clash. Get free expert advice here.

As Diar recently reported, blockchain and crypto start-ups have raised a record US$3.9 billion through venture capitalists. This is 280% more than last year, as you can see in the chart below, with more deals also going through than any previous year.


Source: Diar

[Click to open in a new window]

One of the reasons Diar gives as to why cryptos have been getting some more funding recently is because they have become cheaper.

As Diar reported:

70% of tokens are now valued at less than what was raised during their ICO. The majority of tokens have dropped in price by more than 90% from their all time highs.

That’s why if you are still dismissing cryptos, you are not seeing the whole picture.

With cryptos having gone through a correction, this could be a good time to get in. Just remember, this is a highly speculative investment so don’t invest more than you can afford to lose.


Selva Freigedo,
Editor, Markets & Money

Selva Freigedo is an analyst with a background in financial economics. Born and raised in Argentina, she has also lived in Brazil, the US and Spain. She has seen economic troubles firsthand, from economic booms to collapses and the ravaging effects of hyperinflation, high unemployment, deposit freezes and debt default. Selva now writes from her vantage point here in Australia. She is lead Editor at the daily e-letter Markets & Money. And every week, she goes through each report and research note produced by our global network of trusted advisors to find the best investment opportunities for you in Australia and overseas. She packages these opportunities for you in Global Investor.

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