“Around USD 72 billion of illegal activity per year involves Bitcoin, which is close to the scale of the US and European markets for illegal drugs,” the paper says
Close to half of all the Bitcoin transactions are associated with illegal activities and a quarter of all Bitcoin owners are involved in such activities, a research paper published by the students of the three different business schools have found.
The research paper titled Sex, drugs, and Bitcoin: How much illegal activity is financed through cryptocurrencies? published in January this year, estimates that 44 percent of all Bitcoin transactions, 25 percent of all users, 20 percent of the total dollar value of transactions and 51 percent of Bitcoin holdings are associated with illegal activities.
“Around USD 72 billion of illegal activity per year involves Bitcoin, which is close to the scale of the US and European markets for illegal drugs,” the paper says.
Based on the latest sample (April 2017), the writers of the research paper, Sean Foley and others estimate that 24 million market participants use Bitcoin for illegal activities only. However, it is safe to assume that the numbers could be way off the mark as interest in Bitcoin has grown manifold since then.
The research paper further says that there has been a gradual decline in the proportion of Bitcoin activity associated with illegal trade, However, the absolute amount of such activities have increased.
Foley and other attribute this to two major reasons. One, the legal use of Bitcoin has grown as the interest has surged rendering the proportion of illegal use on a downward path. And, two, the rise of other cryptocurrencies which are more secretive. These cryptocurrencies have received comparatively greater attention from people involved in illegal activities lately.
The paper also finds that the proportion of illegal activity in Bitcoin is inversely related to the Google search intensity for the keyword “bitcoin”.The Indian finance minister Arun Jaitley in his 2018 budget speech had also highlighted the use of cryptocurrencies like Bitcoin for illegal activities. He had added that the Bitcoin was not a legal tender in India and the country will fight against its use in illegal activities.