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How do Cryptocurrencies & Bitcoin work? Explained by UN, BBC & Blockchain Forensic Investigators

Cryptocurrency emerged in 2008 with the Bitcoin white paper as a scientific experiment. In less than fifteen years, it had become a part of the global financial system with the capitalization. To understand more about how cryptocurrencies are used, please see the video below.

Cryptocurrencies are anonymous and untraceable. The cryptocurrency system is decentralized, meaning there is no central server, administrator or manager. It is based on a network distributed across numerous computers, with users completing transactions through applications on smartphones or computers. Therefore, in order for law enforcement officials to freeze and confiscate cryptocurrency, they need to gain control of a user’s cryptocurrency wallet and transfer the criminal proceeds to the law enforcement agency’s own wallet.

As mentioned in the video, three features of cryptocurrency are essential for the online trafficking of synthetic drugs:

  1. It is decentralized: There is no central server, nor a specific actor responsible for the system. The transfer of funds can be initiated easily by the customer, for example through the use of an app, without the involvement of traditional financial institutions such as banks and payment institutions.

  2. It is anonymous: Although there is a public ledger of transactions, it only contains account numbers (so-called “addresses”). It does not include any names, phone numbers or even IP addresses.

  3. The system consists of a large network of small dealers, ATMs, and exchange providers where cryptocurrency can be easily exchanged to and from usual (so-called “fiat”) money.

There is a real threat of cryptocurrency being used for criminal purposes. It is estimated that 14 billion USD was used for criminal purposes in 2021. Large money flows stem from scams and drug trafficking. The threat is rapidly increasing as crypto money laundering reached 30%.

If you need Blockchain Investigations or Crypto Forensic Contact Us


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