5 Reasons Bitcoin is Used For Illegal Purchases

One of the key criticisms of Bitcoin is that it is used for illegal purchases. Ultimately, with the rise of the dark web, Bitcoin has been at the helm.

In my opinion, this claim is hard to refute. After all, over 144,000 Bitcoin were seized after the drug market known as Silk Road was shut down.

But you may be wondering, why is Bitcoin used for illegal purchases?

Don’t worry. In this article, I will be going over 5 reasons that Bitcoin is used for illegal purchases. So without further ado, let’s jump right in.


Bitcoin is used for illegal purchases due to its decentralized nature and pseudonymity. Transactions on the network are largely anonymous and there is not a third party involved who may potentially flag suspicious activity. 

1. Pseudonymity 

One of the main reasons Bitcoin is used for criminal activity is thanks to its pseudonymity. Wallet addresses are not tied to users’ identities but rather an alphanumeric address of random characters.

In other words, although transactions on the Bitcoin blockchain are kept on a public ledger the underlying owner’s identities are kept secret.

This allows users to purchase goods anonymously provided they don’t use a third party or one that requires the disclosure of sensitive information.

2. Ease of storage

Unlike commodities or physical currencies such as FIAT currency (i.e US dollar), Bitcoin is far easier to store. This is thanks to its digital nature. It does not require enhanced physical security procedures such as vaults.

Instead, it is stored on a decentralized digital database known as the blockchain. As a result, it can be stored and accessed from any location. Moreover, Bitcoin is cryptographically secured with the main attack vector being the exploitation of private keys.

Therefore, the seizure of stored assets is extremely difficult due to these security measures. Ultimately, the Bitcoin network is virtually unhackable.

3. Low friction transfers

All in all, Bitcoin is easy to transfer. When dealing with illegal transactions with large amounts of capital it can be transferred with ease. For instance, on April 10, 2020, over $1 billion was transferred in a single transfer with a fee of just $0.68.

Not to mention, transactions are not geographically bound. They can be sent across international borders without alarming authorities. Criminals don’t have to deal with shipping or border security. Ultimately, transfers are frictionless.

4. Decentralized nature

Thanks to Bitcoin’s decentralized nature there is no middleman. The purchase of goods and services can be done without an intermediary. There is no central authority that validates the legitimacy of transactions.

Neither governments nor private businesses report the transactions as they are done using a peer-to-peer network. As a result, they can go largely undetected.

5. Easy conversion to legitimate assets

Bitcoin is used by criminals as it can easily be converted to “clean assets”. For instance, Bitcoin ATMs are a great way of cleaning and laundering illicit Bitcoin.

All in all, there are over 1000 Bitcoin ATMs in the United States alone that allows the exchange of Bitcoin for cash. Therefore, this eliminates a digital audit trail that may lead back to the origin of the illicit purchases.

Ultimately, cash such as US dollars is untraceable and can be traded freely without much interference. Other popular Bitcoin off-ramps include gambling websites and the dark web.


Are cartels using Bitcoin?

In recent years there has been an increase in the number of cartels using Bitcoin as a medium of exchange. A report published by the UN-linked International Narcotics Control Board stated that both the Jalisco New Generation Cartel and the Sinaloa Cartel used Bitcoin to launder money.

What percentage of cryptocurrencies is being used for illegal activity?

A 2021 report published by Chainalysis stated that just 0.34% of cryptocurrency transactions were associated with illegal activity.

Is Bitcoin used for human trafficking?

According to a 2020 report published by the human trafficking nonprofit Polaris. Cryptocurrency is the second most used payment method in the online black market for sex trafficking.

If you want to view this article in a more visual format then please check out my video below:


As you can see, several characteristics attract criminals to use Bitcoin for illegal purchases. All in all, transactions are not tied to one’s identity and large amounts of capital can be transferred without intervention from a third party.

I hope you found this article useful and thanks for reading it. Want to learn about why Bitcoin is a store of value? Click here to read my previous article.