Bitcoin and Money Laundering

Bitcoin is a virtual currency also called digital currency. Bitcoin is basically an online version of payment, most of the people use it to buy products not mostly like shopping as most of the shopping websites do not accept bitcoins. Bitcoin is powered by blockchain technology where blockchain gives transparency and bitcoin promotes anonymity. Private key of bitcoin wallets plays an important role in bitcoin transactions and even make the wallet safe.

Bitcoin was created by Satoshi Nakamoto, the reason was to remove the third party intermediaries to conduct digital monetary transfers. 1 bitcoin costs 8,23,912.48 Indian Rupee, so we can know why bitcoins are not accepted. Bitcoins would be worthless without the private codes printed inside them. Every bitcoin user has at least one private key which is a number between 1 and 78 digits in length. Users can manually create a private key or a random number generated by the computer. Keys are sometimes stored in private cloud or on public bitcoin exchanges. So security experts advice to store the private key in private cloud since, the anonymous people cant access our cloud data and make our bitcoin exchanges safe.

We need to make our Bitcoin exchanges safe else we will be attacked by frauds and as a result we will lose our money. Some of the frauds done through bitcoin exchanges are :

• Phishing: Don’t open unauthorized links which can grab your information in no time. In this way the anonymous people gain the whole information present in our mobile, laptops etc., where they can access the saved passwords and all the private information.

• Prepaid Cards: Prepaid debit cards are the major cause for most illegal activities. Even they can access our associated PINs of third party money exchanges.
• Gambling: Online Gambling sites that accept bitcoin or other cryptocurrencies is another way to conduct a crypto money — laundering scheme. Crypto can be used to buy credit or virtual chips which users can cash out again after just a few small transactions.
• Gaming sites: Gaming websites also make us lose our money by telling us they will debit you some money and finally they credit money instead of debiting money.

• Stealing private keys: If private keys are stored in publicly accessible digital repositories like Bitcoin exchanges and personal cloud storages are vulnerable to theft. The better way to safeguard is to store the private keys in a form of handwritten documents.
• By using this private key information the anonymous people can access and transfer the corresponding bitcoin holdings, funds.
• Due to some security flaws of the service provider company, our bitcoin exchanges are not safe and are vulnerable to attack sometimes.
• Attracting Legitimate Exchanges Directly: Since they attract thousands of users and store millions of dollars in Bitcoin exchanges are attractive targets.
• Self maintenance: Users have to maintain their own accounts or else they may lose the access of wallet

Wider applications of Bitcoin and Blockchain:

Since blockchain and Bitcoin are interrelated, where Bitcoin is a cryptocurrency and blockchain is a distributed database. But the researchers took a lot of time to know that the blockchain has a wider application than Bitcoin.

• Smart Contracts: With smart contracts, automated payments can be released once the contract terms have been fulfilled, which helps to save time and reduce conflicts.
• Transparency of Records: Blockchain is very useful in maintaining a long-term and transparent record of assets so that they can access securely since Bitcoin promotes anonymity, while blockchain is about transparency.
• Perfect proof for Insurance: Blockchain is very useful in providing proof-of-insurance information. This way of insurance provided by Nationwide insurance company is beneficial to the police officers, verify insurance instantly, which will help to speed up the claim process.
• Bitcoin transactions have a threat against hackers because of its anonymity. Since converting your money to bitcoin and making transactions does not require the use of the legal name or address so that it is a threat by hackers to bitcoin accounts. So by the introduction of blockchain technology this makes it easy to secure our bitcoin transactions.

• As it is decentralized in nature and cryptographic algorithms make it immune to cyber attacks. So, hacking the database of blockchain is impossible. So that we can make our information secure using blockchain technology.
• Bitcoin became more popular in the present digital world because of less fees while transaction is going on.

Some of the advantages of cryptocurrency using bitcoin:

• Transparency of bitcoin exchanges.
• Ease of accessibility of bitcoin.
• Easy account recovery because it is run by complex algorithms.
• As bitcoin is accessed by third party services they help in keeping track of the bitcoin exchanges.
• It is easy to buy and sell bitcoin.

Some of the disadvantages of bitcoin transaction:

These disadvantages can overcome by taking some security measures while the transaction is going on.

• No direct ownership as it is maintained by third party services.
• The major disadvantage is due to slow bitcoin transactions
• It is important that the person who buys a bitcoin must be aware of the technology so that they may not get loss
• People should make more research on it before purchasing the wallet because it is still developing technology.
• Even though the blockchain technology made bitcoin more legitimate, the user must use some security policies while using bitcoins.
• Users must check twice while making the transaction because one the transaction is done, the transaction can’t be irreversible.
• Since all the transactions are stored publicly and permanently on the network so follow security measures while making a transaction.
• Make sure that the private key of bitcoin exchange is secure else you may lose money from your wallet and can’t be claimed again.
• Users have to maintain their own wallets else they may lose their access.
• Blockchain implementation is a costly process but the later transaction costs are minimal.

BITCOIN

Bitcoin became so popular because there are more advantages compared to disadvantages of bitcoin and blockchain are balanced.

So, it is in your hands to secure our bitcoin since your bitcoin will be stolen only if you give your private key to someone. Even your bitcoin will be stolen if you don’t log out of your own wallet of bitcoin transactions and if someone access your wallet from mobile phone and take away all your amount in your wallet.