Bitcoin (BTC) Is Being Replaced by Privacy Coins Like Monero (XMR) in Illegal Transactions

Bitcoin was once considered the dominant currency in illicit transactions. However, it is now being replaced by privacy-focused cryptocurrencies like Monero (XMR)

Bitcoin (BTC) is largely used by cybercriminals. But now, it is getting replaced by privacy-focused coins like Monero (XMR), Zcash (ZEC), Dash, and stablecoins.

According to TRM Labs, Bitcoin accounted for 97% of the total cryptocurrency volume associated with illegal activities in 2016. However, by 2022, this figure dropped to just 19%.

According to TRM Labs’s report, unlawful cryptocurrency activities involving Bitcoin will decrease to 12% by 2024. Tron (TRX) will have the largest volume with 58%.

Another report by Chainalysis revealed that stablecoins will make up the majority of the total illicit transaction volume with 63%, and the use of Bitcoin in unlawful activities will decline.

Earlier this year, one of the biggest Dark Web marketplaces, White House Market stopped accepting Bitcoin and will only be using Monero (XMR) for transactions.

Announcing the change, the market admin said: “The Bitcoin workaround was supposed to be there just to help with transition to XMR and as we are concerned, it’s done, therefore we are now Monero only, just as planned.”

Also, Elliptic researchers discovered $11 billion in illicit trades using USDT on Cambodia’s Huione Guarantee marketplace.

Recently, Japanese law enforcement tracked Monero, leading to the country’s first arrest in an case that involved analysis of Monero transactions.

The shift from Bitcoin to privacy coins and stablecoins in the Dark Web is a major trend.

Bitcoin is a transparent cryptocurrency, and every transaction can be tracked when combining with additional data like IP addresses or exchange records.

This transparency has enabled law enforcement agencies, such as the FBI, to use blockchain analytics tools from companies like Chainalysis and Elliptic to shut down major Dark Web markets. Some examples include the closure of Silk Road in 2013, AlphaBay in 2017, Hydra in 2022, and Incognito Market in 2024.

Bitcoin also faces some technical challenges, such as high transaction fees and slow confirmation times.

However, privacy coins like Monero, Zcash, and Dash utilize advanced technologies to provide high levels of anonymity, rendering transactions nearly impossible to track.

Recently, there has been a surge in interest in privacy coins. According to a recent study published in ScienceDirect, there is a close relation between privacy coins and Dark Web traffic, which contributes to the increasing use of privacy coins in illicit markets.

The shift from Bitcoin to privacy coins and stablecoins has implications for both the cryptocurrency industry and law enforcement.

On a positive note, Bitcoin’s declining role in illegal activities could help improve its reputation as a legitimate financial tool. This could lead to greater adoption of Bitcoin by a wider range of users and investors.

However, the increasing use of privacy coins and stablecoins in illicit transactions makes it more difficult for law enforcement agencies to monitor and prevent criminal activity.

Despite advancements in blockchain analytics tools that can follow transaction trails through mixers and tumblers, detecting and tracing transactions involving Monero and other privacy coins remains a significant challenge for these agencies.

Moreover, global regulators are now focusing on privacy coins and stablecoins. Some countries, such as China, have banned privacy coins.

In the case of stablecoins, regulators are introducing stricter supervision, with the U.S. Congress aiming to impose new regulations on stablecoins.