Blockchain myths — Criminals

A misunderstood myth.

Stefano Fedeli
3 min readJun 14, 2022


Yes. Blockchain is used by criminals.

Yes. Criminals transfer money also the traditional financial system.

Photo by Tobias Tullius on Unsplash

Many people say that criminals are the biggest user group of blockchain systems. For this reason, you should avoid interacting with the system at all costs. Transact on the blockchain network is the best way to finance extorsions and drugs cartel. What a misunderstood myth of all time around blockchain! Of course, it is not the case.

Some people around the world are criminals. Of course, they need to move money around. Therefore yes! They also use blockchain systems to transfer value across the globe. What is the problem? They also use the traditional financial system to recycle robbed money from someone else. Is that a good reason to stop using your bank account? I don’t think so.

As for another example, criminals are very well using the internet to carry on dangerous attacks but this doesn’t imply you should not use this new technology, right?

Leaving aside the fact that, incredibly, blockchains are digital systems without a central authority that can transfer value across the internet is already an extraordinary achievement that shouldn’t pass unnoticed, here’s why you shouldn’t worry about criminals but everyone else.


Blockchains are public and transparent. The geeks will say pseudo-anonymous, meaning that everyone can see all history of a specific address. No excuses, no tricks, everything is traceable. That is the main reason why you should be worrying about yourself exposing very private information instead of worrying about financing crime.

Every transaction sent to the blockchain network is stored forever, creating a link between your money and the people who interacted with you. It gets even worst than that. All the history of your coins is available to anyone, which means I would be able to trace the origin of the funds you hold in your wallet at this moment. Quite scary.

An output of plotting transactions

Were those funds stolen from a particular exchange? I can know that just by looking at your wallet, which is public, by the way.

Were those funds used to buy a specific token issued by an outlaw platform? I can know that and block you from interacting with me.

Those are the issues to be aware of when using a blockchain system, not worrying about using the same efficient system as the criminals. Watch out that criminals are just people like you and me, so they are dealing with the same privacy issue as you and me.

Remarkably, law agents succeeded in tracking down the hackers from Bitfinex by monitoring the funds on the blockchain for over six years.

The strange thing is that you should not be super happy about this. Your privacy is at risk when you are using blockchain. Please remember that.


It is possible to see how badly institutions and exchanges treat privacy coins such as Monero or ZCash. Regulators do not particularly like blockchains that adopt privacy by default. However, this is the path all blockchains are ultimately leading.

The best blockchains that will survive over the long term, are the ones with the thinnest footprint. Therefore, the ones who can max the information stored in a single block. It is hard to play this game without sacrificing any of the three vertexes of the decentralization trilemma. And all the solutions will pass through a very high and complex dose of cryptography.

Writing compact digital signatures or not writing proofs on-chain would be the future of any blockchain system that wants to stay for long. For those reasons, we can envision a future where your privacy will be protected much better than today. However, we can also predict a future where the fight with the regulators will become even more intense.



Stefano Fedeli

Data Analyst, Writing for @bit.evolution. Passionate about Innovation, Humans and technology