This weird meme that Bitcoin is so beneficial to criminal activity (especially in comparison with physical cash)... I don't know where it started, but I wish its completely bad-faith nature would die. Sure, the Silk Road started, but the feds have wised up on how to trace Bitcoin since then - it's fairly straight-forward given the public-nature of the blockchain.
I totally agree that Bitcoin should not be primarily identified with criminal activity.
However, I think it's very easy to understand where it started and why it generally isn't in bad faith. Digital currencies (of which Bitcoin is the largest and most well known) make certain types of crimes easier (drugs by mail, ransomware). Those crimes (as they are understood) always involve a digital currency so they feel new (even if they aren't in many ways). Most people don't pay attention to digital currencies so it's not surprising that they associate them with new behavior that doesn't seem possible without them.
I also suspect that, if you were to break down digital currency activity, that most exchanges of goods and services (as opposed to investments) do choose to use a digital currency because it evades some regulatory processes or laws. With the transaction cost of Bitcoin at over $4[1] (down from over $50 recently), I really doubt that people are using it for many exchanges of goods or services where its digital qualities don't enable the transaction in some way.
Edit: added a clarification about ransomware and drugs-by-mail. Ransomware and "darkweb markets" are based on older practices that, to an extent, are distinct because of digital currency. Corporate espionage and ransom demands are quite old, but we call generally call it "ransomware" when the extortion is based on holding digital assets and paying digitally as well.
This is both true and not true. It is true that transactions on the blockchain is public. But it's not true that it makes it trivially easy to identify the actual entities behind those transactions.
The only thing that's actually public are the public keys of the transacting parties. Public keys can be anonymously generated for free. It only becomes possible to deanonymize transactions if the money actually touches a deanonymized terminus.
Even assuming all the fiat off-ramps are properly KYC'd, it still gives the criminal unilateral control to arbitrarily decide when and where to risk deanonymization. You can commit a crime, then wait years for the heat to let up and make sure you're in a safe country without extradition treaties.
You must be joking? There is a trivial way to hide the traces by using mixers. Why do you think ransomware and black markets today exclusively run crypto not fiat?
Also stable value, if I stole $1 million, I'd probably want to bury it in the desert for a few years and then come back to dig it up once the heat died down. With BTC it's a big gamble what it will be worth. Fine to sit on it when the price is going up, but if the price of my ill gotten bitcoins is crashing it might force me to make a stupid mistake and get caught.
So, what you're talking about is a USD market consensus on another currency/entity (i.e. people who currently work with USD primarily arriving at a consensus on the price of bitcoin), run a simulation in your head if you will, something interesting and fairly complex comes up, there's a lot of information asymmetry around it, what do you think happens around the consensus of it as time progresses? (does the information asymmetry decrease or increase?)
We can do this soon in El Salvador (and some pockets in the US too).
The thing is, this is a strange argument, you want a sudden world wide adoption, like, tomorrow every biz owner wakes up and decides to accept bitcoin, so that you can buy your coffee at your local starbucks, have you thought through this? how does the total adoption happen what steps should happen before.
Most criminals are stupid and eventually get caught. Can you show an example of large-scale ransomware where criminal could convert Bitcoin into fiat currency? Most of them store Bitcoin and wait, probably realizing it is not easy to clean that bitcoin. This idea of using mixers is a myth.
Come on, many ransomware packages are quite sophisticated and the operation's run by organized criminals. We're not talking about people impulsively robbing a gas station.
