"Finally, we noted that the subgraph which contains these large transactions along with their neighborhood has many strange looking structures which could be an attempt to conceal the existence and relationship between these transactions, but such an attempt can be foiled by following the money trail in a sufficiently persistent way," the report explains.
Ron and Shamir's research also found that "most of the minted Bitcoins remain dormant in addresses which had never participated in any outgoing transactions," suggesting that these accounts were created to store, but never use, the Bitcoins belonging to the system's creator. Harvey believes these accounts have never made outgoing transactions because Bitcoin's creator wishes to remain anonymous, and knows that making a single transaction could tip his hand.
It may be difficult, but Bitcoin transactions can be traced back to the accounts and people responsible for them. Those looking to hide illegally obtained money from law enforcement, which has its share of capable hackers on its side, may be better off using cash, Harvey says.
"It doesn't matter how many times they split it up. All they need is a computer to backtrack that and find exactly what the source was," he says. "So, people using old systems of money laundering to try to fuse that with the Bitcoin network are basically failing, and are very easy to find. It's so bad that they could be money laundering for 10 years, and make one mistake down the road and you see everything they've done."
Harvey co-founded Lamassu with his brother Josh and friend Matt Whitlock have developed a passion for the digital currency over the past few years. He acknowledges the many critics of Bitcoin, and was even skeptical himself when he first learned of it. But now, Harvey says he has "answers for pretty much all the criticisms" that he's heard.
Perhaps more so than its supposed ties to criminal activity, Bitcoin's volatility has been the focus of its critics. Its value is known to balloon, sometimes amounting to hundreds of dollars, only to crash shortly thereafter.
While that may be off-putting to those looking for a return on cash investments in Bitcoin, it's not necessarily relevant for the larger movement, which aims to establish Bitcoin as a tool that simplifies global payments, rather than a get-rich-quick scheme.
"It is definitely volatile. It's going up and down, and we can expect it to keep going up and down until it stabilizes when it gets to mass acceptance. But that's just growing pains," Harvey says. "And I think a lot of the people who are into Bitcoin don't really focus on the price that much because they're more excited about the technology and what it can enable, such as immediate transfers anywhere in the world."
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