Why Blockchain’s Traceability Makes It Safer Than Cash Against Cybercrime

In an op-ed, Paul Soliman argues that blockchain technology’s traceability offers a significant edge over cash in combating cybercrime. Citing instances such as the Anson Que kidnapping case, he emphasizes the need for improved regulatory compliance to enhance accountability in the crypto space. Despite its association with crime, Soliman suggests blockchain’s transparency and potential for positive applications make it a puzzle piece in the fight against digital crime.

In an insightful op-ed, Paul Soliman sheds light on the paradoxical role of blockchain in the fight against cybercrime, expressing that its inherent traceability actually makes it a safer option compared to cash. Soliman, a tech entrepreneur and blockchain advocate, highlights the transformative potential of blockchain in not just easing compliance but also in preventing financial crimes.

He begins by recalling the infamous Silk Road—a notorious online marketplace that once enabled illegal activities through Bitcoin. The platform’s pseudonymity and rapid transactions piqued interest in cryptocurrency but also caught the attention of criminals. Following its shutdown in 2013, it was estimated that over 9 million Bitcoins exchanged hands—now valued at billions, and ever since, the narrative around cryptocurrency has evolved.

Fast forward, the global cost of cybercrime is estimated by Cybersecurity Ventures to reach $10.5 trillion annually by 2025, making it likely the third largest economy globally. Surprisingly, despite being linked to various criminal undertakings—like ransomware and fraud—cryptocurrency presents a traceability that cash lacks.

A particularly grim example is the Anson Que kidnapping case earlier this year, which rocked the Philippine public. Que’s abduction highlighted how ransom payments were funneled through registered Virtual Asset Service Providers (VASPs), sparking major concern about compliance in the local crypto ecosystem. Investigators traced the movement of funds through licensed exchanges yet found that regulatory loopholes enabled the laundering efforts of the perpetrators.

Soliman argues that this incident serves as a critical wake-up call for regulators and law enforcement in the Philippines. He stresses the urgent need for improved real-time monitoring of transactions and collaboration between government entities and crypto companies. The Anson Que case starkly illustrates that the efficacy of crypto’s traceability relies heavily on the robustness of the governance surrounding it.

On a broader scale, Soliman explains that blockchain isn’t anonymous but rather pseudonymous, meaning every transaction is etched in a public ledger. This level of transparency vastly outstrips that of physical cash. For instance, the U.S. Department of Justice successfully tracked and recovered Bitcoin from the Colonial Pipeline ransomware case by tracing blockchain movements. In the Philippines, regulations like BSP Circular No. 1108 enforce registration and KYC compliance for VASPs, providing law enforcement with tools to identify wallet owners effectively.

Despite its criminal uses, Soliman insists that blockchain can indeed be part of the solution. It’s not just a tool for illicit activity, but a means for advancement in anti-fraud systems and government transparency. Startups in the Philippines are already embracing blockchain for innovative solutions like identity verification and budget tracking.

Ultimately, the crux of Soliman’s message is that the issue doesn’t lie with blockchain technology itself; rather, it’s about how it’s used. When steered by ethical stakeholders, instead of becoming a loophole for bad actors, blockchain can serve as a fortress against cybercrime. In light of the rising threats, blockchain may well emerge as a formidable defence against the trillion-dollar menace of cybercriminal activity.

In conclusion, while acknowledging the risks associated with blockchain in the hands of wrongdoers, it’s crucial to recognise its significant potential to safeguard against malfeasance while facilitating accountability.

With all of this said, it’s clear that in the ever-evolving landscape of digital crime, the future of finance, once seen as a niche, is continuously reshaped by blockchain’s capabilities.