If the Bitcoin blockchain is anything, it is transparent, but only to a degree. Yes, the history of every transaction since 2009 is present for public inspection at anytime, but only to the extent of endpoint addresses. The owner’s identity is the only thing missing, a fact which government authorities, law enforcement officials, and regulators find extremely worrisome and that must be dealt with in the near-term future. Researchers have attempted from time to time to determine the extent that criminal activities pervade the Bitcoin blockchain with mixed results. One of the more extreme cases of this genre is making the rounds again and was featured in one of the world’s top three finance journals, the Review of Financial Studies.
The May 2019 issue of this journal was devoted to Fintech, Blockchain and Cryptocurrencies and featured a study prepared in 2018 by three academia researchers from universities in Sydney, Australia. The paper was entitled: “Sex, drugs, and bitcoin: How much illegal activity is financed through cryptocurrencies?” The three professor-types go through a lengthy discussion of their methodology, which basically took Dark Web addresses, 200 million or so Bitcoin transactions from 2013 through 2017, applied a few “detection” algorithms, and arrived at conclusions that seem so farfetched that they are difficult to accept as truth. Their findings are summarized in the chart below: