This article briefly looks at bitcoin and counterfeiting and the threats associated with its uptake.
Counterfeiting is a massive economic problem that results in billions of dollars in lost business revenues each year, and it exposes individuals and corporations to heightened health, safety, and even cybersecurity risks from fraudulent materials and defective parts.
Counterfeiters embrace technology at a quicker pace than the IP owners they target and have zeroed on bitcoin as the blockchain currency raises in popularity.
What is Bitcoin?
Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency – It is a type of money that is completely virtual. There is no government, institution (like a bank) or other authority that controls it. Owners are anonymous; instead of using names, tax IDs, or social security numbers, bitcoin connects buyers and sellers through encryption keys.
What is the lure for counterfeiters?
The lure for counterfeiters, and people who trade in illegal activity on the web, is that Bitcoin guarantees anonymity that traditional fiat transaction models do not.
Counterfeiters often go to big lengths to hide their identity on the web, but the chink in this armour is that the money trail if perused will end up identifying a company or individual associated with a bank account or a merchant. Bitcoin changes all of that and means that this chink can be eliminated.
Silk Road, which was a digital marketplace that connected vendors of illegal drugs with potential buyers provided an escrow service, whereby the website would hold funds until the customer confirmed that they had received what they had ordered. The funds were always sent in bitcoin rather than fiat currency which provided a great degree of anonymity.
What does the data say?
It is difficult to measure the take-up of bitcoin among counterfeiters as they not overly forthcoming sharing their financials, but one thing we do know is that counterfeiters are moving to digital/crypto transactions.
If we look at the dark web, bitcoin activity has grown by 65% in Q1 2020. According to the study by Crystal Blockchain Analytics, the total value of Bitcoin (BTC) transacted represented a 340% growth over three years. The analytics team claims that such figures could find explanation in mass adoption of the cryptocurrency, attributing it to its “ease of use and popularity” among darknet users and entities.
Bitcoin is still a developing story in many ways, but it is important that the anti-counterfeiting community, brand owners and law enforcement start dialogue about how to counter this issue that could weaken brands and strengthen counterfeiters.
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