Can the US Government Really Track Bitcoin Transactions?Kiana Griffin
This article focuses on Blockchain technology and the IRS’s request to track Bitcoin transactions. It also examines how the technology works, how successful tracing has been, and the NSA’s input on tracing. We’ll also discuss how tracking transactions can be complex but still possible. Ultimately, it is up to us whether or not the U.S. government can track Bitcoin transactions. But the U.S. government certainly does have some options.
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As more companies use blockchain technology to manage their finances, a growing concern has emerged: can the U.S. government track Bitcoin transactions? The answer depends on several factors, including whether the U.S. government has a legitimate interest in tracking cryptocurrency. First, blockchain is a distributed digital ledger that eliminates the need for a trusted intermediary. With a decentralized network, participants can verify that all parties have access to the same data. This helps increase transparency and auditability and removes single points of failure.
While the U.S. government can trace blockchain, its potential is vast. Technology has enormous potential in virtually every industry that needs information to be exchanged. For example, elections could benefit from a permanent record of voting that cannot be tampered with after the election. Businesses could also track Bitcoin transactions to protect against fraudulent activities and keep their inventory records accurate.
However, while the U.S. government has recovered $3.6 billion in stolen bitcoins and arrested two individuals for laundering the cryptocurrency, the principle of privacy is no longer so clear. It’s also possible to trace bitcoin transactions with the help of KYC standards, making it more pseudonymous than anonymous. For more information on how to trace Bitcoin transactions, CNET spoke with Dr. Steven Gordon, a professor at Babson College, and Feng Hou, digital transformation chief at Maryville University.
Blockchains are decentralized digital ledgers that record information on many computers simultaneously. The key to making this technology viable is to have low transaction fees. If fees are too high, it discourages users from using it for everyday commerce. In April 2021, the median transaction fee on the Bitcoin network topped out at $62 per transaction.
IRS Requests To Track Bitcoin Transactions
The IRS has been using software to monitor the bitcoin trade. It also hopes to monitor users who use the currency to pay ransomware and conceal wealth from the tax authorities. The Daily Beast obtained the contract for the software through a Freedom of Information Act request. But the IRS has not stopped at that. They have also begun tracking Bitcoin transactions in other ways, among the most recent proposal to track Bitcoin transactions by the IRS.
The IRS has been pushing for ways to tax Bitcoin transactions since 2014. In 2014, it released essential guidance that treated virtual currencies like bitcoin as property rather than a currency. Last year, around 800 taxpayers declared bitcoin profits and losses, believing that the currency is being used for tax evasion. In November, the IRS filed a John Doe summons to Coinbase, the largest bitcoin exchange in the U.S.
The letter has several requirements. Taxpayers must act quickly and carefully when receiving Letter 6173. The letter outlines the steps that need to be taken to prepare for an audit and seek tax counsel. It also details the penalties imposed for not responding. Since the IRS has begun investigating cryptocurrency, it is imperative to understand the tax implications of the letter. If you are facing a similar issue, take action to prepare for an audit.
The IRS has issued guidance clarifying the rules regarding the taxation of cryptocurrency. This guidance applies to taxpayers who use the currency, businesses that transact with the taxpayer, and other stakeholders in the crypto community. Because crypto transactions involve third parties, it is vital to be aware of the tax implications for taxpayers. Additionally, third-party record keepers may be subject to IRS requests for information about transactions. This could lead to regulatory and financial liabilities for the companies.
Cases Of Successful Tracing
The emergence of cryptocurrency and blockchain analytics has opened up new possibilities for law enforcement. By identifying patterns and relationships in blockchain data, law enforcement can follow the money back to its source. Money laundering is an age-old crime, but criminals increasingly use cryptocurrencies to hide illicit funds. The need for cryptocurrency tracing services and blockchain analytics to track and trace Bitcoin transactions is apparent. The case of Jon Barry Thompson, the former head of the bitcoin escrow firm Volantis, illustrates how blockchain analytics can be used to identify money laundering. Thompson pleaded guilty to fraud and misrepresentation of bitcoin custody and purchasing practices and admitted to exposing the company to risks. He faces a maximum 60-year prison term.
Despite the prevalence of sophisticated fraud and criminal activity, mainstream exchanges continue to serve as a high-risk off-ramp for illicit funds. This is why investigators at CipherTrace continue to see mainstream exchanges receiving illegal funds. In this scenario, the criminals use exchanges with weak KYC and obfuscation technologies to avoid detection. Using blockchain analytics and advanced data collection, law enforcement officials can detect and prevent money laundering and other criminal activities.
Read More: What Is Web 3.0 & What Is Web 3.0 Examples?
Need For Input From NSA
While it is not clear precisely what the NSA is trying to accomplish with its new surveillance system codenamed MONKEYROCKET, it is possible to conclude that they are tracking Bitcoin transactions. The NSA has access to many types of internet traffic, including Bitcoin traffic. It can intercept data as it travels along with fiber optic cables. This allows them to spy on any online communication. If the NSA can track Bitcoin transactions, it means it has a way to target criminals.
Interestingly, the documents do not mention whether the NSA was involved in the Silk Road investigation. However, they note that the agency had worked to unmask bitcoin users six months before Ulbricht’s arrest and monitored the Liberty Reserve around the same time. This enables the NSA to monitor U.S. citizens living overseas. In the end, the NSA may have been instrumental in the arrest of Ulbricht and the criminals behind it.
In the past, the NSA has used OAK STAR to track Bitcoin transactions. It disguises itself as a legitimate service and downloads information about Bitcoin users. This software allows the NSA to link a Bitcoin wallet to a user’s I.P. address and even track the transactions made using that address.
The NSA has been tracking Bitcoin users since 2013 and may monitor their every move. The agency has been tracking Bitcoin users since 2013 when it first gained popularity in the online drug trade. This means that they’ve been gathering information about Bitcoin users since 2013. But it’s too late for Bitcoiners to worry, as the NSA is already doing it. If the NSAtracksg its users, it will likely become a target for future criminals.