Illegal Trades Account for Less Than 3% of Total Bitcoin Transactions – Blockchain Bitcoin News

New data shows that gambling, fraudulent transactions and scams make up less then 3% of Bitcoin Blockchain volume. However, exchanges and trading desks account to around 80%.

Exchanges Dominate Bitcoin Volumes

A new study called “Blockchain Analysis of the Bitcoin Market” It was found that gambling, illegal transactions and scams account for only 3% total onchain bitcoin trade volume. On the other hand, the study asserts that exchange and trading desk-related volume — which is mostly speculative — constitutes about 80% of the total volume.

The National Bureau of Economic Research’s (NBER), published a report that disproves the claim that bitcoin trade volume is dominated by illegal transactions. Igor Makarov of London School of Economics and Antoinette Scoar of MIT Sloan School of Management are the authors. They explain that earlier studies may have overestimated illegal trades’ economic worth.

The authors cite a 2019 study which concluded that illegal transactions account for more than 46% in BTC transactions. They stated that:

First, Foley et al. First, Foley and al. This is because trading, as we have shown above, constitutes the primary activity on blockchain.

Additionally, they stated that volume estimates in Foley’s study are based on an “imputed network of illegal clans” where any cluster that is used recursively to identify illegal clusters is illegal.

Bitcoin volume and value drivers

Although the two authors agree that this method is appealing, they nonetheless argue that this “does not discriminate between real users and short-lived pass-through clusters that exist solely to obfuscate tracing.”

Makarov, Schoar, and others use a different method than the one used for the 2019 study. They include exchanges, OTC desks (OTC), or trading desk data in computing non-spurious BTC volume. Accordingly, their analysis shows that the volume attributed to trading desks and exchanges accounts for about 80%, while the volume derived from other entities is only a small portion of total volume at the end 2020.

While Makarov and Schoar suggested in their report that they agreed with the general concern over the pseudonymous nature of bitcoin transactions, they however insisted that it is “important to get the magnitudes of transaction activities right in order to understand what are the ultimate drivers of bitcoin value.”

Do you agree with this study’s conclusion about the size of illegal transactions on the Bitcoin blockchain? Let us know what you think below in the comments.

Terence Zimwara

Terence Zimwara was a Zimbabwe award-winning journalist and writer. His writings have covered the economic problems of several African countries and how digital currency can offer an escape route.

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