Since it was introduced to the world ten years ago, Bitcoin has garnered a reputation for being an attractive medium for criminals, leading even legendary investor Warren Buffett to declare the cryptocurrency as “rat poison squared.”

That reputation has not been earned without merit. A 2018 study by researchers at the University of Oxford found that 44 percent of all transactions on Bitcoin’s blockchain were illicit.

A recent study has a different take on the matter.  

Elliptic, a blockchain analytics firm, recently partnered with researchers at MIT to publish a dataset of transactions on the Bitcoin network associated with illicit transactions. The study found that only two percent of the more than 200,000 transactions it analyzed were illicit.

It follows a June 2019 study by research firm Chainalysis, which found that criminal transactions on Bitcoin’s blockchain had declined to just one percent as compared to seven percent in 2012, when the infamous Silk Road website operated on the dark web.

Minimizing False Positives

Elliptic researchers used machine-learning to analyze 203,769 transactions, estimated to be worth $6 billion, on the Bitcoin network. The aim of the study was to determine whether artificial intelligence could help with preventing anti-money laundering efforts through cryptocurrencies.

“A big problem with compliance, in general, is false positives. A big part of this research is minimizing the number of false positives. The key finding is that machine learning techniques are very effective at finding transactions that are illicit,” said Elliptic co-founder Tom Robinson.

Only 21 percent of transactions analyzed by Elliptic’s systems were considered lawful while about 77 percent were unclassified. In other words, researchers were unable to determine the nature and consequence of the latter type of transactions.

But the study’s results do not necessarily indicate that Bitcoin is in the clear. Chainalysis predicts that criminals will spend more than $1 billion worth of Bitcoin on the dark web this year. The amount will be spent on illicit activities, such as sex and drug trafficking. By June, they had already spent $500 million.