That’s according to Lizette Lancaster from the Institute of Security Studies who said the lack of regulation posed a huge challenge as transactions “were extremely difficult” to monitor.
Last month, kidnappers demanded Bitcoins when they snatched a 13-year-old Mpumalanga boy and demanded 15 Bitcoins which would have resulted in the parents forking out more than R1.2 million.
The kidnappers said either they paid, or they would send them a video of the teenager being decapitated. The child was later found, but it was not known whether the ransom was paid.
Given the popular nature of cryptocurrencies, it was only a matter of time before criminal networks latched on to this and some cryptocurrencies were created to facilitate criminal activities, Lancaster said.
“It is almost impossible to track where the money is going,” she said.
This was not something new, but this has been happening frequently in South America, she said.
Lancaster said regulations were needed to protect consumers and that some governments, like the US, were making progress in regulating cryptocurrencies.
There were challenges for the kidnappers, however.
One of these was that people who are victims might not even know how to make the payment.
Private investigator Rick Crouch said it was possible to track Bitcoin.
“Law enforcement officials in other countries are using Bitcoin’s public ledger, called the blockchain, to follow the digital money and track down suspected criminals using it,” Crouch said.
He said the rise of Bitcoin had fuelled the rise of ransomware attacks (where people’s computers are held hostage).
The cost of one Bitcoin, the biggest cryptocurrency currently, stands at about R83578. This is one of the lowest points for the cryptocurrency where one Bitcoin costs more than R100000.
“But while Bitcoin users can withhold their identities, they can’t avoid revealing other information that can be useful to investigators.
“Every transaction is recorded on its blockchain, a publicly accessible record of all transactions made using the currency,” Crouch said.
He said police in South Africa did not have the capacity to track down these criminals and it was up to the private sector to do so. Crouch said he believed that the police would be able to develop the capacity to track down people using these methods to demand payment in the future.