Despite being around for almost two decades, bitcoin struggles with use cases beyond money laundering, sex trafficking, drug selling, ransomware and number-go-up, as [PERSON_NAME] has noted. A new NBER paper uses on-chain bitcoin transactions, wallet creation and off-exchange records around World Bank aid disbursals to estimate aid money embezzled and laundered through bitcoin. The authors—Pseudonymous wallets can be created quickly, funds can cross borders almost instantaneously, and exchanges operating beyond regulator reach provide entry and exit points—ask whether foreign aid arrival shifts crypto activity toward anonymous, offshore ecosystem parts.

Studying 328 aid tranches from 2018-24 totaling $238bn across 93 countries, they estimated leakage at 2-6 cents per aid dollar. This is lower than the 7.5 cent-per-aid-dollar from a 2022 World Bank paper based on offshore banking data, but the bitcoin-only estimate likely undercounts the real sum due to rising stablecoin use in money-laundering. Aid arrival correlates with a 137% rise in anonymous transaction volume through tax-haven exchanges, while identified volume rises only one-third as much.

New anonymous wallet creation increases by 1.8 to 2.8 IHS units, with identified wallet creation negligible on tax-haven exchanges. Off-chain records confirm on-chain evidence: responses in unregulated jurisdictions exceed ten times those in regulated ones.