Bitcoin is a digital currency that emerged in 2009. It exists only in cyberspace and doesn't have a physical form. It can be exchanged for goods, services or other currencies, virtual or physical. Unlike physical money issued by banks and regulated by governments, Bitcoin uses a distributed ledger called the blockchain. It is a peer-to-peer, decentralized network, which means that transactions happen without banks or governments. Decentralization and anonymity is a strength but also a weakness. It’s harder to keep someone accountable and there is always a lack of trust and security because there is no bank to control every party involved in a transaction.
All of these important qualities of Bitcoin is making it easy for criminals. They can use burner phones to set up Bitcoin accounts and online wallets so transactions can't be traced back to them. Also, there is no physical proof of a transaction, such as a certificate or a bank statement. This means people can purchase drugs or weapons with little to no possibility of getting caught. When there is no way to connect a perpetrator to a transaction, which Bitcoin anonymity allows, money laundering and illegal transactions are bound to happen.
Also, investors can commit tax fraud. Actually, some research shows that a third of investors do just that. Even though big gains and losses should be reported to the IRS, many taxpayers are avoiding this.
There is also good news. Bitcoin transactions are not completely untraceable. Bitcoin wallets are indeed anonymous, but transactions are public and viewable. This can sometimes enable law enforcement to trace transactions back to their owner.
There is another topic you should consider – an ordinary user being scammed. Transactions using Bitcoin are irreversible. If a scammer posts a false advert online or sends you an email or link (‘phishing’), you could become interested in their product and send them Bitcoin, which may result in never getting your goods/service in return. In this scenario, you are not protected and there is a very small chance of getting your funds back. Be clever, never click on anything suspicions, transact fund with only people and companies you already trust and be careful about sharing your private key.