In a recent post, we discussed the basics of cryptocurrency — what it is, how it differs from traditional (fiat) currency and how it’s used.
We looked at some of the major advantages of currency models such as BitCoin or Ethereum — how they prevent inflation, provide new opportunities for financial growth in rapidly evolving economies and allow for a truly viable digital counterpart to traditional options. We also explored some of the benefits of cryptocurrency’s blockchain model which makes fraud almost an impossibility. And now, you may be convinced that in a world where everything, from your phone to your toaster to your local power grid can be hacked, a blockchain-backed model may be the most secure and economically-sound way to move forward.
The Dark Side of Cryptocurrency
Before you convert all your traditional bacon into digital bacon, it would be wise to consider the other, quite frankly darker, side of cryptocurrency. After all, chances are that until now, you were more familiar with critical role that cryptocurrency plays in the cyber crime industry. This scary truth is that cryptocurrency is fueling basically all the crime that’s taking place on the dark web. In fact, according to IBM, the rise of cryptoransomware and the rise of BitCoin follow an eerily similar trajectory; until about 2013, both were mostly non-entities. BitCoin’s value was still hovering at about 1$ per BTC and ransomware was limited to a few scary, but mostly harmless, variants whose “lock” could be undone with the right technical know-how.
But then, right about the same time that attackers realized they could encrypt files, they also realized they could make collecting payment easier and more secure for themselves using BitCoin. That’s right when BitCoin’s value began to skyrocket and ransomware creators began to see the true potential of the ruse they had hit upon. By 2015, the notorious CryptoWall ransomware variant had netted its creators over $325 million, a feat which would have been nearly impossible without the backing of an anonymised payment method like BitCoin.
Since then, cryptocurrency and cyber crime go together like peanut butter and jelly. Sure, the existence of one doesn’t inherently imply the other, but there’s a darn good chance that they’ll be found between the same two slices of bread. Remember, as we mentioned last time, BitCoin, Ethereum and all other cryptocurrencies are unregulated and thus, no one governing body takes responsibility for the manner in which they are used. This means that, at the moment, there is no way to ensure it’s not being used in tax evasion, money laundering, drug trafficking and more. Really, ransomware is really just the tip of the digital iceberg when it comes to BitCoin-based crime.
Here are a few more ways BitCoin and its counterparts are being used to facilitate cyber — and real world — crime:
Fueling Dark Web Marketplaces: These places aren’t your average Amazon or eBay. On the now-defunct Silk Road, it was possible to purchase drugs, illegal goods, fake IDs, weapons and more, all via BitCoin. The Silk Road was shut down by the authorities in 2013 and its creator, Ross Ulbricht, was sentenced to life in prison but other such marketplaces still exist. On numerous sites, people can hire hit men, buy and sell malware samples and obtain drugs and other illicit goods, all with the anonymity provided by BitCoin.
Funding Terror Groups: At the moment, there is a small, yet growing, body of evidence that terrorists are experimenting with BitCoin transfers, and anti-terror experts agree that these experiments are a harbinger of what is to come in the not so far off future. Already, terror cells in Gaza are soliciting support from outsiders in BitCoin and a few BitCoin wallets have been linked to ISIS members. Experts posit that the reason that BitCoin is not yet the main means of financial transfer from terror network to network is because so many of these groups exist in areas where the digital infrastructure is weak at best. As opposed to far simpler applications such as social media platforms, which are widely used amongst terror groups to rally support and recruit new members, creating and maintaining BitCoins uses up a lot of CPU and resources, something the infrastructure in these areas cannot yet support. But experts feel it’s just a matter of time before terror groups turn their full attention to BitCoins
Powering the CyberCrime-as-a-Service Industry: Back in the day, to be a cyber criminal, you actually had to have some cyber crime acumen. But nowadays, all you need to create a devastating zero-day attack, launch a crippling DDoS against someone you’ve got beef with or buy a fully ready-to-go ransomware exploit is a BitCoin wallet. For just a few dollars (which amounts to a mere fraction of one full BitCoin), would-be hackers get access to a shocking variety of pre-fab exploits. Some come with full instructions on how to launch, manage and collect from the attack, while others tout their “dedication to customer service” and provide video tutorials on how to best utilize the exploit. This makes CyberCrime-as-a-Service a no-brainer option for someone whose got lots of criminal intent but is short on technical skill.
Aside from the off-putting criminal uses, there are some other reasons you may want to reconsider before investing in cryptocurrencies; Their values fluctuate wildly, which means that you can have a whole lot of BitCoin or Ethereum in your wallet one day and hardly any the next and to top it off, wallets can stolen or even lost due to outages. Cryptocurrencies aren’t widely accepted yet by retailers and moreover, there is speculation that governments worldwide may be exploring ways to prevent vendors from accepting payment in BitCoin to ensure that purchases can be traced. It almost seems as if it’s better to just keep your distance and leave the whole cryptocurrency thing to the tech geeks and criminals.
But there’s a silver lining.
The blockchain model means that even though the names of the users are anonymised, all the data associated with the transaction is wide open for anyone with a node to view. And inherently, this data cannot be altered, which does actually provide the authorities with at least some information to begin their post-mortem. Up and coming tools like Chainalisys help investigators map the movement of funds, which can eventually help them link crimes to the perps. Other new tools are helping authorities determine whether vendors accepting cryptocurrencies are paying their properly owed taxes. All these developments mean that one day, if the right measures are put into place, cryptocurrency may become the secured and viable option it was envisioned to be.
For now, experts agree that it’s simply too early to know what the future holds for cryptocurrencies. They may be the building blocks of tomorrow’s global economy or they may be banned by governments around the world – at this moment, it’s really anyone’s guess. But one thing that’s certain is the key role it’s playing in the ever-expanding digital realm which is why you need to be “in the know”. As with all things digital, they may make us uncomfortable and we may not like them — but we should at least try to understand them.