Keith Kirkpatrick writes in the Communications of the ACM about “Financing the Dark Web”. Ths basic fact is,
“Cryptocurrencies are enabling illegal or immoral transactions in the dark corners of the Internet.” (, p. 21)
However, the picture is hardly simple.
In some ways, Bitcoin is well suited to illicit commerce and money laundering—arguably, it was specifically designed for this role. However, it is not the case that Bitcoin or cryptocurrencies in general are only used for “dark” purposes.
Kirkpatrick points out that Bitcoin and similar currencies are not ideal for criminal activities. A big problem is that the anonymity needed for security from authorities depends on avoiding human error, which is always a losing bet. If anyone slips up, the whole network of transactions will be exposed.
A second vulnerability is any connections to the real world, be it physical products, or conversion to conventional currencies. As I have written several times, security is an end-to-end property, and is only as good as the weakest link. Many people have been caught through tracking goods or detecting exchange of Bitcoin into Euros or dollars.
These risks are very real, and large scale criminals avoid them by using other methods. The article reports that some groups use digital currencies based in Russia, out of the view of US and other authorities. The suggestion is that these currencies enjoy political protection, and corruptly collude in dark transactions.
Kirckpatrick argues that Bitcoin is convenient and accessible for small scale activities and criminals, while larger enterprises can afford more secure methods.
Of course, Bitcoin is also ideally suited for ransomware and other cyber crimes. In the case of ransomware, the combination of ease of use and relative anonymity is ideal. (You want it to be as easy as possible to fork over the ransom: you wouldn’t want to force your victim to have to figure out how to transfer funds to some mysterious Russian server or somethign like that.)
Kirkpatrick makes a good point. It’s not that Bitcoin invented cybercrime or dark markets. Rather, cryptocurrencies have lowered the bar of entry, letting pretty much anyone access pretty darned good dark payments, for whatever reason.
Large scale criminal operations don’t really need or use Bitcoin, because they have plenty of ways to move money around with impunity. But cryptocurrencies do let lots of little guys get in the digital games at low cost and with almost no technical knowledge. In aggregate, these small operators could be highly destructive.
This article suggests reasons why, contrary to the fantasies of early enthusiasts, Bitcoin has not yet wiped out conventional finance and governments. Primarily, this is because the physical world still exists, and the powers that be, still be. It is also true that many cryptoenthusiasts tend to place a lot of faith in the perfection of the technology, but technology can never be entirely free of human and technical error.
Is Bitcoin Evil? Obviously, Biticoin didn’t invent the evils it is used for, and, as this article makes clear, it is not the only or necessarily the best tool for bad behavior.
But the designers of Biticoin had some evil intentions, and designed Bitcoin to be very useful for evil doers. And Bitcoin enables lots of petty evil to be a lot more effective, at almost no cost. That’s not a good thing, to have on your resume.
- Keith Kirkpatrick, Financing the dark web. Commun. ACM, 60 (3):21-22, 2017. http://cacm.acm.org/magazines/2017/3/213816-financing-the-dark-web/fulltext