New digital money, new digital crimes

The crypto opportunities for the gangsters are as great as the crypto opportunities for the GAFAs

I wrote last week that governments will never allow anonymous digital currencies, and my comments have sparked some controversy. And I understand why. But for those who say that uncensored, undetectable digital cash would be a shield against dictators, a force for the downtrodden, and a blessing to free men everywhere … well, I think it’s more complicated.

The issue of anonymity in payment transactions is complex and crucial and deserves sound, calm and strategic thinking, as the transition to digital currency affects so many aspects of society.

An obvious and important aspect is crime. Would the digital currency change crime? If I hire thugs who lure a kryptobaron into a hotel room and then beat them up to get a million dollars in bitcoins from them (as actually happened in Japan), is it a crypto crime or just boring old blackmail? If I use Craigslist to lure a HODLer to a street corner and then pull a gun at him and force him to send me his bitcoins (as it actually happened in New York), that’s a crypto crime, or just boring old ones Raid? If I get someone’s login credentials and transfer their bitcoins to me (as happened in Springfield), is that a crypto crime or just a boring old scam? If I kidnap the CEO of a cryptocurrency exchange and then release him after paying a $ 1 million bitcoin ransom, is that, as the Ukrainian interior minister said at the time, “bitcoin kidnapping” or just boring old blackmail?

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They’re just crimes, aren’t they? And not very good ones, because they are permanently recorded in an immutable public ledger. If I were to kidnap a CEO of a cryptocurrency exchange, I would personally ask that the ransom be paid in a more privacy-friendly cryptocurrency because, as I explained in the FT several years ago, Bitcoin is not a very good choice for this type of cybercrime. It’s just not anonymous enough for really decent crimes or the darkest of darknets. Hence my skepticism about claims that Bitcoin’s long-term value is determined by its use for crime.


But what if there was a truly undetectable cryptocurrency out there and it wasn’t up to governments to let it or not? Could an aspiring crypto criminal mastermind use it for something more innovative than the physically grueling crime of kidnapping? I’m sure the mafia would be happy to have anonymous digital cash that they could get around the world, but what would they use it for? Could they come up with an insidious corporation that is not a virtual shadow of a crime that has existed since year zero, but an entirely new crime for the virtual world? What if they could find a solution with the potential to take over drug trafficking (currently around 40% of organized crime revenues) as the best option for criminal entrepreneurs?

Ransomware is an interesting candidate. It is certainly a big problem. Criminals take control of organizations’ computer networks, encrypt their data and demand payment for the delivery of the decryption keys. Companies paralyzed by the attacks paid hackers an average of more than $ 300,000 in 2020 (three times the previous year’s average). A cyber security survey last year found that more than two-thirds of companies in the United States experienced a ransomware attack and paid a ransom as a result! This is pretty decent business for criminals, and it has certainly been a driver for Bitcoin, though ransomware operators have been moving away from it for some time.

(The Sodinokibi payment website started charging 10% more for Bitcoin ransom last year than the more private Monero cryptocurrency.)

Overall, given the fundamental nature of most organizations’ cyber defenses (more than half of all ransomware attacks come from spam emails), ransomware rewards can be expected to keep rising. Among other things, the ransomware raiders reinvest their profits in increasingly efficient processes, which leads to even bigger and bolder attacks.

Assassins and Alerts

But what about a gloomier candidate for large-scale crimtech investment? Is it time for the “assassination market”? As far as I know, this idea originated from Jim Bell, who formulated it in an essay on “Assassination Policy” in 1995. A few years ago Andy Greenberg wrote a great article on murder markets here on Forbes. He was investigating the specific case of “Kuwabatake Sanjuro” who set up a Bitcoin-based market for political assassinations, but in general a murder market is a form of prediction market where anyone can place and cash a bet on the date of death of a specific person a payout if they “guessed” the date correctly. Bet on the time of the subject’s death.

Here’s how the market works, and why the incentive works, as I explained in my book “Before Babylon, Beyond Bitcoin”. Someone is keeping a public record of the probable death dates of public figures. I bet when they’ll die. If the CEO dies, whoever is closest to the date and time of his death wins all the money wagered, minus a portion for the house. Let’s say I’m wagering $ 5 (using anonymous digital funds in cash over the TOR network) that a certain technology CEO will die at 9 a.m. on April Fool’s Day 2022. Other people hate this person too and place bets too.

April Fool’s Day 2022 is approaching. There’s now $ 10 million targeted for this CEO to die at 9 a.m. I’m paying a hit man five million dollars to murder the CEO. Hooray! I won the bet, so I get the ten million dollars in anonymous digital cash and give half to the hit man. Nobody can blame me for the crime because I also paid the killer in undetectable anonymous digital cash.

I’m just the lucky lottery winner.

But better than that, if I can get enough bets on someone then I don’t even have to take the risk of hiring the hit man. If I use some anonymous bots or friendly tolls to coordinate a social media campaign to get a million people to place a $ 5 bet on the date the tech CEO died, then an enterprising hitman becomes make his own bet and kill her. If the public had wagered $ 5 million on March 31, and an enterprising crypto-psycho murdered the CEO himself the day before, it would have only cost me $ 5 and I would have considered the 5 well spent, as did (presumably) everyone else who wagered $ 5.

(Imagine being a tech CEO waking up in the morning. The first thing you check is no longer the stock price, but the price on your head. If anyone wants to turn this into Netflix drama, I’ll stand to disposal.)

The unconditionally anonymous population-level digital currency is really opening up some fantastic new opportunities.

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