Bitcoin’s boom a boon for extremist groups
AFTER the bloody Unite the Right rally in Charlottesville, Virginia, in August, technology companies tightened rules against hate speech and banned many extremists from using Web hosting services, social media platforms and online payment systems.
But some on the farthest edges of the political spectrum soon found an effective tool for thwarting this industry crackdown: Bitcoin.
Even before Charlottesville, Richard Spencer, a prominent member of the alt-right, a group that espouses racist, anti- Semitic and sexist views and seeks a whites- only state, had gone as far as declaring bitcoin “the currency of the alt right.” But far-right political leaders and experts on extremist movements alike say the adoption of bitcoin gained new urgency after Charlottesville as extremists looked for ways to operate beyond the reach of government control and the shifting policies of US tech companies.
Those who began acquiring bitcoin in August already have reaped substantial returns, despite the recent volatility in its price. In the months since demonstrators carried flaming torches and chanted “Jews will not replace us,” bitcoin has quadrupled in value. The digital currency began trading on several mainstream financial markets this month, pushing the price of a single bitcoin at times above US$ 19,000 ( RM79,800). It was worth US$ 16,000 at one point last Tuesday.
Extremist figures who invested in bitcoin as a bulwark against efforts to block their political activity now find themselves holding what amount to winning lottery tickets. The proceeds could be used to communicate political messages, organise events and keep websites online even as most mainstream hosting services shun them, experts say.
“Bitcoin is allowing people in the movement to go beyond cash in an envelope or a check,” said Heidi Beirich, head of the Intelligence Project at the Southern Poverty Law Centre, a non-profit group that tracks extremists. “It’s really a godsend to them.”
First created in 2009 by an anonymous computer programmer, bitcoin is a digital currency that is not issued by any government and has no physical manifestation, such as actual coins or bills. Someone who wants to buy bitcoin can sign up for one of many online exchanges – each account gets a unique identifier of numbers and letters – and pay dollars (or other traditional currency) for the digital currency. People can also send bitcoin to others or conduct transactions at any of a growing list of businesses, non-profit groups and financial institutions that accept it.
A secure, continuously updated ledger called the blockchain records all transactions in a publicly visible way, assigning each an alphanumeric record. Unlike the closely governmentregulated banking systems that record traditional financial transactions, the blockchain is completely decentralised, relying on complex mathematical calculations across countless computers world-wide.
Such a system makes it difficult for regulators and law enforcement agencies to monitor assets or know the identities of particular account holders. It also allows fringe groups not only to collect money, but to spend it more easily – for example, on foreign online services if US companies restrict their access.
Google, GoDaddy, PayPal and others banned some far-right activists from their services after the Charlottesville rally, saying they violated rules against hate speech.
Spencer and others who have lost access to these services – a process they call being “deplatformed” – say they are effectively being denied freespeech rights.
“We have faced enormous problems from being deplatformed,” Spencer said. “Bitcoin at least, from what I can tell, is not something from which we can be de-platformed.”
Extremists are hardly alone in benefiting from surging bitcoin values. Early buyers include cryptography enthusiasts, libertarians and professional investors – as well as drug traffickers, money launderers and others who regularly conduct transactions on the “dark Web,” a part of the Internet only accessible using specialised software that helps shield online activity.
Also unaffiliated with the far right yet profiting handsomely is WikiLeaks founder Julian Assange, who tweeted in October that US political pressure on traditional payment processors such as credit card companies to stop handling transactions for the site “caused us to invest in bitcoin – with & gt; 50000 per cent return.” In a dig at policy makers who pressured the companies, Assange expressed his “deepest thanks.”
It’s impossible to know how many on the far right are reaping bitcoin windfalls, but researchers who monitor extreme political activity say they have detected a surge in transactions as people on the far right move assets into the digital currency and increasingly use it for ordinary business purposes. The SPLC is tracking roughly 200 bitcoin wallets – the way users store the currency online – that it says are held by extremists.
Public blockchain records make such monitoring possible. Researchers can study the times, dates and amounts of any transaction, along with what accounts are involved.
That does not include the actual names of account holders, but such records can illuminate identities. The SPLC, for example, looks on the donation pages of extremist websites for bitcoin accounts that are seeking contributions.
According to SPLC research, among the most striking recent donations was 14.88 bitcoin paid to Andrew Anglin, editor of the Daily Stormer, a neo-Nazi online publication that lists a bitcoin account number online. The SPLC has labelled the Daily Stormer the nation’s “top hate site. — WP-Bloomberg