Crypto Wars
Is China unleashing global unrest using social resistance and financial terrorism through decentralized autonomous organizations funded by hijacking crypto-assets:
China wields a very significant threat through its capability to control damage the entire Bitcoin network, and thus starting to destabilize the global economy. It is commonly known that over 70% of the total network hash rate (mining of Bitcoins) originates in China. This essentially qualifies a few facts, which in turn fuel the fear of Chinese capabilities in crypto-weaponized attacks of many kinds. India, its government, its agencies and war apparatus are totally unprepared for this war, if it were to happen tomorrow - the threat is very real, but the preparation has yet to start.
One, China has complete autocratic control of everything that happens in their territory, including Bitcoin mining pools. If they assume brute state control over it, they wrest rights over potentially globally damaging crypto infrastructure and crypto assets (literally) that may be abused to their ulterior ends in anonymous funding of whatever, wherever, whoever and whenever they wish to fund. To the un-initiated, such control will put them in charge of hundreds of billions of dollars in cryptocurrency while ripping off millions of people (agnostic of nation or nationality) who actually own these assets.
Example: Look at how some big crypto scams have taken place in India, where the first piece of crypto forensics (Blockchain analysis) has yet to be found by Indian LEAs (law enforcement agencies). For lack of knowledge, they save their skin by tagging these as cyber-crimes or financial crimes. But without the right kind of forensics in these cases, agencies will never find the money trail (essential transactional evidence) and money laundering will keep happening because of anonymity of the mode and value of such money vanishing into thin air.
Two, Chinese are known and suspected to snoop over whatever device they can, and then meddle with it in ways that further their global ambitions. Given this fact, most experts and technology czars naively advocating that highly encrypted cryptocurrency like Bitcoin/ Ether cannot be hacked easily, miss the mark by more than the proverbial mile. Given that they penetrate cyber assets from the word go, and that the largest part of mining happens in China, who is to say that they do not snoop over devices that login to transact in crypto. Which brings us to the point that they merely have to slide a key-logger onto the device which is logged in to Chinese servers. This debunks and demolishes the entire theory of how decrypting crypto is impossible, by not even attempting to do so.
Three, China is engaging in a new kind of warfare which is unconventional and against which the world has almost no defense. We have seen in 2019-2020 that the entire world suspects China of unleashing the Covid-19 globally. What if their next war on the world is through controlling the entire Bitcoin network and funding social unrest and terror across the world’s leading nations.
Example: Some experts in Indian LEAs believe that the funding of social movements and unrest in recent times has a large amount of unconventional funding methods attached to it, given their magnitude and sustained length of time. Cryptocurrency, especially Bitcoins and a few dark coins, are the primary suspect of very large amounts in funding such events.
Four, 51% Attacks Model. Cryptocurrency is built on Blockchain which is hard-coded by a democratic algorithm. In simple words, whoever has control over 51% or more of the block, shall be able to make changes and control a lot of what happens over it. When an autocratic regime like China has such control over the majority of assets physically in their boundaries, anything is possible. The way they work, if it is done, it will be done overnight with brute force and the consequences will be devastating. This is highly improbable, but cannot (must not) be ruled out.
Example: There exists no example of the exact nature but the world believes that China is capable of enacting maneuvers of this kind with easy and without guilt, followed by misdirection & misinformation campaigns to wash their hands of it.
The question is: Why are most nations either blissfully unaware and hence entirely unprepared for crypto wars? Why India is being caught crypto-napping while billion of dollars scams, money laundering, capital flight and misuse of cryptocurrency in illegal activity happens all around us?
FIVE REASONS FOR THIS
1 governments have no jurisdiction over cryptocurrency, not any kind of control, nor any capability of tracking transactions and hence cannot stop or freeze such transactions happening freely, anonymously and uncontrollably.
2 theoretically anyone can store any infinite amount of money in cryptocurrency anonymously. Today cold wallets allow the bearer of such currency to carry any amount in their quarter-pocket. Thus, no need for carrying cash or physically traveling to haven banks who hold your money with no questions asked. Thus, very large amounts can be converted to black money and capital flight takes place. It is happening as we speak.
3 Since the entire sum of money is secured by a highly encrypted mechanism, and a password merely in the mind of the accused/ arrested, it becomes very difficult for governments to confiscate cryptocurrency.
4 it is the fastest, most convenient, completely anonymous way of terror or unrest funding for banned terror organizations, which have been known to accept Bitcoins by merely putting out a wallet address via social media posts and disappearing thereafter. Even so called online social activist organizations like WikiLeaks have in the past accepted Bitcoins as a mode of funding.
5 knowledge-proofs’ protocol are now being created where transactions can be confirmed without revealing the address of the sender or recipient on the blockchain. Governments who start late will find it increasingly difficult to deal with the menace as technology anonymity becomes even more powerful.
The solution lies only in preparing an early defense system so that the weeds are destroyed before they take strong root and suck the nourishment that ensures normalcy for the citizens of our country.
Md Shahabuddin i s Pr i nci pal Advisor to BEGIN India Think Tank. Evangelist of India Cryptocurrency Initiative which helps government by advising on policy building and compliance, and training financial institutions & law enforcement in creating capability & capacity i n cryptocurrency tracking, forensics and analysis. He has more than 2 decades of experience in building Indian IT/ BPO industry at leadership position in NASSCOM, advising on Indian ITC Policy, as ITC advisor to government of Egypt & ICT Subject Matter Expert at World Bank.