The Dark Side – Crime in the age of Cryptocurrency
The evolution of cryptocurrency was designed to safeguard online transactions over the rapidly expanding digital realm. But as the past reflects, any form of control can be manipulated.
The exploitative nature of human beings is not a new phenomenon by any means! With every advancement in culture and technology, human beings have always found loop holes in the system with some taking advantage of its existence. Over years, much effort has been made to do away with the fragilities of the system but alas, nothing is ever fool-proof. The evolution of cryptocurrency was designed to safeguard online transactions over the rapidly expanding digital realm. But as the past reflects, any form of control can be manipulated.
Cryptocurrencies are essentially a digital currency that uses various forms of cryptography to provide security. Employing blockchain technology (a system of shared information over vast networks of computers), cryptocurrencies are maintained on a distributed ledger. This allows much transparency as participants can view information on transactions as well as accurately see the changes in valuation. This eliminates the need for a centralized form of authority to control and manage cryptocurrencies. Bitcoin, one the first and most successful cryptocurrency in use today, was founded way back in 2009 by an anonymous individual (or group) who is indentified as Satoshi Nakamoto. Today, with almost a decade since its inception, there are over 17 million bitcoins in circulation with a combined valuation of over $115 billion. Along with others such as Peercoin, Namecoin, Litecoin, etc., the global valuation of all cryptocurrencies are around $200 billion. With no central authority to regulate such a large market, it has become a major problem for government authorities to restrict its uses by criminal elements.
Over the last few years, there have been several cases that have linked the use of cryptocurrencies to terrorism. Authorities have accused that cryptocurrencies were being used to fund hostile terrorist activities of large militant organisations. As bitcoins and other such cryptocurrencies use blockchain technology, users are usually anonymous and are not restricted by location. With blockchain, all information is stored and verified at each block without disclosing the specifics of every single transaction. This makes users very hard to track. This semi-anonymous nature of cryptocurrencies is one the key factors to its success and popularity, however itnalso leaves doors open to nefarious activities. Most websites operating on the darknet employ cryptocurrency as their preferred means of transaction as specific details such as name, address, location, etc., remain hidden. This has led to several illegal businesses such as drugs, arms and ammunition, as well as pornography to find a market in the digital realm as they can function without being traced. As there is no centralized control over this system, law enforcers have struggled to diffuse the rise of such illegal activities.
Cryptocurrencies, existing solely in the digital realm with no physical substitute, has often suffered from various forms of cyber theft. Recently, a report surfaced that alleged that an Asian hacker group managed to steal more than $500 million by targeting cryptocurrency exhchanges. According to U.S. based cyber security firm CipherTrace, almost a billion dollars have been stolen in year 2018 alone, leading to a 350% rise in cryptocurrency related thefts. Most hackers target custodial systems which manage several users’ cryptocurrencies. These centralized systems are often referred to as ‘honeypots’ as they are lucrative to hackers who want to steal large sums of money rather than target individuals. With the rise in cryptocurrency related crime, many governments are employing means of regulating its usage. Cryptocurrency related crime has led to the advocacy of tighter regulations, impositions of restrictions and accountability of transactions that will lead to an end of anonymity. Crytocurrencies are not created but mined in the digital realm using advanced software and hardware. Many have resorted to steal electricity and other hardware to enhance their computational power to mine cryptocurrencies. While regulations might restrict certain types of cryptocurrency related crime, there are still major loopholes to be addressed. For one thing, individual accounts are still accessible through pass keys. These can be hacked in a more traditional manner.
Although cyber and real world crimes can be checked and controlled through government regulations, many experts argue secrecy and anonymity are cornerstones to digital privacy. Without it, the digital world might be open to large scale manipulation. But as we look back at the history of crime and innovation, we can be assured that any future adaptation or legislation would surely be taken advantage of by some. With every advance, not only does the world progress but its criminals as well.