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.

Distinguished Magazine - - CONTENTS - PRATIK ROY CHOUDHURI

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.

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