Cryptocurrency, and the underlying technology it’s built on, blockchain, has a lot to offer to individuals and governments. However, according to a RAND report, terrorist organizations such as Al Qaeda, ISIS and Hezbollah may soon be on the precipice of taking advantage of the same.
The report, titled ‘Terrorist Use of Cryptocurrencies: Technical and Organizational Barriers and Future Threats’, tries to address two queries; whether terrorist organizations are actually using cryptocurrencies, and the future properties that would make cryptos more viable for such terror networks.
The report suggested that despite cryptocurrencies offering an anonymous, secure, and ready stream of funding, there was “little current evidence of the adoption of cryptocurrencies by terrorist organizations or the motivation to do so”. However, this may soon change as the cryptocurrency technology evolves over time, it warned.
The report evaluated a set of useful cryptocurrency characteristics and weighed them against a list of five financial activities common to terror outfits. These crypto characteristics included anonymity, usability, security, acceptance, reliability, and volume.
Upon evaluation, it was found that no single cryptocurrency is currently able to address all the financial needs of terrorist organizations. The report used examples of Bitcoin and Zcash to make its case.
While the world’s premier cryptocurrency satisfies the conditions of acceptance and usability, it’s relative anonymity isn’t substantial enough for terror outfits which are keen to keep their fundraising and operational costs completely anonymous.
On the other hand, while coins such as Zcash satisfy the condition of anonymity by offering a higher degree of privacy and allowing digital currencies to be moved offline, it does not satisfy the conditions of acceptance as it doesn’t have a user base as huge as Bitcoin.
However, the RAND report didn’t discount the future use of cryptocurrencies by terror organizations. It concluded by stating,
“…should a single cryptocurrency emerge that provides widespread adoption, better anonymity, improved security, and that is subject to lax or inconsistent regulation, then the potential utility of this cryptocurrency, as well as the potential for its use by terrorist organizations, would increase.”
In fact, Hamas, the Gaza Strip-based Palestinian terror outfit has already been accepting donations via Bitcoin for the past two months.
The report also cited several factors that may dissuade terror organizations from using cryptocurrencies. These include infighting within the crypto community and stronger law enforcement actions such as de-anonymization of crypto transactions, among others.
Subscribe to AMBCrypto’s Newsletter