Cryptocurrencies are traditionally associated with Blockchain, and they influence each other’s reputation. As most of us know, cryptocurrencies are used in a lot of illicit activities, such as funding terrorist groups, however, when we think about Blockchain, we think about security and transparency, so the real question is: can we use Blockchain to fight terrorism?
The answer is: we could, if certain actions are taken, but the whole thing is more complicated than that.. Cryptocurrency is very promising for many reasons: quick transfers, no central authority, no fees. However, whatever appeals to common people, also appeals to criminals. Let’s have an overview on this phenomenon.
Why do terrorists use cryptocurrencies?
In our white paper Terrorist Use of Cryptocurrencies, we explained why cryptocurrencies appeal to terrorists.
The main reason is that they need to operate online. No matter what you do in the world, internet changed your way to do it, and terrorism is not different. They use social media to spread their message, with a website they can recruit more people, and with cryptocurrencies they can get money.
Bitcoin, for example, has become very easy to use, and now the average tech-savvy user can successfully complete a transaction. However, when platforms of exchange are based in jurisdictions with insufficient or no regulations, or when they fail to meet the minimum legal standards, they become the perfect money laundering and terrorism financing tool.
A lot of national and international banks are working towards the direction of fraud prevention, so it is becoming harder for terrorists to convert cryptocurrencies into fiat, but they are still better than cash, as it can be lost, stolen, or destroyed, and can become as volatile as cryptocurrencies because of the exchange rates continuously changing.
How do terrorists use cryptocurrencies?
Because it is difficult to withdraw money from cryptocurrencies transactions, terrorist groups use them to fund their activity in other ways. The most classic example is the purchase of weapons, as it is relatively easy to do on the dark web.
According to CoinTelegraph, there is evidence from the Israeli Intelligence that influencers linked to ISIS or Al-Qaeda promoted funding of those groups outside traditional western channels, saying that Bitcoin has the potential of being a good way to raise funds for the fighters. Other sources, however, state that only a small part of illegal weapon sales are done in bitcoin.
How to use Blockchain to fight terrorism
The use of an international registry on a global blockchain is probably the best alternative we have, but also the most difficult and time-consuming.
Some European countries are working on Blockchain solutions to monitor some of the most sensitive industries. The Isle of Man is partnering with some UK-based Blockchain companies in order to create a Blockchain registry that will be used to monitor all the cryptocurrencies companies on the island, while Sweden and Georgia are commissioning Blockchain-based land registries in order to stop corruption in the real estate industry.
The usage of Blockchain to fight terrorism is feasible, but there is still a lot to do.