In the previous year, there has been a rising figure of criminals using cryptocurrencies as a mode of payment be it for ransom, kidnappings or facilitating the exchange of illegal substances. However, when it comes to financing terror, there are many obstacles and technical issues that make it a poor mode of exchange.
Matt Peyer, a Marine Corps Signals Intelligence, turned money laundering investigator for a National Bank argued that there are a lot of existing boundaries and difficulties for terrorists to successfully fund terrorism through cryptocurrencies.
Matt Peyer noted that Bitcoin may appeal to younger Jihadists who are embracing the digital age. However, most terror financing efforts searching cryptocurrencies are around actions that produce little capital like crowdfunding sites. Peyer said that the most likely reason comes from the fact that high-ranking terrorists are old school and he also admitted that as younger individuals take over, the dynamics may change.
Bitcoin activities are traceable
Though Bitcoin is popularly known for its anonymity, it is rather pseudonymous. Bitcoin addresses and activities are not linked to the identity of users. Real identities can however be easily traced if they are used in combination with Bitcoin addresses in a number of ways. Moreover, the blockchain records all activities from the time, date and people involved.
Most criminals leverage the anonymity of Bitcoin to hide their activities from the law. On the other hand, terrorist attacks and terrorists purposefully draw attention to the situation. Matt Peyer mentioned that, the Bitcoin blockchain also makes it simple for detectives to follow the trail and uncover leading and critical members in a huge underground network.
Mining of Bitcoin Leverages Terrorism
As for sustainability, if terrorists were to leverage Bitcoin, they would most likely be included in the mining procedure. Computer mining may sound easy but with Bitcoin’s increase to popularity, it has become even harder due to rising competition. Therefore mining computers, values a lot from $5,000 to $35,000. The upfront costs, consumption of electricity and hardware needs are extremely hard in a third world country. Even in a developed country, the abrupt amount of energy would draw attention. Peyer stated that police agencies already searched for sites with high energy consumption, especially when searching for houses growing cannabis.
If mining is too hard, terrorists could theoretically buy from cryptocurrency exchanges. However with the know your customer (KYC) and anti-money laundering (AML) policies, analysts are busy searching for suspicious cases of money laundering and terrorist findings.