September 10, 2018 11:31 PM
A recent report details cryptocurrency’s limited traction among terrorist organizations.
According to a September 7 report[1] from Yaya Fanusie of the Center on Sanctions and Illicit Finance, a Washington, DC-based economic think tank, cryptocurrency is on the radar of Al Qaeda and the Islamic State. Although terrorist groups have experienced limited success in their cryptocurrency-based fundraising activities, Fanusie believes that the US should prepare "now for terrorists' increasing usage of cryptocurrencies."
Fanusie asserts that because terrorist organizations adapt to new opportunities, whether that be for plotting attacks or financing purposes, the emerging cryptocurrency market offers a new avenue for terrorists to exploit. Regarding cryptocurrency's potential for exploitation, he explains, "Law enforcement officials and regulators have flagged cryptocurrencies for enabling illicit activity because of their pseudonymity and suitability for cyber crime and darknet marketplace transactions."
This potential is hedged, though, by multiple factors limiting terrorists' ability to use cryptocurrencies effectively. For instance, Fanusie maintains that terrorist environments, such as "jihadist battlefields," are generally not "conducive to cryptocurrency use." He continues to note that terrorists "usually need to purchase goods with cash," but the areas they operate in may contain "unreliable technology infrastructure."
Further, by the nature of blockchain technology, there is a public record of cryptocurrency transactions on many networks, so "unsophisticated users," as Fanusie points out, may leave a trail of illicit transactions behind them.
Fanusie also indicates that terrorist groups may not possess the skills and know-how to use cryptocurrency effectively. He argues that, in general, there is a user experience gap when engaging in cryptocurrency transactions (as opposed to cash, which everyone can use). Individuals must also securely store their private keys, and to manage a lot of cryptocurrency, they must be incredibly savvy in the
