Federally Funded Think Tank Explains How U.S. Government Could Attack Decentralized Digital Currencies

January 14th, 2016

Awake Goy

The RAND report goes one step further and suggests that governments should use advanced technical means to actively disrupt virtual currencies. That includes terrorist groups, but also peaceful deployments of digital currencies by other non-state actors, and a general war on privacy and encryption.

According to the RAND analysts, virtual currencies demonstrate a resilient means of storing data in a highly distributed fashion that is very hard to corrupt and could permit, for instance, information dissemination (blogs, social media, forums, news websites) that is resilient to nation-state interference.

“[Virtual currencies] represent the latest step toward decentralized cyber services,” notes the report. “In particular, the historical trend suggests the development of a resilient public cyber key terrain, which this report defines as the ability of unsophisticated cyber actors to have persistent, assured access to cyber services regardless of whether a highly sophisticated state actor opposes their use.”

The RAND researchers analyze key features of decentralized blockchain-based systems, including but not limited to virtual currencies, of which bitcoin is the best-known example. But non-currency applications of blockchain technology, such as sophisticated systems for encrypted storage and emerging forms of decentralized web and communication services, are seen as equally threatening. In fact, one of the effects of the growing popularity of Bitcoin is an increase in the cryptography awareness and sophistication of the population at large.

“Increased awareness of block-chain technologies has, as a result, increased awareness of sophisticated cryptographic techniques for distributed consensus and computation,” note the analysts. “Venture capitalists now talk about computer-science concepts [that] would never have been the subject of discussion beyond rarefied academic circles.”

Therefore, the RAND report seems to suggest pre-emptive strikes and notes that “perhaps the best strategy for the United States and its allies to thwart a VC [virtual currency] deployment would be to target those properties of a VC that would most increase its acceptance, most notably transaction anonymity, security, and availability.”

Examples of promising cyber attacks against digital currencies and blockchain-based systems for other applications are given.