Everyone in the blockchain industry can breathe a big sigh of relief: terrorists, it turns out, mostly don’t rely on cryptocurrency to finance their activities. So says a new report from the Foundation for Defense of Democracies, a think tank specializing in national security and foreign affairs, which was presented to the congressional Subcommittee on Terrorism and Illicit Finance last week.
To be clear, the report suggests that terrorists would use cryptocurrency more if it weren’t for a number of technical issues which make it impractical. Areas with large-scale terrorist activity tend to be economically underdeveloped, and sparsely covered by the necessary infrastructure for exchanging digital currency for physical goods and services. Even when this can be done, the report says, terrorists generally lack the level of technological sophistication needed to obscure their activity from being detected on the public blockchain, and so tend to stick with cash instead. (Though coins like Monero, that offer a higher level of anonymity by default, could remove at least one of these barriers.)
Industry media outlets dutifully reported the news: Cryptocurrency Is Not Conducive To Terrorism, said Bitcoinist. Crypto Use A “Fringe Activity” Among Terrorists, wrote CoinDesk. Bitcoin Not Useful For Terrorists, reported CCN. Certainly, over the years, evidence-based articles like these have helped to overhaul the image of cryptocurrency from dark web drug money to a legitimate mode of value transfer. But touting this as a win for cryptocurrency reinforces the idea that suitability for terrorist purposes is the yardstick by which legitimacy should be measured, instead of acknowledging that privacy—the key property that terrorists and criminals are attracted to—is a fundamental right for all of us, but one which comes with both pros and cons.
Privacy will always be a double-edged sword. The ability to carry out any activity without scrutiny makes wrongdoing more likely, so by definition any privacy-enhancing technology makes criminal activity easier. On the other hand, the right to a private life is crucial to democracy, and any technology that erodes our ability to exist outside of the public sphere increases the likelihood of compliance with authoritarian rule—like China’s huge rollout of AI and facial recognition technology in public spaces.
Though it’s almost too trite to be worth saying, just because something can be used for illegal activity does not mean it will be. Here are a few other things that have been shown to fund terrorism: Saudi oil money. Offshore bank accounts. Suitcases full of hundred dollar bills. While we might take issue with the existence of one, two, maybe even all of them, they are a consequence of the financial and geopolitical systems that we live in, and not a sign that all oil, banking, or cash exchange is bad.
In the post-9/11 era, the threat of terrorism has been mobilized again and again in order to restrict civil liberties. In trying to promote the many legitimate uses of cryptocurrency, we should aim for a better standard than ‘is not used by terrorists’: the bar is too low, and it brings us down to try and clear it.