Hi everyone, so the next discussion will be on bitcoins and cryptocurrencies.
This one's going to run a little bit differently. So there's actually
three speakers that will be speaking 12 to 15 minutes each.
We're going to take questions after each one of the speakers
so that people don't forget the topics and then we'll move on.
We'll try to kind of keep things rolling so that
everyone gets a chance, the same amount of time, to speak.
So first up is Dr. Marie Vasek. She's the assistant professor in the
computer science department at the University of New Mexico.
Next up will be Dr. Eric Jardine, the organizer of this event.
He is an assistant professor of political science at Virginia Tech and a
fellow at the Center for International Governance and Innovation.
And finally, Dr. Aaron Brantly, assistant professor in department of
political science and Hume Center for National Security here at Virginia Tech.
He also is the cyber policy fellow at the Army Cyber Institute
and a non-resident cyber fellow at the Combating Terrorism Center at West Point.
So I will turn it over to Dr. Vasek. Okay, thanks for the introduction.
So today I'm going to talk to you about some of my work that deals with
financial crimes particularly ponzi schemes and those
using bitcoin in particular though i should say that digital
currency is nothing new in 1990 they came out with digicash
there's also been eagles in the 90s that was later shut down to fraud as
well as liberty reserve that was accused of
laundering 6 billion with a b dollars
before it was later shut down
now my work is in online ponzi schemes and these also have been around
since before cryptocurrency so this paper was
written in 2012 and collected data from before that and they looked at
a large number of ponzi schemes advertised and then the
currencies that they accepted and they found that 83 percent of their
sample accepted liberty reserve um 70 percent uh accepted perfect money
however this online ponzi scheme has really uh ecosystem on the web has
really adapted itself to cryptocurrencies there's a lot of nice
features that bitcoin has that let's say liberty reserve doesn't have because oh
wait the fbi can't just really easily shut it
down um so for example you have a ponzi
scheme that looks like this to a really naive use earth they might
think that this actually does provide a unique opportunity
to help out startups however if you look at the deeper on the
page it says we guarantee you daily earnings
up to five percent of your investment it also has a schedule where if you
invest more money you get more money back they also have
an affiliate marketing scheme all of the classic hallmarks of being a
ponzi scheme now this particular one as in many other
popular particular ponzi schemes except bitcoin as well as other
cryptocurrencies though with the openness of the
blockchain we can actually measure the amount raised by bitcoin
whereas we cannot raise um we cannot directly measure the amount
raised in perfect money or something else
um and so what we did is we went to the bitcoin forums the bitcoin forums were
set up uh way back in the early days of bitcoin
and since they were set up in let's say 2010
or so they've really been the place to go to
talk about bitcoin and other cryptocurrencies
um they're also the place where people discuss
where they pay in their money and so we could get all these addresses
by looking through pages and pages and pages on the bitcoin forums
then to measure the profits in and out so we can measure lots of different
ponzi schemes and this is over a nine-month period
the black line is the money into these ponzi schemes so you can see
that there's a couple spikes when the ponzi schemes are advertised and they
get really popular and some pretty dramatic falls once they
close up shop
now in this paper that was done along with my phd advisor
tyler moore at the university of tulsa um we also looked at other types of
scams that are prominent on the
in the bitcoin ecosystem so one of the big ones
is bitcoin wallets and so if you actually go to the tour head in wiki
um this is the main page this is what it looks like
you can then go down to financial services
this is what it looked like at like 7am this morning when i was making these
slides and you can actually look at all of the
different ones in red that advertise themselves to be bitcoin
wallets um and these all are the same scam and
when we measure one of these websites looks like this
some other ones look a little bit different
but they're all the same operator and we looked at the address that the
money was being scammed out to and we can measure
the profits in bitcoin up in top this is for a year between
2013 2014 um
and we can convert it down into the trading volume in dollars
at the end because there's big volatility in bitcoin during this time
and we can see that the scammers are making
between 10 and 20k a week now after we published this paper they
shut down their clarinet but they continued their darknet ones
um they also changed their payout method so we can't measure it as well
um but we still believe that they're we have no evidence to believe that
they're still not attracting the same number of users
the big attractive mechanism is that people
um who use the silk road as a bank are looking for the same sorts of
properties which are all the same properties that they advertise
and so we think it's the similar types of users that are moving from that type
of wallet that they trusted into this sort of one which they should
not
yeah we did some follow-up work on these ponzi schemes and we noticed that
um a new bitcoin ponzi scheme arises on the forums almost every day
and we wanted to know why some of them ended up making three
million dollars and others of them made nothing
um so again we went to these posts on the forums and we looked at the time
difference between the first post in the last post and we can do an
initial analysis of the lifetime of the scams
so this is a survival plot where you look at the sorry
you look at the probability um that it will die at any period of
time so you can read this as within one day
of being posted on the forums about 25 of the scams will die
so about 25 percent of scams never really make any money
um we can also pick another point so after about
a week about half of the scams will die of course there's a very long tail so
some of these scams last quite a long time
now that's what i have to say about ponzi schemes so my current work
um inspired my previous work is looking at
the alternative currency movement so um many people propose alternatives to
bitcoin um however while some of these
alternatives have actual use to them many of them we
can't really find um legitimate other use cases for them and
they seem to um be more for speculation
and for making money for the people who started the coin
so we can measure the market capitalization of all of these different
currencies um we normalize this of course to us
dollars and we can see that there's um not very
much interest there's a little bit of a blip
the beginning of 2014 when the price of bitcoin
also goes up a little bit but then the amount of interest has really just been
rising since 2017.
we can also go to the forums and look at the different
ones that were first advertised on the forums which we see in this orange
dotted line compared to the number that ever traded for money which is on
the black line underneath we can see that the number advertised on the forums
approximately tracks the number that ever traded
except for one notable instance the time period between 2014 and 2015 when there
are many more advertised than ever paid that was because during
this time there was a service where you could get
your own cryptocurrency for very small a number of money
and they would set it up for you and because of this
many people propose currencies that were all direct copies of each other
and they never went anywhere
we can also look at current events so this is with a paper that i'm
was just accepted along with tyler moore um and jt hamrick his phd student
and neil gandal and amir his grad student on the big bitcoin
burst so bitcoin traded for a high of
over 19k on december 17 2017. on the upside of the bubble so for the
in the 52 days before that it rose of from almost
six thousand dollars to over 19 000 and then on the downside um and the 52
days afterwards it declined 64
now in the previous times when the price of bitcoin rose and then
fell again the price of all of the other currencies rose and then fell again so
it seems to give us this indication that they don't actually have work
worth outside of price of bitcoin however in this case in 2017
we actually didn't notice this to be the case so
out of the other 63 most popular currencies
um a love of them actually went up when bitcoin was skyrocketing down
um we do notice however that 41 went down along with bitcoin
and 11 of them went either up or down but they did it in a range that was
small enough not to be interesting
and that is my talk thank you
okay
so do you think that bitcoin will replace um banks in the future
do you think that's a possibility like bitcoin would become like
more like the way that people do trading or
use it for profit in the future well you just said a lot of different things that
are not necessarily all the same and
it's also if some people do use bitcoin as a bank but the people who use bitcoin
as a bank isn't the primary use case um so
while some people do use it as a bank and there are legitimate reasons for
using bitcoin like as a bank um people in the bitcoin
community like to point out that in the u.s while most people have
access to the normal financial situation and other cases like women in
afghanistan there isn't so much access to the normal financial
situation and so um having some sort of uh currency that's outside of the
regulation of the government is a useful thing now
do i think that it will be universally replaced
no um i i think there's too much overhead and
too many issues that we haven't really dealt with
um there's also lots of uses for not having um
a global spank that everybody uses
so thank you for that very fascinating uh discussion i have
a couple of questions about some of the in the ponzi scheme
portion of the research and i'm not sure if your observation period
extends near enough in time to where we are now to really say
but uh so they're obviously running along with this there's
there's periods of price of pretty significant price fluctuation
and i could imagine a scenario in both directions where people want to get in
to cryptocurrencies and into things that produce returns from being in
cryptocurrencies and so they might therefore like pile into ponzi schemes
but i could also imagine the other situation where people
are making money by trading or holding currency and they don't want to
put that money into anything else they want to just keep it as cat reserve cash
uh and so i guess my uh the sort of question i would ask is
you know did you observe any sort of association between
the fluctuation and currency prices for say bitcoin
and participation in any of these ponzi schemes
yeah so this was 2013 2014 and so this was a period where
when bitcoin got popular the price went up and people started hearing more about
the ponzi scheme so we think that that's more of the mechanism
there so we do notice that to some effect though it was interesting reading
some work about other ponzi schemes they
noted that um where was it i believe it was in
nigeria and they were claiming that they knew
that they were putting their money into a ponzi scheme but they trusted it more
than they trusted their local government
so maybe for some people it is rational to trust
these uh scammers the ponzi scheme this was
a news article from buzzfeed the punders were out of russia um
and they thought that they were way more trustworthy than their government
um i've also so when i so i just recently got my phd from the university
of tulsa and the tulsa bitcoin meetup was actually started by two women that
were advertising their ponzi scheme um
and so i went and when i when we were talking about
the fact that you know this scheme that they were talking about was a ponzi
scheme one of the women said that she didn't
she knew that it was a ponzi scheme but if she didn't have
a certain amount of money by the end of the month
it really didn't matter if she had 500 or not
so there are some reasonable reasons to invest in ponzi schemes
though they're definitely not the norm
you talked about the difference between the ponzi schemes and
which was successful in those which weren't did you identify what was the
differentiator between the you know what made one scheme successful
and another one not successful so one big thing that makes you
successful is advertising so advertising more we in
one of these papers that i pub that i've presented parts of
um we saw that more interaction ended up with better results
in other work in the ponzi scheme literature offering lower rates of
return gives you a higher um way uh there's some ways that people
measure the quality so if you have a better website it has better uptime at
the beginning those sorts of things we also noticed
in this paper we broke it out by different scams so this is like nine
aggregated together but when we took them apart we looked at
the individual transactions in and we noticed that it was quite common
that they didn't need a lot of people investing in their scheme to be
profitable they needed just one guy to invest 12 bitcoin and then they were
home free
so thank you to dr pasek um next up is dr jardine
we should have we should have some time for additional questions at the end
so if you have more questions just remember them and we'll bring everybody
up at the end
all right so thank you all and my talk today is going to uh parallel
some of the let me get in there some of the themes
that sort of have come up in both nicholas and
marie's presentations in terms of the substitution
uh effect that seems to be occurring away from bitcoin on broader dark web
platforms towards other types of crypto currencies
and i'm going to look in particular specific uh the relationship between
specific types of cryptocurrencies and specific categories or types of drugs
and my motivation for this really comes out of an observation at the end
of 2017 where secretary of the treasury steve mnuchin
had a comment in a public interview of this sort where he basically said we
want to make sure that we don't have at the end of the day a dark web funded
or financed by bitcoin so he was sort of in his official capacities
basically saying we're fixed we we've got it bitcoin is the sort of lubricant
of the dark web it's what's financing all of this it's what's
allowing for uh transactions and that is i think historically correct
as nicholas pointed out with some of the older market
uh places and yet as you start to move forward as alternative currencies start
to pop up the question about how accurate this
sort of uh single currency focus actually is is an
empirical issue that's worthy i think of a bit of
investigation and so from this i really would have
derived i think three questions which is basically in general
how popular is bitcoin relative to other
cryptocurrencies so is it the most popular cryptocurrency when you're
looking at hidden service sites secondary to that is how common is
bitcoin or other cryptocurrencies for that matter relative to
other content so is it always linked up with content on the dark web or is it
just a specific subset just in some measure and then to that
point about specific drug types when you dive in and say
okay well there's spent in all there's cocaine there's marijuana
how what's the sort of level of association you tend to see there
between bitcoin other currencies and uh these specific drug types because
that has material implications for policy if you're trying to counter
say the opioid crisis and there isn't much of a link between
bitcoin and fentanyl say then perhaps focusing on another
currency is a better route of trying to kill the cash that
underlies these businesses so to start it's basically what is the sort of
look at bitcoin relative to its peers so in this sense sort of looking at this
would be the association of uh a pairing of terms so how often
does bitcoin appear on hidden service sites how often does ethereum the narrow
litecoin dash ripple all how often do these currencies appear on hidden
service sites and relative to each other so this would
be uh you know relative to each other bitcoin
obviously stands out it is most commonly referenced around 78
of the hidden service sites that are referencing one of these
cryptocurrencies are going to be referencing bitcoin
and so from that simple measure you can basically say
you can basically say that of course yes bitcoin remains
probably the predominant uh predominant uh
cryptocurrency uh and but you could do see some interesting
longitudinal movement over time so looking sort of in a uh
rather than in a static snapshot of all sites looking over a year and a half
period here bitcoin's relatively stable there's a little bit of
an increase in terms of uh reference and association here
but you see pretty large growth sort of mirroring what nicholas was saying
earlier in the growth in monero which is a more secure more
private um cryptocurrency and so you actually see
uh these are not these don't have to be
mutually exclusive references by the way so you could have
you don't have to sum to 100 would be one thing to note right away but you
could have you know 90 in this particular
period here it could be 94.92 percent are referencing bitcoin and then 90 are
referencing the narrow that would be a possibility so these are not mutually
exclusive but you are definitely seeing with the
monero category a general increase in the association of hidden
service content and uh these more private
cryptocurrencies and so the general like the answer to
those that first question is bitcoin relatively popular absolutely it's
relatively popular across all dark web content
and so then the more specific question is when we start to dive in to say drugs
and the association's there do we see the same sort of pattern
bearing itself out and so the first thing to sort of
think about is generally what kind of references
to drug related uh categories are we seeing on hidden service sites
and again uh paralleling what nicholas was mentioning earlier
uh weed cocaine pills ecstasy meth these are sort of the high frequency terms
so these are not specifically just dark web markets these are dark web
markets plus other hidden services sites that might be talking about but not
actually bending this material so this is sort of a broader picture
rather than a specific market-centric picture
but we're seeing the same sort of lineup that nicholas was finding across
those 15 hidden this 15 dark dark web markets that he was crawling
before so with that sort of information in mind what you can then
do is basically say okay within these drug categories what is the sort of
association that we're seeing of these various uh drug types and
specific cryptocurrencies and so the big question
that i was really interested in in light of what secretary mnuchin was
saying was basically is bitcoin the one popping up
all the time in association with these various drug
categories or are other currencies often popping up
uh in uh more with more regularity and so what i ended up doing was looking
for those uh those sorts of associations a little
too fast those sorts of associations and in this
figure what we have is bitcoin is the baseline so these are
deviations in terms of the frequency of of
occurrence between the drug category and the reference to the
cryptocurrency relative to what the frequency with which
bitcoin is paired with those terms so bitcoin's essentially zero and these
are all deviations from how how often bitcoin is referenced relative
to these types and there's a few interesting things that kind of can kind
of be extracted from this particular figure one is that for many
categories or a lot of categories particularly generic references to
pharma xanax marijuana or meth monero ethereum or litecoin are all
referenced in association with these terms a lot more frequently than bitcoin
so in that sense bitcoin may still be in the
broader ecosystem sense more commonly referenced but in terms of these
specific categories other cryptocurrencies are appearing a
lot more frequently for u.s public poll in a u.s public policy sense
one thing that's quite interesting to note
is that when you sort of dive in on the opioid crisis in particular and look at
the fentanyl category relative to references to bitcoin monero
that more private currencies actually about
150 more commonly referenced in association with the term
fentanyl and so it sort of suggests as a preliminary cut that if you wanted to
try to be countering the opioid addiction
crisis and you want to try to do so by combating
doing blockchain analysis on bitcoin or something like that
you might get a little bit of traction for sure but you'd probably get more
attraction if you were able to somehow compromise uh or figure out the identity
of users of an arrow that's a more complicated and difficult task to
be sure but it does it is sort of suggestive of the idea
that there's more bang for your buck to be had in other currency types
potentially depending on the drug that you want to be trying to counter in
particular so in terms of policy implications and
to return sort of to those questions that i posed in the beginning
or sort of extracted out of secretary mnuchin's comments you first
have the idea that bitcoin does remain relatively popular so in a broad sort of
you know no differentiation sense if you wanted to say what is the big
currency on the dark web it is still bitcoin
there's a variety of plugins and tools like mixers and tumblers and these sorts
of things that make bitcoin a little bit more
anonymous they can be used and so i don't think bitcoin is going to drop to
zero on in terms of its usage on the dark web
but it definitely remains fairly a fairly large proportion in big
generic terms when you sort of scale down and you
start to look specific drug types as we as we did with that last uh slide there
you start to see a bit of a different story emerging in terms of the
co-association of the specific terms to do with drugs and the specific
references to specific cryptocurrencies and there you start to
see a lot of differentiation where specific drug types are actually
referencing or are sort of coincidental in terms of what's
appearing on the site with other types of cryptocurrencies and this is
suggesting that there possibly is this movement
sort of demonstrated with the growth in manero over time
toward other currencies as those who are conducting sort of illegal drug sales
and that sort of thing are getting wise to the idea that bitcoin
is pretty easy to at least partially de-anonymize and has this
quite a large weak link at the uh at the exchange
points where you have to convert real dollars into
cryptocurrencies or vice versa and lastly just to the
the opioid addiction point um if fentanyl is a major driver of that
there's there seems to be this very strong association
between fentanyl as a category of drugs and monero as a specific
cryptocurrency about 150 percent more common to have references
to fentanyl than to have references to bitcoin and so in that
sense again from a policy angle and i'll conclude on this point it's just that
you'd probably want to be spending your resources
on you know blockchain analysis for right to the extent of such and
de-anonymizing to the sense that such a thing is possible of a manero rather
than doubling down on trying to figure out
who's using bitcoin it may be a lower hanging fruit but you
may get less bang for your buck in a specific
category of drugs and so that is it thank you all
just a quick question um so why is monero so much less vulnerable
than bitcoin in terms of the right right so there's i mean there's
people in the room who've studied this a little bit more interested than i have
and they may be able to correct anything that i'm gonna say that's wrong
but my general ins so bitcoin has uh a public address that's part of the
blockchain and so all the transactions that you do
via bitcoin are linked to that address and you see who's transacting with whom
what dollar values and that'll allows you to analyze blockchain and to
trace out from sort of point of sale all the way through
to the exchange where you're converting currency who's doing what effectively
right monero has private addresses linked to you and those that's
where you're storing your value but the exchanges are done
through one-time use public addresses and then they have this other
complicating factor where you have um ring ct which means that the the actual
exchange of monero gets lumped together in with a lot of other transactions and
you end up basically not even being able to say
my wallet transacted with your wallet with any amount of value
so the ability to correlate for example like
an exchange of five dollars becomes impossible for there too so they've sort
of obscured both the uniqueness of the wallet as it's
tied to a specific account as well as the dollar value so you have
two areas where previous forms of analysis of blockchain
could have given you some answers and now
they're sort of they're built by design to obfuscate both angles
if i maria if i mess that up totally let me know
okay good
next we have dr aaron brantley
uh
there we go okay um
my application is closed on the other one okay uh first of all
thank you everybody for being here and thanks to eric and grace and
hume and everybody else for putting this on
so i'm going to talk a little bit about some of the research i've done over the
years on essentially
terrorist usage of the internet uh as as it pertains
particularly to innovation but also to the use of of bitcoin and other types of
things uh i think one thing to remember is uh
just like gareth and others have talked about there's a lot of innovation going
on within nefarious communities and we should be very cognizant of the
fact that this is a long treadmill and not a
short-term event that can be solved by one-off solutions it has to be a
deliberate a deliberate strategy over time
uh a few of the products that i've i've done over the
last few years uh focused on the financing of bit
of terrorism using bitcoin innovation and adaptation strategies within
terrorist networks and others i think what's also important for us to
remember is that terrorists in particular are
increasingly digital natives uh they have grown up in
environments where they leverage mobile phones for the internet
uh for access uh to the global uh to recruitment networks to to
financial networks in a large percentage of africa and
other places uh they don't use banks they use mobile
phone transactions and other types of things
so we're engaging in a type of environment uh that's
outside of what we consider the norm these aren't people using swift networks
uh these are people using novel forms of financial transactions
to engage in acts that we we deem inappropriate they have
an unprecedented access to the knowledge uh
to knowledge about our capabilities uh this is continuously facilitated by
leaks uh both from within our own government
from our allies and through other parties
and they have increa over the years developed a robust
capability to adapt and develop countermeasures for our
our attempts to take them offline
just to give you an example of some of the recent domestic terrorism
incidents every single one of these individuals with
perhaps the exception of abdul karim was a digital native from birth
they interacted on a on a regular basis with technology from the day they they
were born largely what i focused on when i was
working uh this issue with uh u.s cyber command and
army cyber command and others was where in the world are
terrorists how do we find them leveraging digital technologies and
other types of tools and techniques and if you study
terrorism you know that traditional terrorist networks
function in a variety of different ways so you
we don't typically see the highly centralized network
but we do see a very central decentralized network
with a central node that would be al-qaeda or a more
decentralized distributed network which would be daish with a
centralization in iraq and syria during its heyday
it's also important to recognize that each of these networks as we were
analyzing them leaned heavily on the best practices
of others who came before them and in providing information intelligence and
i've seen lots of reports particularly on edward
snowden in i've read them in arabic and other
in other languages as well talking about brother snowden being such a helpful
force in the global jihad um
now ron dieber and i getting arguments on this left but
so knowing that information is readily available
helps us to understand that innovation is
not a foregone conclusion that it is something that is happening
regularly within uh jihadist networks on an ongoing basis for a while they
were using a series of platforms dumped to just paysted and others these
were being tracked by the fbi and intelligence agencies on a regular
basis they started putting up their own independent sites such as
pacemaker they also tried to run them in the dark web although they
didn't do very well and they also created
automated scripts to regenerate twitter accounts and other types of things using
twitter back and then asara mujahideen
which is an encrypted messaging platform and now they have a new platform that
enables them to encrypt and do steganographic
work using uh php scripts and python we've seen limited use of uh
of bitcoin and other types of cryptocurrencies
here's one example that was collected about
i don't know 11 months ago uh and we don't we love it when they post stuff
like this because it provides a a really quick way to find them
um the there's been several reports out of cnas
and rand and others that talk about the potential implications
of bitcoin but the fundamental problem of using bitcoin for terrorism is the
transition of financial currency of a digital
currency into a fiat currency that's used on the
ground uh so if i'm going to buy weapons uh and
i can trade with bitcoin perhaps but i still have to at some point be
able to get cash back in or i have to get cash back out this is a
fundamental problem of current cryptocurrencies particularly in areas
where uh where crypto exchanges are not as easily
accessible uh so for instance if i take in large
amounts of money for oil transactions on the
syrian-turkish border i have to somehow convert that money into a cryptocurrency
and get it back out again to do the money laundering chain
so this is why bitcoin is not a sole technology it is part of a package
and so if i'm going to engage in the process of money laundering if i'm going
to engage in recruitment if i'm going to engage in financial network fraud
and other types of activities i have to engage in
secure communications or operational security online
and so you see these are some of the posts from
a 2015-16 time frame run through the tech of the islamic
state talking about how to leverage tor how to
leverage wicker telegram signal how to somewhat securely
leverage twitter uh and and other types of activities
we also see just for reference we also see
the usage of of these same technologies to do doxing campaigns to provide
information again to do counter messaging and
information operations against u.s personnel foreign personnel
including the saudis the iranians and others
so here's some uh families of soldiers being posted online
i've redacted the their addresses and stuff
the uh and then databases so we collected a ton of stuff on this
there's a lot of stuff up there also saw this is a now defunct
website uh that was run out of eastern ukraine i
actually found it by going through jihadist forums uh and they were selling
weapons on there uh in bitcoin and other types of things
uh this has now been shut down there's a
few other ones that have come up in its place but nothing with the type of
heavy weaponry that this one particularly offered
um we should expect to see the technical capability of
non-state actors increase both with their communications
uh and sophisticated ease of use they should
we should expect them to use increasingly higher levels of encryption
uh and we will see this across the board uh and it's going to be a continuous cat
and mouse game particularly on the encryption side
moving forward we should also expect them to continue to share the
information about how to leverage these things but we should also expect that
just because they're sharing the information doesn't mean that they're
going to do it well uh it's if so for those of you who've
used tor we had a we had an ice a hume national
security project one of our teams was using tour to
attack honey pots and we were able to identify where they
were coming from in blacksburg and so we the it's it's a lot harder
than it looks to maintain good digital opsec but they're trying they
put it in these these various different forms
we should also expect to see the purchase of services for hire from
non-state groups terrorist organizations and others
here's personal hacking services that are available on the dark
web this is a screenshot i took uh and then we should see we've
we've seen although it hasn't been pervasive movement
of and use of of the dark web for recruitment sites and others but
it's as most of you know it's hard to find
hidden services in the dark web without posting them publicly
and this one also had several mistakes and flaws associated with it
that allowed it to be identified the only time we've only seen this on a
very few occasions the purchasing of hacking services in real time
monitoring on the dark web this is a the the collection of purchases of somebody
saying that they're isis trying to purchase hacking services on
the dark web over the course of research we
identified uh 130 different tools or platforms
being discussed of which bitcoin ethereum monero and others are now being
added to this list and so with that i will uh kind of
close it out and open it up for questions
so yeah yeah thank you aaron um i guess one question
in the how do i phrase this so you know on this on the clear web
you've got like gofundme pages do you see any evidence of
the equivalent in this space where cryptocurrencies or dark web hidden
service sites are being leveraged to sort of just yes so there was
there were a few chechen and turkish terrorist organizations that tried
leveraging it uh the that we found there are obviously
others that pop up but it's it doesn't stay up long
it goes down pretty quickly um yeah they try and they try and do it but
you know so in meetings uh that i've had and and and in forums
i've seen them discuss the different aspects of it and the general consensus
is that using huala networks is far more efficient
first of all it allows them to transfer enormous sums of money
and it allows them to do it much more anonymously than
using bitcoin or any other services
i noticed you had uh one of the last slides was a i2p
um screenshot yes you see a specific dark web network that is more prominent
for terrorist activities than others no they try and use both but
you know so there's remarkably there's not as many
as people think it's a lot much i mean you have a higher statistical
probability of slipping and falling and dying in your bathtub and you do have
being killed by a foreign terrorist attack but uh
so the but the so the group is it's we see groups developing we see bad
people trying to do bad things but i would say that the issues that
gareth highlights with child pornography and other types of things are far more
pervasive on the dark web than terrorism
that's probably a silly question because i'm not sure you're about to answer it
but you talked about one of the encryption tools they were using
very early on
so that went through about 14 different versions
they're now in a new version of it is it that
i mean i'd read that like the early versions were
had vulnerabilities in them and yeah possibly
allies and um deploying sort of backdoor versions yeah so the
earlier versions did have substantial vulnerabilities in them they have gotten
substantially better over time uh the new
so then they're using a new steganographic platform which
uh is a build-on capability to it's essentially the next version of
truecrypt but they're using using python to do steganographic
sending of messages in the open
yeah and so that's it's a fascinating thing yeah okay thank you
so you have a lot of uh so if you go to the next slide you have this comparison
between uh you have this uh sentiment of
different services that terrorists have yeah it's just a
basic sentiment okay are are terrorists a lot like us are they
different so does everybody just live tour or do
terrorists live tour more than everybody or just you know everybody
have negative sentiment towards google search
uh no so this is just these aren't sentiments and these are
these are essentially reviews of their perceptions of security on different
platforms okay so positive review negative review very
very categorical broad bunch how does it compare to
a more general population uh so just like it's very much like the
the general population except i'd say that
they're a little bit more leaning towards technical savvy okay uh
but the the overall assessment is that there's a
why a fairly normal distribution if skewed
towards the technical side okay thanks
okay yep sorry
hey aaron and i don't know maybe this question is
more broadly upon this this last segment that we had so if anybody has a
insight on it uh please uh you know speak up
but uh is there uh any uh assessment or your your sense of how
cryptocurrencies are being used as a uh a national uh tool of influence
um you know specifically to undermine you know the the dollar
and its dominant position and in global trade and transactions
um let me see if i can go back to this i i advised on this report here national
security implications of virtual currency which is a rand report which i
highly recommend it's very good um that discusses the possibility of
doing what you're talking about i haven't i haven't seen it in practice
uh if only because there are fundamental
problems associated with cryptocurrencies right now
one there's 500 of them there are several that are
primary use cryptocurrencies there of of and maybe eric and others can add to
this there are several currencies that are primarily used ethereum monero
bitcoin dogecoin others uh but the the reality is is that you know
they they aren't as they're inefficient for several different reasons one they
consume an enormous amount of power two they are not as fast as using a
credit card or cash uh or uh or other financial
mechanisms and so to convince people to undermine
the a major currency system is is less likely than what we're seeing
in the process of using things like apple
pay android pay other types of things where they're
using references to fiat currencies
in digital implementation form which are extremely efficient
both cryptographically and uh and and in terms of transfer of financial
funds we've seen this in china in particular
the somebody was talking yesterday about chinese
financial transactions this is going to be in the
it's going to take over china's financial transactions sweden and other
places as well to add on a few thoughts i think the
i don't i haven't observed much evidence of this and i think
to what aaron was saying i think there are some limitations one is bitcoin for
example can't it's not going to scale well
visa processes like tens of thousands of transactions a minute and
bitcoin can do like seven uh and so you you can't
it can't hit a level where it could fundamentally challenge the dollar i
don't think from a from a technical scale point of view yet i mean maybe
eventually a currency at some point might be able
to do that but not at this point the other thing is there's i think
one of the macroeconomic sort of motivators of what people like about
currencies is a degree of stability that if you have
sort of hyper fluctuations most people
shy away from that or the mass amount of people will shy away from that and
cryptocurrencies kind of as we've seen are so volatile that its ability to
substitute for something like the us dollars
i think pretty questionable because the us the value of the us dollar really as
a global benchmark is not its fluctuation
but it's stability that it's sort of it is the
effectively the reserve of the world and i don't think
something that fluctuates a lot will be able to displace that
um that being said one challenge and i'm not i haven't read this report but
would certainly like to but the one challenge i could see is
using the that very fluctuation as a tool
a sort of a macroeconomic tool of economic warfare
that if you had the money to do it you could start to do
pump and dump schemes on a large scale and then you could see consumers
flooding in you could if if you saw a big enough bitcoin crash
you could wipe out tremendous amounts of value really really quickly
and it would probably be clustered in rich western countries
it wouldn't be a specifically targeted just us but it could be so
i mean there's some fundamental challenges with cryptocurrencies right
so you're talking about liberty reserve
earlier liberty reserve had is a fascinating currency because
they did have an a quasi-anonymous ledger system in the center of the thing
so it wasn't so bitcoin is fully decentralized
non-trust-based system liberty reserve managed a centralized
system which allowed the secret service to go in and break them apart
there's a great report on the ctc website about this one run through the
secret service but the problem is is that in order for
cryptocurrencies to function in a meaningful way you have to have
a sufficient amount of people within the network to manage it
to enable the non-trust-based transaction scheme
so when you hear about blockchain of any type
if we're talking about blockchain usage in terms of small
scale small scale blockchain usage that doesn't function
efficiently for security purposes because it no longer
matches the requirements set out by quite eloquently by satoshi nakamoto in
his paper which establishes that you need a
certain large scale of network in order to manage the non-trust-based
calculations associated with it um and so even when you go into other types
of of uh of of mechanisms to do this
there's you start losing these trust-based
credentials associated with it um and i think one of the examples i
talked about yesterday at the senate was uh
in the early 2000s 2010 2014 somewhere in that range one of the
major blockchain wallets had uh accumulated enough
computational power to become a 51 computational force within the
blockchain and they actually withdrew systems until the network grew larger so
that they wouldn't be able to double transact
uh within the blockchain now it's still technically possible to double
or double solve a problem in the blockchain it's probabilistically
difficult uh immensely probabilistically difficult
so if if two computers solve the the proof of concept at the same time
and send that out to the network and for some reason they
both hit 50 of the network at the exact same time
that would cause a fundamental challenge in the blockchain
but the larger the network is the much more difficult that becomes
does that make sense so satoshi's paper is really readable by
the way so if anybody's interested it's a great paper to read
okay good yep well thank you to all three of our panelists
um i will turn it back over to dr jardine
sure thank you so