RAND Corporation: Terrorist Groups Could Deploy Virtual Currencies In The Future

RAND Corporation, a US think tank, recently released a report that examines the potential of non-state actors to increase their political and/or economic power by deploying a virtual currency (VC) for use in regular economic transactions.

The report, titled “National Security Implications of Virtual Currency”, addresses some key issues such as the reasons as to why a non-state actor, including terrorist and insurgent groups, would deploy a VC; what steps should be taken by a government or organization to successfully technologically disrupt a VC deployment by a non-state actor; additional capabilities that become possible when the technologies underlying the development and implementation of VCs are used for purposes broader than currency and many others.

“VC deployments are attractive in developing countries and in countries undergoing internal turmoil, where the existing financial infrastructure is either insufficient or weakened”, the report said. “The rapid deployment of a VC over a large geographic area would likely be less complicated than deploying more common currencies, such as those based on commodities or paper-based currencies.”

However, the report added that a non-state actor's VC (including Bitcoin-like currencies) would likely be vulnerable to cyber attack by a sophisticated adversary. Moreover, creating new, usable yet reliable digital currencies may pose great challenges, particularly for a non-state actor without technical expertise.

“Despite numerous hurdles, trends indicate a future in which VCs could be deployed by non-state actors or other organizations”, it added.

The report further emphasizes that the Department of Defense should be aware that VCs are an increasingly technologically feasible tool for non-state actors to deploy in order to increase their political and/or economic power. Also, the trend towards decentralized cyber service will further simplify getting access to cyber services by unsophisticated cyber actors, which could enable unprecedented global access to information and communication services that is agnostic to the national security interests of the U.S.

The research was sponsored by the Office of the Secretary of Defense, and it was conducted within the International Security and Defense Policy Center of the RAND National Defense Research Institute.