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The recent terrorist attack on Paris has caused a furore among the international community, especially in Europe and United States. Soon after the attacks, multiple reports started circulating around stating that the terrorists were funded using bitcoin. The governments that never took anonymous hacktivists seriously suddenly started considering their statements about bitcoin. Now, based on those unverified reports Europe is planning to reconsider its stance on bitcoin and other digital currencies.
The European Union and United States have been unsuccessful so far in thwarting the spread of ISIL. It is also claimed that the same NATO allies were responsible for creating the terrorist organization in the first place by destabilizing the region in the name of democracy. Whether it is s conspiracy theory or not, still they seem to be sitting on their hands and the current move to crack down on digital currencies instead of appearing clueless about ways to tackle it.
One of the Anti-ISIL hacktivist groups recently confirmed that it found over 9000 bitcoins worth of about $3 million in bitcoin wallets which are thought to be owned by the terrorist organization. However, no one has accounted for the actual fiat currency that is currently in ISIL’s possession or the proceeds from freely trading oil and other resources. Unlike bitcoin, cash holdings are virtually untraceable and the amount of US Dollars and other currencies in circulation in ISIL controlled regions is definitely a lot more than bitcoin.
For those who understand the world economy, bitcoin makes up to less than one percent of the total world economy where as hundreds of billions in cash is unaccountable. Even the recent UK Treasury report on risk assessment of money laundering and terrorist financing confirms that cash, bank transfers and other traditional monetary systems present a greater risk than bitcoin when it comes to illegal use of funds.
The same view is also shared by Leonid Bershidsky, a writer, editor and columnist. His views regarding bitcoin and terrorism was published recently on Bloomberg View. Governments and intelligence agencies have a better chance of tracking the terrorists through bitcoin than following the cash trail, and given the minute share of bitcoin, compared to fiat currency in the world economy, it is better for the EU to work on tightening the flow of funds in the form of Euros or US Dollars than bitcoin.
He also argues that if ISIL was indeed using bitcoin to fund their activities, there would be a lot of transactions happening over the Bitcoin network, resulting in a drastic rise in bitcoin value. Also, by imposing strict restrictions on bitcoin, the EU or any other nation will hamper innovation and progress in the fintech sector, leading to billions of dollars in losses to the country’s economy.
References:
Leave Bitcoin Alone. Abolish Cash Instead - Leonid Bershidsky (Bloomberg View)
HM Treasury Report - UK national risk assessment of money laundering and terrorist financing
ISIL Militants Linked To France Terrorist attacks Had A Bitcoin Address with 3 Million Dollars - NewsBTC
