I’ve been wondering why we don’t see more bitcoin crime. This sort of thing, I mean. Pavel Lerner, CEO of a cryptocurrency exchange, was released by kidnappers on payment of a $1 million bitcoin ransom. According to the Financial Times, the Ukrainian interior minister specifically labelled the crime “bitcoin kidnapping and extortion”.
(I would have asked for Monero, rather than traceable bitcoins, but there you go.)
Given the number of Bitcoin billionaires out there — I seem to bump into one at every conference I go to these days — you would have imagined that the more enterprising and forward thinking members of the cosa nostra (the coder nostra, as I call them) would be out in force to exploit this new opportunity. All they would have to do is to stand around outside Consensus or Money2020 and bundle most anyone into a van, drive them to a secluded spot and then pick up their Bitcoin, Ripple, Ether or Bitcoin Cash payoff. It’s a puzzle that this doesn’t happen all the time, although it’s entirely possible that it does and that I never get to hear about it because I’m not rich enough, just like with those Silicon Valley sex parties.
So is kidnapping for cyber-ransom the defining crime of the 21st century? Is this really a cyber-crime? Or is it just the same old crime that we had before Mr. Nakamoto’s invention? If Bitcoin is all that, where’s the commensurate innovation from the criminal fraternity? What if, rather than traditional money–related crimes such as kidnapping and extortion, there were much better crypto-crimes invented in parallel with the new forms of crypto-money made available by technology? Is there such a crime that is unique to this virtual world? Not a virtual shadow of a crime that has been around since year zero, but a wholly new crime for the virtual world? Actually, one such crime was invented many years ago. It's the "assassination market" that I wrote about in "Before Babylon, Beyond Bitcoin".
An assassination market is a prediction market where any party can place a bet (using anonymous crypto-currency through an anonymous crypto-network such as TOR) on the date of death of a given individual, and collect a payoff if they “guess” the date more accurately than everyone else betting on the death of the same individual. This would incentivise the assassination of specific individuals because the assassin, knowing when the action would take place, could profit by making an accurate bet on the time of the subject’s death.
Here’s how the market works. Someone runs a public book on the anticipated death dates of public figures. If I hate some particular pop star or politician, I can place a bet on when they will die. When the person dies, who ever had the closest guess wins all of the money, less a cut for the house. Let’s say I bet a fiver that a specific TV personality is going to die at 9am on April Fool’s Day 2018. Other people hate this personality too and they put down bets as well. The more the person is, the more bets there will be.
April Fool’s Day comes around. There’s ten million quid bet on this particularly personality. I pay a hit man five million quid to murder the personality. Hurrah! I’ve won the bet, so I get the ten million quid and give half to the hit man. I don’t have to prove that I was responsible for the assassination to get the money and no-one can pin the crime on me because I paid the hitman in untraceable anonymous electronic cash as well: I’m just the lucky winner of the lottery. If someone else had bet 31st March and murdered the television personality themselves the day before, then I would be one of the loser. But hey, it would only have cost me a fiver, and I would have regarded that as a fiver well spent.
The average nutter might think it a form of modern entertainment to invest £20 quid a month on four bets! Pop stars, politicians, bankers and all sorts of people would find themselves checking their assassination lottery pools ten times a day just as they check on their Twitter followers now. I’m not sure whether it would be a badge of honour to discover that your assassination pool had gone over a million quid or a sure sign that you should go into the witness protection programme.
To be honest this is a rather an old idea that originated, as far as I know, with Jim Bell. Way back in 1995, Mr. Bell wrote an essay on “assassination politics” that brought the idea to the popular (well, amongst a nerd subgroup) imagination. I suppose it was inevitable that the arrival of digital currency would stimulate thought experiments in this area and it was interesting to me then (and now) because it showed the potential for innovation around digital money in adjacent sectors. If I hire thugs to lure a cryptobaron to a hotel room and then beat him up to get a $1m in bitcoins from him (as actually happened in Japan recently), that’s just boring old extortion. If I use Craigslist to lure a HODLer to a street corner and then pull a gun on him and force him to transfer his bitcoins to me (as actually happened in New York back in 2015), that’s just boring old mugging. What if new, bigger and better crimes are just around the corner though.
"Privacy coins such as monero, designed to avoid tracking, have climbed faster over the past two months as law enforcers adopt software tools to monitor people using bitcoin… For ransomware attacks, monero is now 'one of the favorites, if not the favorite’."
This followed from the obvious fact that, as I explained in the FT some years ago, Bitcoin is not a very good choice for this sort of cyber-criminality. It’s just not anonymous enough for really decent crimes or the darkest darknets. Hence my scepticism about the claims that Bitcoin’s long term value will be determined by malevolent money mischief. If there is anonymous, untraceable cryptocurrency out there then an assassination market is a much better bet for the coder nostra than the physically demanding felony of kidnapping.