Bitcoin and its extended family of cryptocurrencies are fascinating for more reasons than I could possibly list here, although I think the most notable is how they’ve triggered an innovative wave of monetary rethinking throughout various sectors. If bitcoin isn’t a game changer, it’s at least one hell of an expansion pack.
The cryptocurrency craze has catalyzed a swift period of evolution for online contracts, transactions, and investments. At every step of the way, economists and academics have been peering out from the periphery attempting to make sense of it all. What we’re looking at is a brave new world for online economies as well as a brand-new arena for research and analysis.
For example: Two professors from Cornell, Ari Juels and Elaine Shi, along with University of Maryland researcher Ahmed Kosba released a paper this past week detailing the possible breadth of innovation bitcoin offers to some of its most invested stakeholders: criminals. We’re learning that, as with most technological breakthroughs, progress has a dark side.
MIT Technology Review‘s Tom Simonite covered the three authors’ concerns in a piece over at that site earlier this week:
“A new bitcoin-inspired technology that some investors believe will be much more useful and powerful may be set to unlock a new wave of criminal innovation.
That technology is known as smart contracts — small computer programs that can do things like execute financial trades or notarize documents in a legal agreement. Intended to take the place of third-party human administrators such as lawyers, which are required in many deals and agreements, they can verify information and hold or use funds using similar cryptography to that which underpins bitcoin.”
What does that all mean? Juels, Shi, and Kosba demonstrate that these types of contracts could allow for easier planning and heightened anonymity for conspirators of criminal acts.
“One example is a contract offering a cryptocurrency reward for hacking a particular website. Ethereum’s programming language makes it possible for the contract to control the promised funds. It will release them only to someone who provides proof of having carried out the job, in the form of a cryptographically verifiable string added to the defaced site.
Contracts with a similar design could be used to commission many kinds of crime, say the researchers. Most provocatively, they outline a version designed to arrange the assassination of a public figure. A person wishing to claim the bounty would have to send information such as the time and place of the killing in advance. The contract would pay out after verifying that those details had appeared in several trusted news sources, such as news wires.“
What we’re seeing is the potential for digital technology to enable real-world crime by turning criminal acts into attainable bounties. In a way, smart contracts could be made to resemble video game achievements. Accomplish “X” task in “Y” way to receive your reward.
Of course, there are plenty of limiting aspects to the smart contract technology that make it impractical for the typical lowlife who lacks keen programming skills. We’re not going to see all criminal activity automatically hop online overnight. Cryptocurrency innovations will continue to be net positives for the foreseeable future.
But, as mentioned, progress almost always has a dark side. Innovation creates many varying byproducts to be exploited by those with the wrong intentions and proper knowhow. It’ll be fascinating looking forward to keep an eye on where else the cryptocurrency craze takes us.
Read more at MIT Technology Review
Below, bitcoin expert Wences Casares extols cryptocurrency as a broad social experiment while advocating for some basic regulations to make sure it’s not exploited by those with malintent.
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