The advent of a new crypto danger to the government

It’s interesting to think what will happen when people have access to crypto tools that enable them to send money, form groups, and enter into financial contracts — all with greater secrecy than Bitcoin offers. If the spread of social media to the Middle East sparked the Arab Spring, let’s imagine what will happen when people have access to these tools.

Amir Taaki, a pioneering Bitcoin developer who is presently collaborating with a global team of anarchist programmers on cutting-edge software meant to answer this question, made the astonishing claim in his pitch. The programmers think their system will pose a greater threat to governments than other developments on the internet over the past 20 years.

According to numerous members and the content of a draft announcement, the group is getting ready to deploy a testnet, a crucial early milestone on the road to launching a finished product, as soon as Thursday afternoon.

Law enforcement and cybersecurity professionals are still battling the effects of the first generation of cryptocurrency-related technology 14 years after Bitcoin was originally introduced, including money laundering, unregistered securities offers, and ransomware attacks. However, developers all around the world are vying to implement increasingly sophisticated variations on the original concept as regulators and law enforcement work out how to handle the first wave of blockchain networks.

The upcoming launch demonstrates that radical anti-government ideologies continue to be a driving force in the evolution of many crypto networks, even though many of these next-generation tools are being developed to ensure greater legal compliance than their predecessors, or even for use by governments themselves.

Going Dark

The anarchist project’s name, DarkFi, alludes to the “Going Dark” issue that widespread encryption presents for law enforcement organizations attempting to monitor digital activities as well as “DeFi,” the abbreviation for cryptocurrency-based decentralized banking.

Members of the group, according to representatives, are dispersed throughout the Middle East and Europe. Despite the fact that the software is marketed as a tool for protecting users from governmental aggression, law enforcement officials assert that the increased usage of improved encryption makes it more difficult to apprehend terrorists, drug traffickers, and people traffickers.

The potential for advanced encryption to hide crime is alarming, according to Bill Callahan, a former Drug Enforcement Administration agent who oversaw money laundering investigations during a two-decade tenure at the agency. He added that new encryption tools must strike a balance between individual freedom and governmental oversight for the sake of public safety.

Callahan, who now works for Blockchain Intelligence Group, which conducts forensic examinations of crypto activities, stated that:

We have a fair expectation of privacy. We don’t have an absolute right to privacy.

Callahan, who was not aware with the specifics of DarkFi, claimed that anyone responsible for creating and managing crypto networks might be held legally liable for crimes committed on those networks. They run the risk of being held accountable if they allow malicious actors to use this, he warned.

If developers openly declare their plan to disobey the law, the risk only increases. They will most likely been persecuted and given as an example, according to Callahan.

The DarkFi project heavily relies on zero-knowledge proofs, a cryptographic technique created by mathematicians in the 1980s that enables targeted verification of encrypted information while maintaining the privacy of the majority of the information. These tools are being developed for use by governments and legally compliant businesses.

While expressing doubt of the project’s developers’ aim, experts who examined DarkFi’s announcement and website noted the project appeared to be technically sophisticated.

Matthew Green, a computer science professor at Johns Hopkins University and a co-founder of Sealance, a business that seeks to incorporate advanced encryption into a legally acceptable form of crypto, said,

They appear like they’re actually putting a lot of engineering effort into it. It’s a significant undertaking. They intend to accomplish something extremely, extremely powerful.

Evan Shapiro, the CEO of the Mina Foundation in San Francisco, which promotes a different next-generation crypto network supported by venture capitalists, said, “They do know how to accomplish it and they’re thinking right.

Shapiro, however, claimed that DarkFi lagged behind a few venture-backed encryption protocols that had comparable technological goals but were created for more traditional commercial uses in some key ways. He claimed that although drawing applications and users more in line with its anarchist ideology, DarkFi was expected to differ little from these more commercial ventures in terms of technical aspects.

Taaki, who has recently lived in London and Syria but remained silent when asked where he is now, claims that the new platform will allow for greater privacy than business-oriented enterprises that can’t afford to defy government demands to maintain legal conformity.

In other words, the organization thinks that the high-tech cat-and-mouse game that has been going on for more than a decade between renegade crypto coders and governments is still just getting started.

In a way, this continues the goals of the first cryptocurrency, Bitcoin, which was created especially to oppose governmental control over banking and money. Governments have discovered measures to lessen the threat presented by the original cryptocurrency and its immediate successors as it has developed and garnered wider use.

Even though Bitcoin uses anonymous addresses, for instance, all network transactions are visible to the public, and law enforcement agents have developed methods to link them to specific individuals. According to a research published last year by analytics company Chainalysis, even if the overall amount of illegal cryptocurrency activity has increased in recent years, its proportion of transaction volume has decreased to new lows as legitimate usage has skyrocketed.

On the technological front, a study financed by the Defense Advanced Research Projects Agency and published last year discovered multiple Bitcoin security holes that a hacker with the resources of a state-sponsored adversary could use to take down the network as a whole.

Since Bitcoin’s debut, thousands of forerunners have tried to enhance certain aspects of its design. Numerous more recent systems, starting with Ethereum, which debuted in 2015, have offered more sophisticated features including smart contracts, which can automate financial activities. Others have provided further levels of privacy, such as Monero, which after its inception in 2014, became a cryptocurrency of choice for criminal use.

Blockchain systems that combine secrecy with next-generation capability in a single system are still being developed, though. According to Taaki, doing so will contribute to “the destiny of crypto,” which is to promote individual freedom at the expense of governing bodies.

People will be able to create organizations that collectively raise and distribute money in complete anonymity thanks to capabilities promised by DarkFi. This, according to Taaki, was partly motivated by the group’s experience creating a crypto-based organization to help Julian Assange, the incarcerated founder of Wikileaks, using available technology.

But this anarchist vision still faces political and technical challenges.

Green, who played a key role in the creation of ZCash, an early privacy-focused cryptocurrency released in 2016, said:

Building private blockchains that can accomplish things like Ethereum is incredibly hard.

Green stated that he also thinks that developments in network architecture and encryption could lead to further crypto-driven upheaval. But at least for the time being, he claimed, governments have demonstrated their ability to stifle illicit activity via networks and that they will do so.

He said that we are currently in the very beginnings of the technology. The real potential of it will likely not be realized until 10 years from now.

Related

• Emerging trends driven by Blockchain: censorship resistance and nodes disrupting tech giants
• Edward Snowden: Crypto is Heading in the Wrong Direction
• White House: Crypto Regulation Drama