Recently, a new suggestion by Senator Elizabeth Warren made the news. To improve cybersecurity, she would ban Bitcoins and all other cryptocurrencies from being traded in the United States. While the proposal might fit into her broader crusade against digital assets, it is worth noticing that cryptocurrencies play a significant role in ransomware. Thus, let us look at cryptocurrencies, ransomware, and human nature in more detail to determine how a ban might affect cybersecurity.
What are Cryptocurrencies?
The idea behind Bitcoins and all cryptocurrencies is that the blockchain, a series of mathematical calculations, provides definite proof of who owns every coin. With our current computing power, the equations behind the blockchain are a one-way street. Once a miner, the software creating the coin, has minted a new coin or recorded a transaction, changing the entry is impossible without altering the subsequent chain. Thus, you have the perfect currency. No one can forge it, and everyone can determine the ownership by finding the last relevant entry. However, the ownership aspect refers to which wallet, the storage of a coin, owns the coin. The ownership of the wallet is anonymous.
How do Cryptocurrencies relate to Cybersecurity?
The anonymity of the wallet and, thus, the missing association between a natural person and coins makes cryptocurrencies attractive. No one knows who owns a wallet, and there is no way to mark a coin as crime-related.
Consequently, when a ransomware attack hits, the criminals usually demand to be paid in crypto. Once a crypto locker hits, it will encrypt all the data on the network. Once done, it will show a screen instructing the user or administrator to pay a fraction of a Bitcoin worth hundreds or thousands of dollars to get the key to unlock the data.
Thus, Bitcoin is the payment to free the data. Until now, it is up to the victim to determine whether to pay or fight back.
How a Ban would change Cryptocurrency Payments
Banning all cryptocurrency transactions in the US would consequently disrupt the payment flow. If an individual user or company cannot buy coins, they don’t have a way of paying the criminals. As time passes, the criminals will realize they don’t profit from the efforts and focus on other activities. At least, this is the theory behind it.
In practice, it will be more complex. It will reduce the flow of money from consumers to criminals. For most of us, committing a low-level securities crime is enough of a deterrent to not pay for freeing our data. For companies, the situation will be more nuanced.
We have a comparable situation in the insurance market. You cannot legally insure your business against fines and penalties in numerous US states. Consequently, enterprises seek insurance outside of the US, often utilizing a subsidiary. While it complicates things, it helps obtain legal coverage that would otherwise be unavailable.
The same will likely happen with Cryptocurrencies. The workaround remains legal and eliminates the risk of wrongdoing and the feeling of it.
The Human Component
While the backdoor would be open to anyone, US security laws and human psychology would block most of us from utilizing it. Financial marketplaces outside the US, including most legal crypto exchanges, are closed to US residents, as they would otherwise be subject to US regulations. Consequently, most exchanges won’t accept anyone in the US as a customer.
Secondly, our nature wants us to conform to societal expectations. Circumventing the law isn’t something we routinely engage in. We follow speed limits and pay taxes, even knowing no one is watching.
The Education Component of a Cryptocurrency Ban
The second part of a cryptocurrency ban, is creating awareness about the money flow. For most of us, cryptocurrencies are nothing more than a technological toy. There is no applicability to real life, and it feels even less like money than credit cards. Thus, we have fewer moral quarrels about giving criminals funds if we think it is “play money.”
An outright ban on crypto might change that. Why would the government go through the hassle of banning it if it wasn’t dangerous?
Further, if most of us become aware of the implications of financing crimes by paying ransom, we might see shareholder pressure pick up. If enough of us and our money managers put pressure on corporations, they will conform to the spirit of the law and not find ways to circumvent a ban.
Stopping Crypto Payments might Stop Criminals
Without having funds available, the premise of building ransomware networks becomes an expensive hobby instead of a lucrative enterprise. An outright ban utilizes our wish to conform to society and will stop consumers and small businesses from giving in to criminals. While large corporations might find a way to circumvent a ban, the education component might turn into shareholder pressure to not pay criminals. Thus, an outright ban on crypto will improve cybersecurity.