When bitcoin first arrived on the scene years ago, one of the concerns at the time was the use of it for transactions related to criminal activities, such as some of those conducted through the now-defunct darknet marketplace Silk Road. Then the FBI shut down Silk Road, and it seemed like blue skies for bitcoin. However, now we’re hearing that the cryptocurrency has another controversial group of users amid reports that extremists use bitcoin to dodge restrictions placed on them by tech companies and payment processors.
Extremists use bitcoin to dodge tech firms, payment processors
The violent Unite the Right rally over the summer in Charlottesville served as the tipping point for the pushback against the so-called “alt-right” movement. Following that rally, web hosting services and other technology firms attempted to sever a major artery for extremist groups: their ability to conduct transactions. Apple Pay and other tech firms were quick to publicize their move to stop supporting websites that sell merchandise targeting white supremacists, which led affected groups to look for alternate methods of payment to transact in.
On Tuesday, The Washington Post reported that extremists use bitcoin now to get around the tech industry’s crackdown, noting that prominent alt-right member Richard Spencer even described bitcoin as “the currency of the alt right.” The article seems to argue that extremists could be driving the latest bitcoin boom. At the very least, they are likely benefitting from the rally, if not driving it.
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Who’s driving the bitcoin rally?
The recent bitcoin boom was put on ice temporarily, but another rally could be in the making as the price is back on the rise, triggering speculations about exactly who is fueling this new rally. Cryptocurrency experts noted recently that there seemed to be a rotation out of bitcoin and into other cryptocurrencies, such as bitcoin cash, ethereum and others, driven by the skyrocketing value of bitcoin.
Bitcoin prices were already on the rise at the beginning of this year, but The Washington Post notes that the sharp price increase in the cryptocurrency began in August. That does roughly line up with the timing of the crackdown on extremist groups by website hosting services, tech firms and payment processors, but does that actually mean that extremists are driving the rally?
A winning lottery ticket
Even though bitcoin prices have been volatile recently, anyone who started buying the cryptocurrency in August has enjoyed significant returns as its value has quadrupled. This month brought a broader legitimization of bitcoin as a number of mainstream markets started to support trading of it, and the price closed in on $20,000.
According to the Post, experts say the proceeds from sales of bitcoins purchased in August as a way to circumspect the crackdown on extremist groups can now be used for the same types of activities companies tried to prevent. On one hand, if extremists use bitcoin, they can turn a hefty profit by selling any coins they purchased in August.
On the other hand, the cryptocurrency makes it possible for groups to continue conducting business even if traditional payment processors have cut them off. Bitcoin is based on blockchain technology, a digital ledger that isn’t regulated and leaves no physical trace.
Spencer had told the Post that the alt-right has “faced enormous problems from being de-platformed.”
“Bitcoin at least, from what I can tell, is not something from which we can be de-platformed,” he also told the newspaper.
Dislike all bitcoin or just dislike some users of bitcoin?
It’s unclear how many extremists use bitcoin, although the Post states that the Southern Poverty Law Center was able to trace approximately 200 bitcoin wallets to extremists.
Not everyone is quick to trace bitcoin’s surging price to extremist groups. Earlier this month, Bitsonline argued that the link between white nationalists and bitcoin is “tenuous” at best. It also described such narrative as “dangerous and irresponsible,” adding that it could “end up hurting vulnerable demographics if it is allowed to propagate.”
It is true that anyone—even those cut off by traditional payment processors—can use bitcoin. As a result, the very nature of the technology makes it a prime currency for anyone who can’t use centralized money for any reason, whether it’s because the activities they are conducting are illegal, ethical or risky for some other reason. Bitsonline argues that the cryptocurrency can be of value to “under-served people exposed to extreme risk” just as much as it can for extremists or criminals.
“Losing sight of bitcoin’s usefulness because bad people use it is a lot like boycotting shoes or cars because bad people use them, too,” the blog states. “It’s utterly nonsensical.”