So you might have heard that a Russian politician named Andrei Svintsov claims that cryptocurrencies like Bitcoin are actually a CIA plot to “finance terrorism and revolutions”. He sure sounds like the kind of person who sees the Illumanati and underground reptilian people behind everything that goes on behind the scenes, doesn’t he? While it may be remotely possible that Satoshi Nakamoto was involved in public service at some point in his or her lifetime, I consider it unlikely that a government agency would create a technology that could undermine existing financial institutions and get away with it for long.
There may be evidence that Islamic terrorism is using the Dark Web to raise Bitcoin if you go by what a Singapore-based cybersecurity firm called S2T is saying. ISIS has made death threats against senior Twitter employees for efforts to shut down their social media accounts, which may be a sign of the kind of desperation that would cause radicals to take advantage of technologies like TOR. Ido Wulken of S2T said of it, “Due to the increasing efforts of social media websites to close ISIS-related accounts, it was estimated that global jihad activists would seek to refuge in the dark web.”
However, this doesn’t mean that Bitcoin was created to fund terrorism. Even if ISIS is somehow receiving Bitcoin, this is simply another example of bad actors taking advantage of a new technology. In fact, some Russian politicians do seem to be softening towards cryptocurrencies if the recent reduction in fines from $1,314 to $1,050 for using Bitcoin is any indication.
“With experience and further innovation, I think it is very possible that the blockchain will have a very bright and promising future,” Federal Financial Monitoring Service chief Evgeny Volovik said of it.
If the CIA was involved in creating Bitcoin to finance terrorism, it’s showing signs of backfiring. Most Bitcoin users see it as a form of investment that can be used for the occasional purchase, a workaround for the fact that banks, Paypal and/or credit cards aren’t readily accessible in their region, or as a way to stick one in the eyes of arrogant financial institutions and corrupt politicians. Bitcoin users can choose to donate to any non-profit organization on a long list of charities that accept Bitcoin donations and have nothing to do with terrorism. Generous owners of mining rigs have donated hashrates to charity that includes a German organization that provides for kids who have been orphaned by AIDS. These aren’t the kind of people who support a terrorist organization like ISIS because they recognize it for what it is: just another violent organization that is seeking to grab power.
One would imagine that the U.S. federal government would be throwing some kind of back-handed tantrum if they had gotten stuck with a digital currency they lost control of and can’t admit to having created. A federal government that is in a bad mood could easily cause headaches for Bitcoin entrepreneurs.
However, eight members of Congress have received Bitcoin donations – completely legally, too, according to statements from the Federal Election Commission – and Congress has been pretty quiet about cryptocurrencies beyond one hearing held by Senate subcommittees in 2013 that was mostly positive, with Bitcoin experts handily shooting down comparisons between Bitcoin and porn and expressing a willingness to fit into existing business regulation, and another hearing on the topic held by the U.S. House Small Business Committee on April 2, 2014 that ended on an uncertain note regarding the future of Bitcoin. It could be that Congress is mostly taking the same lassez-faire attitude towards digital currencies that it took towards the early Internet.
Federal agencies and local governments are a different matter. The IRS has declared Bitcoin to be property that would only be taxed if it is spent or sold. New York City recently released an updated version of the BitLicense. It is possible that there is a certain amount of communication between federal agencies. If I bought into the Russian conspiracy theory that the CIA is behind Bitcoin, I would say that the CIA could have sent a memo around to federal regulators and local and state governments asking them to make life difficult for cryptocurrency enthusiasts – in which case some states like Utah would have simply refused to cooperate.
A more likely scenario is that the CIA was as surprised by the way Bitcoin took off as everybody else who hadn’t been aware of its existence practically from the day that it came to light in 2009. When you could still get a Bitcoin for less than a dollar, it wouldn’t have been very useful for funding terrorism on the level that organizations like ISIS would have preferred.