[2015] National Security Implications of Virtual Currency

This report examines the feasibility for non-state actors to increase their political and/or economic power by deploying a virtual currency (VC) for use in regular economic transactions. Bitcoin is a digital representation of valued currency that, like conventional currency, can be transferred, stored, or traded electronically. VCs are neither issued by a central bank or public authority nor are they necessarily linked to a fiat currency (dollars, euros, etc.). This form of currency is accepted by people as a means of payment. We addressed the following research questions from both the technological and politicaleconomic perspectives:

  • Why would a non-state actor deploy a VC? That is, what political and/or economic utility is there to gain? How might this non-state actor go about such a deployment? What challenges would it have to overcome?
  • How might a government or organization successfully technologically disrupt a VC deployment by a non-state actor, and what degree of cyber sophistication would be required?
  • What additional capabilities become possible when the technologies underlying the development and implementation of VCs are used for purposes broader than currency?
  title={National Security Implications of Virtual Currency},
  author={Baron, Joshua and O’Mahony, Angela and Manheim, David and Dion-Schwarz, Cynthia},
  journal={Rand Corporation},
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This was shared by @CorujaTejedora as part of FRP-32: Socioeconomic effects of cryptocurrency redistribution in the Costa Rican rural town of Tinamastes.

Statement: Baron et al. (2015) explore the different challenges of deployment for VC (virtual currencies), from lack of accessibility/technological tools to attacks by cyber-terrorist or nation-states that may perceive the VC as threat to National Security.

Description: According to Baron et al. the main challenges to deploying a VC are: access to technological sophistication, access to the VC, transaction anonymity together with transaction transparency, protection against cyber threats. All of this builds up the trust in a particular VC which in turn builds up user engagement leading to successful deployment of a particular VC.

Comments: The authors do not identify the complexities of understanding any VC as a threat to National Security, considering the historical conceptualization of National Security as a power ideology used and misused by the imperialist nations to maintain, regain and reshape control, power, resources and capital in their favour.

Evaluations: This research is useful in as much as it helps us identify the main challenges in employing a VC in Tinamastes day to day use.

Key Words: Virtual Currency (VC).