Crypto and Bitcoin in Times of War and Unrest: A New Financial Weapon?

Summary: This article delves into the role of cryptocurrencies, particularly Bitcoin, in times of war and unrest. We will examine how crypto is used to finance protests, conflicts, and even terrorism. Additionally, the article will analyze crypto’s potential as a safe haven asset during periods of political and economic instability, especially as the world witnesses escalating conflicts and unrest.

1. What is Crypto and Why is it Important?

Cryptocurrency, or crypto, is a decentralized digital currency that uses cryptography to control the creation and verification of transactions. It operates on blockchain technology, a digital ledger that stores transactions grouped into blocks and distributed across a network of computers.

It is evident that crypto offers numerous advantages, such as:

Decentralization: Crypto does not rely on any central authority, making it resistant to government control.

Transparency: All transactions are recorded on the public blockchain, enhancing transparency.

Security: Crypto is secured by strong cryptography, protecting it from fraudulent activities.

Efficiency: Crypto transactions are fast and efficient, with low fees.

However, crypto also poses potential risks:

Price volatility: Crypto prices can fluctuate significantly, leading to losses for investors.

Lack of regulation: The lack of clear regulations for crypto can lead to illegal activities.

Energy consumption: Mining crypto can consume vast amounts of electricity.

2. How is Crypto Shaping Conflicts and Wars?

Recently, you have seen the escalation of military conflicts in various countries: the US clashing with Ukraine, European involvement in the war, France deploying troops to support Ukraine, escalating tensions between Iran and Israel, a high number of casualties in the Gaza Strip, protests in Bangladesh aimed at overthrowing the government, ongoing civil war in Myanmar between over a dozen factions, Thailand’s invasion of Cambodia, widespread protests in the UK, riots in Serbia, and the two economic powerhouses, China facing a severe economic crisis rooted in the bursting of the real estate bubble, and Japan facing difficulties with rice supply. In this volatile global context, crypto is gradually replacing traditional currencies, reshaping international conflicts and politics. Crypto is not only an attractive investment opportunity but also impacting conflicts and wars.

3. Financing Protests

Transparency and accessibility: Crypto enables protest groups to raise funds from diverse sources, even from supporters abroad, without relying on traditional financial institutions.

Avoiding control: Crypto can help protest groups avoid government control over their finances.

Example: During the 2019 Hong Kong protests, activists used crypto to raise funds, purchase supplies, and support detained protestors.

In a world increasingly witnessing anti-government protests, crypto has emerged as a new tool for financing these activities. It is important to note that in some foreign countries, protesting is legal; it’s more like a civilized marketing campaign than a riot. Here are some ways crypto is used to finance protests:

1. Raising funds from diverse sources:

Transparency and accessibility: Crypto allows protest groups to raise funds from various sources, even from supporters abroad, without relying on traditional financial institutions.

Difficult to track: Crypto transactions are often conducted anonymously or through digital wallets, making it harder to track the source of funds.

Example: During the 2019 Hong Kong protests, activists used Bitcoin and Ethereum to raise funds from supporters globally. These groups used cryptocurrency trading platforms and digital wallets to collect and distribute money for protestors’ needs.

2. Avoiding government control:

Decentralized system: Crypto is built on a decentralized foundation, independent of government agencies. This allows protest groups to avoid government control and interference with their finances.

Overcoming geographical limitations: Crypto can be transferred easily and quickly across borders, enabling protest groups to access funds from other countries.

Example: During protests in Venezuela, activists used crypto to finance their activities because the Venezuelan banking system is tightly controlled by the government.

3. Supporting protestors:

Purchasing supplies: Crypto can be used to purchase essential supplies for protests, such as masks, gloves, water, construction materials, etc.

Legal assistance: Crypto can be used to fund lawyers and provide legal assistance to those arrested during protests.

Example: During the 2020 protests in Belarus, activists used crypto to fund lawyers defending the rights of those arrested during protests.

4. Enhancing efficiency and transparency:

Fast transactions: Crypto allows protest groups to raise and use funds quickly and efficiently compared to traditional funding methods.

Transparency: Crypto transactions are recorded on the blockchain, enabling donors and protestors to transparently track how funds are used.

Example: Some protest groups have utilized cryptocurrency-based crowdfunding platforms to raise funds transparently and efficiently.

4. Undermining Conflicts, Riots, and Civil Wars

Funding rebel groups: Armed groups and rebel factions can utilize crypto to raise capital, purchase weapons and equipment without going through official channels.

Circumventing sanctions: Crypto can help sanctioned groups access funds from abroad.

Example: During the Syrian conflict, some armed groups used crypto to finance their operations.

Cryptocurrency, as a decentralized digital currency, has become an ideal tool for facilitating covert funding for conflicts. Crypto offers unique advantages, allowing groups involved in conflicts to collect finances discreetly and efficiently compared to traditional methods.

4.1. Supporting Rebel Forces

Funding armed groups: Rebel groups can use crypto to raise funds, purchase weapons and equipment without going through official channels. The decentralized blockchain system allows these groups to access funding from various sources, even from supporters abroad.

Avoiding control: Crypto can help rebel groups avoid government control over their finances. Governments find it difficult to monitor and control crypto transactions, especially when using anonymous wallets.

Example: During the Syrian war, some armed groups used crypto to finance their operations. These groups used cryptocurrency exchanges and anonymous wallets to receive funding from international donors and within the country.

4.2. Circumventing Sanctions

Difficult to track: Crypto can help sanctioned groups access funding from abroad, circumventing international sanctions.

Security and anonymity: Crypto transactions can be conducted anonymously, making it more challenging for intelligence and counter-terrorism agencies to monitor.

Example: During the Venezuelan crisis, some opposition groups used crypto to finance their activities. Crypto helped them bypass US sanctions on the Venezuelan government.

4.3. Challenges to International Security

Increased complexity: Using crypto in covert funding for conflicts increases complexity for counter-terrorism efforts and maintaining international peace. Crypto presents new challenges for intelligence and counter-terrorism agencies in monitoring and preventing illegal cash flows.

Ethical issues: Using crypto in conflicts raises ethical concerns. Crypto can be used to fund groups with illegitimate political motives or groups using violence to achieve their goals.

Overall, using crypto for covert funding in conflicts is a serious issue that requires strict control. Authorities need to collaborate to prevent these activities and protect national security. The need for crypto regulation is growing to create a more secure and stable financial environment.

5. Covertly Funding Terrorist Groups

Enhanced anonymity: Crypto allows terrorist groups to finance their operations anonymously, making it more challenging for intelligence and counter-terrorism agencies to monitor.

Avoiding control: Crypto can help terrorist groups avoid government control over their finances.

Example: The terrorist group ISIS used crypto to raise funds, purchase weapons, and finance their terrorist activities.

Cryptocurrency, with its decentralized, anonymous, and easily transferable features, has become an attractive tool for terrorist groups to fund their operations. Here are some ways crypto is used to support terrorist organizations:

1. Raising funds anonymously:

Avoiding government surveillance: Terrorist groups can use crypto to collect funds from various sources, including individuals, organizations, and even unrelated governments, without going through traditional banking channels where they can be closely monitored and surveilled.

Protecting identities: Crypto allows donors to remain anonymous, avoiding detection by law enforcement.

Example: ISIS used Bitcoin and other cryptos to raise funds from supporters worldwide.

2. Easy and fast money transfers:

Overcoming geographical barriers: Crypto can be transferred quickly and easily across national borders, avoiding obstacles due to foreign exchange control regulations.

Difficult to track: Crypto can be transferred through multiple wallets, making it challenging to track cash flows.

Example: Terrorist groups used crypto to transfer funds to their branches in other countries, where they could purchase weapons, hire people, and carry out terrorist activities.

3. Bypassing sanctions:

Overcoming financial restrictions: Sanctioned terrorist groups can use crypto to access funding from countries not applying sanctions.

Securing assets: Crypto can help secure assets from seizure by law enforcement agencies.

Example: Terrorist groups used crypto to avoid United Nations sanctions, such as the ban on funding terrorist groups in Syria and Iraq.

4. Purchasing weapons and equipment:

Black market: Crypto can be used to purchase weapons, bombs, explosives, and other military equipment on the black market.

Difficult to determine origin: Crypto can help conceal the source of funds used to purchase weapons, making it harder to trace terrorist groups.

Example: ISIS used crypto to purchase weapons and equipment from suppliers in various countries.

5. Funding media operations:

Online propaganda: Crypto can be used to fund online media activities, such as creating websites, videos, and terrorist propaganda materials.

Overcoming censorship: Crypto can help terrorist groups avoid censorship by online media platforms.

Example: ISIS used crypto to fund its social media accounts and propaganda websites to attract new members and spread extremist ideology.

Potential Threat:

Increased terrorist financing: Crypto is posing significant challenges to counter-terrorism agencies globally, making it harder to monitor, identify, and prevent terrorist financing activities.

National security threat: Terrorist groups using crypto to fund their operations can pose serious threats to national security, such as terrorist attacks, violence, and social unrest.

To address this threat, law enforcement agencies and international organizations are collaborating to develop countermeasures:

Promoting crypto regulations: Clear regulations on crypto are needed to restrict its use for illegal activities.

Developing monitoring tools: Advanced tools and techniques need to be developed to monitor crypto transactions and identify terrorist financing activities.

International cooperation: Close international cooperation is needed between law enforcement agencies and intelligence agencies to share information and coordinate actions.

6. Paying for Propaganda Content

Enhanced efficiency: Crypto allows terrorist groups and politically motivated groups to pay content creators quickly and efficiently.

Overcoming censorship: Crypto can help these groups avoid censorship by online media platforms.

Example: Some terrorist propaganda websites have used crypto to pay content creators, such as uploading videos, articles, and propaganda information.

The development of crypto has created a new method for terrorist groups and extremists to pay for propaganda content, enhancing their ability to spread ideology and influence. Here are some ways crypto is used for this purpose:

1. Anonymous and secure payments:

Avoiding tracking: Crypto enables terrorist groups to pay content creators anonymously, preventing law enforcement agencies from tracking and identifying them.

Protecting information: Crypto ensures the security of transactions, preventing intelligence and counter-terrorism agencies from monitoring and blocking them.

Example: A terrorist group could use crypto to pay individuals creating propaganda videos or posting articles supporting terrorism on online platforms.

2. Overcoming geographical barriers:

Global dissemination: Crypto can be used to pay content creators anywhere in the world, allowing terrorist groups to spread their messages more effectively.

Avoiding censorship: Terrorist groups can use crypto to pay for websites and online platforms that are not censored by governments or mainstream media organizations.

Example: Terrorist groups could use crypto to pay for their propaganda websites hosted on servers abroad, avoiding being blocked by authorities.

3. Enhancing efficiency:

Fast transactions: Crypto allows terrorist groups to pay content creators quickly, avoiding delays and risks associated with traditional payment methods.

Low costs: Crypto can help terrorist groups save money when paying content creators due to lower transaction fees compared to traditional payment methods.

Example: Terrorist groups could use crypto to pay content creators for creating propaganda videos or articles inciting violence, attracting new members, and increasing their influence.

Impact of using crypto for propaganda content:

Increased influence: Crypto has facilitated terrorist groups’ access to content creators, enhancing their ability to spread ideology and influence more broadly.

Difficulty in control: Crypto is creating new challenges for authorities in controlling and removing terrorist propaganda content from the internet.

Security threat: Terrorist groups using crypto to pay for propaganda content can increase the risk of inciting violence, spreading extremist ideology, and causing social unrest.

To address this threat, authorities and international organizations need to:

International cooperation: Develop strong cooperative mechanisms between countries to share information, monitor activities funding propaganda content, and stop illegal cash flows.

Technological development: Invest in advanced technologies to track crypto transactions and identify terrorist groups using it to fund propaganda content.

Content control: Enhance online content control, reduce the supply of terrorist propaganda content, and support online platforms in removing illegal content.

7. Crypto as a Safe Haven Asset During Troubled Times

As you can see, political and economic instability can lead to fluctuations in domestic asset prices, declines in domestic investment products, currency depreciation, and inflation. In the current volatile global landscape, Bitcoin and other cryptos can serve as a safe haven asset, or stablecoins can also be considered as safe haven assets.

Preserving value: Crypto can help protect asset value against domestic currency depreciation.

Resisting control: Crypto is independent of the traditional financial system, therefore, it can resist government control and manipulation.

Summary Table: Crypto and Its Uses in Times of Conflict and Instability

Activity	How Crypto is Used	Examples	Risks
Financing Protests	* Raising funds from multiple sources * Avoiding government control	* Hong Kong protests in 2019 * Black Lives Matter movement	* Crypto price volatility can make fundraising difficult * Can be exploited by groups with other political motives
Covertly Funding Conflicts, Riots, and Civil Wars	* Funding rebel groups * Circumventing sanctions	* Syrian war * Yemeni Civil War	* Can prolong and intensify conflicts * Risk of exploitation by terrorist groups
Covertly Funding Terrorism	* Enhancing anonymity * Avoiding government control	* ISIS * Hamas	* Risk of increased terrorism * More difficult to monitor and combat terrorism
Paying for Propaganda Content	* Fast and efficient payments * Avoiding platform censorship	* Terrorist propaganda websites * Social media channels	* Enhanced effectiveness of terrorist propaganda * Easy spread of misinformation
Safe Haven Asset	* Preserving value from domestic currency depreciation * Resisting government control * Stablecoins used as safe haven asset	* The 2008 financial crisis (this is just an example, and Bitcoin didn’t exist at that time) * The current unstable economic situation	* Crypto price volatility can cause losses * Risk of theft, losing control over assets

Note: This table is only illustrative of some ways crypto is used in conflicts and instability. Numerous other aspects require further consideration and research.

Observations

The topic of crypto in times of war and unrest is a heated and complex issue. While crypto is considered a modern financial tool offering numerous benefits for transactions and investments, it also carries potential risks. Crypto can become a tool to support illegal activities like funding terrorism, conflict, and violent protests. This poses significant challenges for nations in controlling and managing crypto, especially in a world witnessing escalating conflicts and unrest. Finding a balanced solution between promoting crypto development and controlling its potential risks is crucial to ensuring national security and financial safety for everyone.

Relevant Information

• Beyond Bitcoin, other cryptos can be used to fund illegal activities, such as Ethereum, BNB, SOL, XRP, DOGE, ADA, AVAX, DOGS, etc.
• Governments and regulatory agencies are seeking ways to manage crypto to prevent illegal activities.
• The need for crypto regulation is increasing to create a safer and more stable financial environment.

Additional Information

• On October 7, Hamas launched a terrorist attack on Israel, killing hundreds of civilians and soldiers and taking dozens hostage.
• Besides Israel’s inability to predict the attack, the question of how Hamas developed its attack capabilities against Israel, a country with superior military power, remains unanswered.
• Some investigations reveal that, in addition to traditional fiat currencies, Cryptocurrency played a significant role in funding Hamas to acquire the necessary attack capabilities.

Conclusion

Crypto’s role in times of war and unrest is complex. Crypto can be used for both legal and illegal purposes. We need to closely monitor these developments to implement appropriate measures for effectively managing crypto and preventing illegal activities.

Note: Using crypto in illegal activities is a serious issue that requires strict control. Authorities need to collaborate to prevent these activities and protect national security.