Here’s something I’m surprised we don’t see more of. Pavel Lerner, CEO of the cryptocurrency exchange Exmo Finance, has been released by kidnappers after the payment of a $1m bitcoin ransom. According to the Financial Times, the Ukrainian interior minister specifically labelled the crime “bitcoin kidnapping and extortion”. I would have asked for Monero rather than traceable bitcoins, but there you go.
Given the number of bitcoin millionaires wandering around – I bump into them at every conference I go to these days – you would have imagined that the more enterprising and forward-thinking members of the Cosa Nostra (or the coder nostra, as I call them) were out in force. Stand around outside Consensus or Money2020 and bundle most anyone into a van and drive them off into the desert and you’re sure of a Bitcoin, Ripple, Ether or Bitcoin Cash payday. It’s a puzzle that this doesn’t happen all the time, though it’s entirely possible that it does and that I never get to hear about it because I’m not rich enough, just like those Silicon Valley sex parties.
So is kidnapping for cyber ransom the defining crime of the 21st century? Actually, I suspect not. What if, rather than traditional money-related crimes such as kidnapping and extortion, there were much better crypto crimes invented in parallel to the new forms of crypto money made available by technology? Is there such a crime that’s unique to this virtual world? Not a virtual shadow of a crime that has been around since year zero, but a wholly new crime for the virtual world? Actually, one such crime was invented many years ago. It’s the “assassination market” that I wrote about in Before Babylon, Beyond Bitcoin.
A fiver well spent
An assassination market is a prediction market where any party can place a bet (using anonymous cryptocurrency through the TOR network) on the date of death of a given individual, and collect a payoff if they “guess” the date accurately. This would incentivise the assassination of specific individuals because the assassin, knowing when the action would take place, could profit by making an accurate bet on the time of the subject’s death.
Here’s how the market works: Someone runs a public book on the anticipated death dates of public figures. If I hate a pop star or politician, I place a bet on when they will die. When the person dies, whoever had the closest guess wins all of the money, less a cut for the house. Let’s say I bet a fiver that a specific TV personality is going to die at 9am on April Fool’s Day 2018. Other people hate this personality too and they put down bets as well. The more hated the person is, the more bets there will be.
April Fool’s Day comes around. There’s 10 million quid bet on this particularly personality. I pay a hitman five million quid to murder the personality. Hurrah! I’ve won the bet, so I get the 10 million quid and give half to the hit man. I don’t have to prove that I was responsible for the assassination to get the money and no one can pin the crime on me because I paid the hitman in untraceable, anonymous, electronic cash as well. I’m just the lucky winner of the lottery. If someone else had bet 31 March and murdered the television personality themselves the day before, then it would only have cost me a fiver, and I would have regarded that as a fiver well spent.
This is a rather old idea that originated, as far as I know, with Jim Bell, who back in 1995 wrote an essay on “assassination politics” that brought the idea to the popular (well, among a nerd subgroup) imagination. I suppose it was inevitable that the arrival of digital currency would stimulate thought experiments in this area, and it was interesting to me then (and now) because it showed the potential for innovation around digital money even in the field of criminality.
If I hire thugs to lure a crypto baron to a hotel room and then beat him up to get $1m in bitcoins from him (as actually happened in Japan recently), that’s just boring old extortion. If I use Craigslist to lure a HODLer to a street corner and then pull a gun on him and force him to transfer his bitcoins to me (as actually happened in New York in 2015), that’s just boring old mugging.
Now, as I explained in the FT some years ago, bitcoin isn’t a very good choice for this sort of cyber criminality. It’s just not anonymous enough for really decent crimes or the darkest dark nets. Hence my scepticism about the claims that bitcoin’s long-term value will be determined by malevolent money mischief. But as I explained to students at Winchester College last week, if there were to be an actually untraceable cryptocurrency, then an assassination market is a much better bet for the coder nostra than the physically demanding felony of kidnapping.
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Image by Portrait Images Asia by Nonwarit, Shutterstock.com