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National Security Implications of Virtual Currency: Examining the Potential for Non-state Actor Deployment

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Technical Report

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RAND Corporation -NDRI Santa Monica United States

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This report examines the feasibility for non-state actors to increase their political andor 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 political economic perspectives Why would a non-state actor deploy a VC That is, what political andor 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 This report should be of interest to policymakers interested in technology, counterterrorism, and intelligence and law enforcement issues, as well as for VC and cybersecurity researchers.

Subject Categories:

  • Economics and Cost Analysis
  • Government and Political Science

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