Ban cryptocurrencies to tackle cyber attacks
From Misha Cohen, London, UK — This is Friday’s most read letter
Sir, An effective policy to curtail ransomware which has caused havoc in the UK’s National Health Service and elsewhere would be to ban the use of bitcoin and similar “cryptocurrencies”. Anonymity and fungibility have always made cash the favoured tool for illegal activities. Credit cards, cheques and bank transfers are too easily traceable. Bitcoin moves the criminal’s favoured financial tool online, with disastrous consequences.
The world now faces a historic choice: either allow cryptocurrencies to proliferate, until it is too late to ban them, or eliminate such tools and enjoy an era in which illegal activity online is circumscribed. Bitcoin was introduced in 2009. It has fulfilled no useful purpose in the financial system. Its only major effect has been to facilitate massive criminal activity. Yet with support from governments, such cryptocurrencies are thriving. The global value of bitcoins in circulation has increased from $3bn to about $29bn in the past two years. New currencies, such as Ethereum and Ripple, are growing even faster.
It is still possible to make all activity in cryptocurrencies an offence. Their worldwide value is $50bn — only 1.7 per cent of the value of the FTSE 100 stocks in London. Destroying this asset value would create few problems, and would strike a blow for justice as much of it is held by wrongdoers.
Absurdly, governments labour to bolster legality in anonymous physical cash, while encouraging unregulated use of its digital equivalent: the eurozone bans €500 bills, but allows criminals access to online bitcoin “notes” of unlimited value. India tries to uncover illegal funds held in banknotes, while leaving bitcoin stashes unchecked. The UK introduces high-tech pound coins to foil forgers, while allowing criminals use of higher-tech “pound bitcoins”. China attempts to control smuggling of cash, while letting bitcoin transfers flow freely.
Cryptocurrencies will soon become a large segment of the global financial system. Banning them would then threaten financial stability, but regulating them will be impossible. Meanwhile, life will become easier for people with the moral turpitude to destroy hospital IT systems. History will judge very harshly those who allowed this to happen.
The utility of a currency depends on confidence that it is accepted as a means of payment. If even one major economy banned cryptocurrencies, these would be hobbled. The UK should take the lead. Otherwise, the next time the NHS is crippled by an attack financed in bitcoin, the government will rightly be accused of complacency as sick people die.
Misha Cohen