Bitcoin’s Dark Side Could Get Darker

by  Tom Simonite,  MIT Technology Review

Some of the earliest adopters of the digital currency Bitcoin were criminals, who have found it invaluable in online marketplaces for contraband and as payment extorted through lucrative “ransomware” that holds personal data hostage. A new Bitcoin-inspired technology that some investors believe will be much more useful and powerful may be set to unlock a new wave of criminal innovation.

Smart contracts or computer programs that can confirm data and hold or use funds using similar cryptographic methods to those which underpin Bitcoin could help enable a new, insidious dimension of cryptocurrency’s criminalization, according to research by Cornell University professors Ari Juels and Elaine Shi, and University of Maryland researcher Ahmed Kosba.

“In some ways this is the perfect vehicle for criminal acts, because it’s meant to create trust in situations where otherwise it’s difficult to achieve,” Juels says. The researchers envision one example of a contract offering a virtual currency bounty for hacking a website supported on the Ethereum small-contract platform. The platform’s programming language would enable the contract to control the funds, and issue them only to someone who proves they have performed the task in the form of a verifiable string added to the defaced site.

Although Ethereum chief technology officer Gavin Wood says legitimate companies are planning to use the platform for honest business, he concedes it could be used in illegal ways as well. One scenario he speculates on is Ethereum’s software being used to establish a decentralized version of Uber or a similar service, in which payments are handled without the need for an intermediate company.  Read the article.