The currency of the far-right: why neo-Nazis love bitcoin

For extremists, deregulated cryptocurrencies are a potent political statement as much as a means to fund their activitieshe bitcoin battle is about to go up to a new level: the G20. Last week France and Germany announced that they would propose, at the March summit, a concerted clampdown on the cryptocurrency that is dividing the world.

In the global dispute about the future of the digital currency experiment some unlikely coalitions have taken shape: who would have thought that bankers and environmental activists would join forces one day? While the former seek to preserve the financial system, the latter want to protect the ecosystem. Even more obscure is the conglomerate of cryptocurrency enthusiasts fighting side by side to keep the bitcoin experiment alive: libertarians invest in their vision, speculators in their wallets, and criminals out of necessity.

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As so often, when two quarrel a third rejoices: in the shadow of the bitcoin craze, extremist groups around the world have capitalised massively on the exponential rise in the value of cryptocurrencies. Bitcoins have enabled them to raise, transfer and spend money – “at a speed that I’ve never seen“, Heidi Beirich, the director of the Southern Poverty Law Center’s Intelligence Project, told me. She has been monitoring more than 200 “alt-right” bitcoin wallets, finding that “some folks are getting straight off rich from their bitcoin accounts, which will fuel their ugly activities”.

Similarly, pro-Islamic State groups have managed to fund their activities from their bitcoin revenues. For example, a German jihadist Telegram channel that trains its members to carry out cyber-attacks, and was probably involved in the hacks of hundreds of US schools last November, was able to generate enough money to reward its “cyber-jihadists“. “We have exchanged parts of our bitcoins to equip the brothers who helped in our last missions with computers,” one of the group’s members wrote in their private chat group in December.

The high volatility of bitcoin may backfire in the long run, according to financial experts. Yet neo-Nazis, identitarians and jihadists aren’t short of incentives to invest: they share the anti-establishment sentiment with the libertarians, the desire to make quick money with the speculators, and the need to find alternative transaction routes with the criminals.

In the aftermath of the lethal white nationalist rally in Charlottesville last August, many extremists had their accounts removed from mainstream crowdsourcing platforms such as Patreon and GoFundMe, and their credit cards blocked by online payment providers such as PayPal, Apple Pay and Google Pay. This has triggered a mass migration by extremists to alternative crowdsourcing platforms such as Hatreon, and a shift to cryptocurrencies. “They are secure, instant and anonymous,” one user on the neo-Nazi platform Stormfront explained to me.But extremists view the decentralised, deregulated currency as more than a means to make money. “It’s also a political statement,” believes John Bambenek, an American cybersecurity expert who built a neo-Nazi bitcoin transactions tracker. “If you believe the banks are part of the Jewish world conspiracy nonsense, well, then there are only two ways to make financial transactions: it’s either cash or it’s bitcoin.”

This explains why the use of bitcoins by extremists predates both the cryptocurrency hype and the crackdown on neo-Nazi accounts after Charlottesville. The American white nationalist Richard Spencer already called bitcoin the “currency of the alt right” before its boom. And the Black Hat hacker Weev wrote back in 2014: “I heartily encourage you to consider cryptocurrency, including bitcoin.”

Like most extremists, Weev stressed that he prefers Monero, “which best maintains our privacy”. A shift to Monero and other less transparent alt-coins could bring new challenges to cybersecurity and intelligence services. “As an intelligence analyst I love that extremists use bitcoins,” Bambenek tells me. The high level of transparency of the blockchain technology, which is the backbone of any bitcoin transaction, has allowed analysts to speed up their investigations.

Only joint action by the G20 countries, as proposed by France and Germany, could be enough to become a game changer
However, even in the case of transparent digital currencies, merely watching extremists multiply their income and conduct their business is hardly satisfying. Some countries have taken crucial steps to regulate bitcoin: China plans to restrict bitcoin mining, South Korea wants to ban its trading, and Egypt’s grand mufti, Shawki Allam, even declared the digital currency haram. But can national bans, regulations or capitalisation requirements have any tangible impact?

Bitcoin is a bit like Marmite: you love it or you hate it, and even if some countries impose bans and regulations, they won’t be able to stop its production or its spread. Only joint action by the G20 countries, as proposed by France and Germany, could be enough to become a game changer. And yet detours through countries such as Russia – already looking at developing a “crypto-rouble“ – may always provide opportunities to circumvent international regulations.

Wherever the bitcoin bubble and battle are heading, the global cat-and-mouse game between extremists and intelligence agencies will continue: we need to become faster than extremists at identifying future loopholes that can be exploited to promote their activities.