Good Guys Use Blockchain to Fight Back
Money laundering and human trafficking have always been like evil twins, or at least evil BFFs like Jesse James and Cole Younger. Or Al Capone and Frank Nitti in the 1987 hit, The Untouchables. And for several years now, modern slave traffickers have been making use of a newer, better, weapon in their get-rich-quick, money laundering arsenal: cryptocurrency.
If you’re thinking Bitcoin, you’d be partially right, as Bitcoin is the original and still the most popular. But it is by far not the only cryptocurrency to grace the blockchain; Ethereum, Ripple, Litecoin (and later this year, Facebook’s own Libra), are part of over 2,000 cryptocurrencies in existence.
Cryptocurrency and Blockchain Mumbo-Jumbo
Cryptocurrency itself is really not new, as its roots go back at least to the early 1980s, and it’s everywhere today. For instance, if you’ve ever used PayPal, you’ve used cryptocurrency.
But in 2008, a mysterious individual (or a group of individuals – no one knows) by the so-called name of Satoshi Nakamoto released a white paper called, Bitcoin: A Peer-to-Peer Electronic Cash System, and in 2009, Bitcoin was introduced to the public. Nakamoto had created a peer-to-peer system of payment that enables users to send the value transfer token, directly and without an intermediary.
The reason for the creation of Bitcoin – and the other cryptocurrencies since – was simple: to make money faster, easier, cheaper, and more secure to transfer from one party to another. For instance, banks and other financial institutions can charge hefty fees for money transfers because they’re acting as the middleman. And cross-border payments done the traditional way can take days to settle, at best. Plus, financial institutions can be vulnerable to hacking.
Cryptocurrencies were designed to eliminate financial institutions as the intermediaries and do an end-run around the old school financial system through blockchain technology. The only “intermediary” involved, is the network itself which, although it is decentralized, nevertheless verifies the transactions.
But how does that work? Enter Nakamoto’s brainchild, the blockchain. A blockchain is simply blocks of data that are time-stamped and bound to each other using cryptography. It’s often described as a sort of unalterable cyber ledger or spreadsheet, and each “block” in the chain is an entry in that ledger that is open for all to see. The data is managed by powerful computers, and not owned by any single entity.
Because this “ledger” is shared and, unlike a bank or credit card company, has no central authority, it is open for everyone to see. This makes it transparent by nature, which in turn, makes everyone involved accountable for their actions. The idea was honorable, which, in addition to the other reasons crypto and the blockchain were invented, was to breach the wide gap in digital trust.
At the same time, it is private. But how can it be both?
When someone makes a purchase on the blockchain, their identity and the amount they paid is recorded in the ledger, along with the date and time. But instead of their name, thanks to cryptography, their identity pops up as an extremely long, seemingly unintelligible string of characters. So if you were to look up a transaction, instead of something like, “John Homebody sent 1 BTC to Overstock,” (which accepts Bitcoin, by the way), what you’d see would be more like, “1JOK8hdowitCGKD4THB7N8CHzaei43XDZ sent 1 BTC.” John maintains his privacy because his real identity is not broadcast for all to see, yet all his transactions show up via his public address.
Co-opted by Corruption
This is fine if John is just an honest consumer looking to furnish his new home. But if John is a trafficker he can, of course, use his anonymity to keep his nefarious machinations flying under the radar.
Thus, it would seem that cryptocurrencies and the blockchain are the perfect platforms for crooks, including slave traffickers, to finance their evil deeds in obscurity.
Because as with virtually anything human beings invent, no matter how altruistic or honorable the original intent was, the sad fact is that tentacles of evil always find a way to slither in and get a grip somewhere. From the many modes of transportation to lodging, to reading materials both in print and online, pretty much anything can be used for evil. Even innocuous things like swimming pools and rocks have been used as murder weapons.
For example, trafficking victims must be transported from Point A to Point B somehow. And the same hotels and motels that provide rest and relaxation for the weary traveler or the family on vacation are scenes of torture for those being trafficked.
So, to say that cryptocurrency and blockchain should be outlawed because traffickers and others use it for evil purposes would be like blaming the Wright brothers for 911, or Gutenberg for print pornography, and saying that hotels must be outlawed because they can be used for wicked purposes. Or that the internet and planes, cars, busses, and other modes of transport should be banned because they’re all used by some sick individuals for human trafficking.
We can’t ban all those things, nor should we.
On the other hand, the authorities can’t just throw up their hands, sit back and let these foul souls sully the blockchain with their dirty work, unabated and unchallenged. Something must be done.
Beating Them at Their Own Game
According to the 2019 Trafficking in Persons Report put out by the State Department, around 29.4 million people are being trafficked globally, garnering their traffickers about $150 billion per year. And sickeningly, nearly 1 million in Bitcoin and Etherium cryptocurrencies alone was made by child porn traffickers that year. That’s an increase of 32% more than in 2018, which in itself was 212% higher than in 2017. Although the dirty trafficking virtual money represents only a tiny fraction of crypto transactions, still… human trafficking’s a huge business, coming in second only to drug trafficking.
But anti-traffickers are onto them.
In a delicious irony, technology and even the blockchain itself is being used to turn the tables on the human trafficking villains and beat them at their own sick game.
One high-tech way law enforcement and some anti-trafficking groups are striking back in the area of online ads is with an artificial intelligence (AI) platform called Stylometry. Sort of like good old-fashioned handwriting forensics, Stylometry analyzes the unique writing style of individuals online. Similarities in tone, the ways words are used, and many other factors paint a picture of the author's personality and can reveal a lot about the person who posted the ad. Stylometry’s AI finds and analyzes these patterns and styles within similar categories of ads.
When it comes to these trafficking-type ads, the most similar ones in any given category are likely written by the same trafficker or group. Once this has been determined, police detectives can respond to the ads and find the perps.
As it turns out, Bitcoin and some of the other currencies aren’t so anonymous after all. To be sure, they once were. But thanks to blockchain forensics, anonymity in the world of crypto is quickly becoming a thing of the past.
Blockchain forensics uses Know Your Customer (KYC) and anti-money laundering (AML) identification data collected by banks and other exchanges to hunt down suspicious-looking transactions and de-anonymize them. They can match crypto wallet addresses (a “wallet” is software used by crypto owners to see balances and make transactions) with identities, and trace the transactions.
And with some exchanges, someone who wants to buy their currency must first surrender their identifying information. If that person later sends crypto to a wallet in a different exchange, blockchain forensics firms can figure out that the wallet where the money was sent is connected to that person.
There’s a lot more to blockchain forensics than that, of course. A plethora of algorithms and AI are also used, that can generate things like maps of crypto transactions, which show the movement of crypto between various known wallets, exchanges, individuals, and companies.
Blockchain forensics alone can’t disrupt slave trafficking to the point of putting all the slavers out of business and behind bars. But this technology, together with law enforcement, anti-human trafficking groups, and the many caring individuals giving their support through prayer, financial giving, and volunteering, can take a massive bite out this heinous crime.