Crypto communities must be more neighborly

software developers have a surprising way of dealing with words. While people found chambers or associations in other industries, join “communities”-the name for loose organized groups that work together on the open source software that our technological society brings to life.

As far as the marketing language is concerned, it is difficult to beat; There are only a few warmer and more blurred names in English. When you think of communities, you come to mind good things: families who picnicking in the park, children in the local school who collect money for charitable purposes, friends who help each other after a storm.

But some developers are less neighborly than others, and we could use new words for them. A typical example comes from the blockchain world, where there are now communities that work on pushing laws to combat laws to combat money laundering by creating so-called data protection coins-cryptocurrencies that are designed to be traced or pursued.

The threat from Privacy Coins can be found from the small print of a federal criminal complaint submitted this month, in which a couple from New York is accused of having washed revenues from the Hack of the Bitfinex exchange in August 2016, in which Bitcoin was worth 4.5 billion government at the time. The techniques that they supposedly used was the conversion of a part of the Bitcoin into a "virtual currency anonymity," according to the file, whereby the most remarkable example of data protection is Coin Monero.

The lawyers of Ilya Lichtenstein and Heather Morgan have described the evidence against them as weak. But the case was celebrated as a triumph for law enforcement, and that is right to a certain point. Their arrests and the confiscation of Bitcoin worth 3.6 billion, just as the FBI secured the country's banks against the John Dillingers in the last century, high-tech criminal fighters are making progress in protecting cryptocurrency platforms from computer hackers today.

The authorities benefited from the fact that blockchains are public. They were able to track down the stolen Bitcoin because they never lost sight of it; The proceeds from the hack hiked in "Wallet 1cga4s" and mostly stayed there. The difficult part was to connect the prey to the alleged perpetrators. When reading the complaint, Tom Robinson, chief scientist at Elliptic, a blockchain intelligence company, said that he believed that the breakthrough came in the case of 2017 when US officials called a "Darknet" site called Alphabay. "It was necessary to trace the stolen Bitcoins back over Alphabay to connect these funds with the two alleged money launderers," he said.

Stopping

hacker is not the same as the traditional traditional way of using crypto to move their money across national borders or swirl around to disguise its origin. The importance of the Bitfinex case in this struggle is less certain due to what seems to have happened to the Monero of the alleged money launderers, that the identity of its owners wears out by using "ring signatures", which means that several parties are involved in the signing of a transaction. It is difficult to say who initiated.

Based on government documents, Robinson suspects that the authorities did not pursue privacy coin. Regardless of whether they could not crack the cryptography of the Monero community or did not have to do this, Robinson assumes that the result could increase the attractiveness of cryptography for bad actors.

"This could make money launderers and criminals use Monero to a larger scale - you will see how traceable the Bitcoin was in this case, and this will make it use Monero instead. "We have to accept that there is no traceable digital cash. The question is how we deal with it."

I would suggest that one of our congress committees or someone in the executive, before more tax money is spent on a further money laundering examination with data protection coins-and I would bet that the bust of Bitfinex was not cheap-representative of the committee should convene Monero community to discuss things.

A small dialog can do a lot.

There are reasons to worry about the protection of privacy in public blockchain, and based on their writings, the members of the Monero community are good. "Monero's state -of -the -art cryptography hides every level of a transaction," you say on your website to strengthen people in "oppressive countries or depressed economies" and "consumers and companies before price manipulation, exploitation of the supply chain, economic discrimination".

At the same time, the representatives of the elected government should make it clear that software developers also have responsibility towards the general public. Money laundering is the way in which large criminals get away with their illegally obtained profits. To give up the fight against it would give the kleptocrats, the terrorists, the gangsters, the drug dealers and the pours.

gary.silverman@ft.com