Cybercrime expert Alex Holden explains why this bright new cryptocurrency has fallen in with the wrong crowd
In a dark alley of the Dark Web, a drug deal is taking place. Unlike a typical drug deal, both drug dealer and an addict are sitting behind their computers, typing away. They agree on a price for goods, payments are made, the drug dealer discloses a cache of drug location or sets up a drop/shipment, and they go on their separate ways, never meeting and never saying a word to each other.
Cybercrime takes away traditional aspects of notorious activities, like bank robberies and drug deals. Criminals no longer wear black masks, trading them in for black hats. Yet the same problems exist for criminals no matter where they conduct their crime – how to not get caught, how to stay anonymous, and how to profit.
Much of Dark Web technology today is built specifically to preserve anonymity amongst the cybercriminals. Even physical exchanges of goods can be done anonymously. For example, in close geographical proximities, criminal goods (i.e. drugs) are hidden in specific locations, then photographed and their location is marked on a virtual map. Then a picture of the cache and its map location is sold to a new customer. A drug dealer’s credibility is not measured by their “street cred”. Instead, it mostly hinges on their seller rating and online comments of customers. From there, only one major pressing issue remains -– how to get paid so the funds are not traceable.
As you can imagine, most standard payments are traceable. And cash is not an option. Law enforcement has had success tracing virtual currencies like bitcoins. However, growth of cryptocurrency creates new breeds that are specifically based on anonymity and privacy.
One such currency is Monero.
Monero was not invented to aid cybercriminals, but after just two years of its existence its design and features made it one of the more attractive currencies in the underworld. Initially designed as an improvement to bitcoins, Monero designers concentrated on making their currency and transactions private and untraceable. The currency is based on CryptoNote protocol, which features untraceable payments, unlinkable transactions, ability to use the same money only once, and analysis-proof blockchain. Monero is also localised, allowing its users to preserve all of its information locally, not on the internet.
Given its privacy features, Monero is instantly attractive to individuals who want to preserve their privacy during financial transactions. The Dark Web is always striving to adapt new technologies first and Monero cryptocurrency emerged into the spotlight following its addition as a payment method on AlphaBay – one of the largest Dark Web markets, known for the sale of drugs, weapons, stolen data, and other ill-gotten goods or services. This type of notorious adaptation draws more attention to Monero and is bound to get more fans in underground communities, where the beneficiaries will be drug dealers and markets for cybercrimeware or its products.
While Monero can be used for a great variety of legitimate transactions, its anonymity features make it a dangerous tool for financial transactions amongst criminals. Over the past few years, widespread adaptation of bitcoins created a fair amount of concern for law enforcement. Today, however, law enforcement is relatively successful tracing bitcoins, blockchains, and has an ability to blacklist, block or even confiscate accounts involved in criminal activities. Monero’s obfuscation of blockchain and lack of double-spending standard (it can’t use the same money twice) breaks typical methods that law enforcement uses to monitor and pursue criminal activity. This should present another significant hurdle in the fight with cybercrime.
What does the future hold for Monero? It is hard to tell. It’s new found fame resulted in a 400%+ growth of its value over the past few weeks. Adaptation on AlphaBay may prove to be very fruitful for this cryptocurrency. However, it is still unknown if the fame will last, or if it will fade back to obscurity.
Alex Holden is chief information security officer at Hold Security, credited with the discovery of many high profile breaches including Adobe Systems, JPMorgan, and the independent discovery of the Target breach.