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Bitcoin: The Queen of the Cyberwar Chessboard

In last week’s article for Forbes, I questioned the purpose of the radically innovative cybercurrency Bitcoin. Libertarians, criminals, speculators, and consumers all have an angle – but business models focusing on each of these constituencies each have serious flaws.

There is one purpose for Bitcoin I didn’t discuss in the Forbes article, partly because space didn’t allow, but also because it requires a higher level of speculation than Forbes may be comfortable with. The Intellyx Cortex, however, has no such constraints.

The final, and perhaps most significant purpose for Bitcoin is cyberwarfare.

The Ongoing Cyberwar

Inside a secret Chinese Bitcoin mine

Inside a secret Chinese Bitcoin mine

The role Bitcoin might play in a cyberwar is mostly speculative, but the ongoing cyberwar is all too real – and has been going on for years. I’ve written about this cyberwar before, both for DevX and ZapThink – and the cyberwar even made an appearance on ZapThink’s Enterprise 2020 poster.

And while terrorist organizations like ISIS command the headlines, the cyberwar has for the most part avoided the public consciousness. The reasons for this lack of attention are numerous: an unclear adversary, largely secret and technically complex attacks and defensive actions, and the simple fact that it’s been going on for so long.

But cyberwar there is. The latest skirmish? China’s hack of the US Government, stealing personal information about millions of government employees.

But simply saying our adversary is “China” is misleading. The Chinese government claims no responsibility, for what that’s worth. In reality, simply the fact that attacks originated in China might mean that the bad guys are organized criminals separate from the government, or perhaps disorganized criminals with no particular political agenda. It’s difficult to tell.

And then there is the question of the goals of the attack. Personal information about government employees is quite different from, say, sensitive military information. Why bother?

Among the best theories I’ve seen is that the malefactors will use the information for spear phishing attacks – fooling other government employees into believing an email is coming from a colleague, in order to introduce malware onto government networks. But the fact is, we really don’t know what the hackers are up to.

Bitcoin’s Cyberweakness

And that brings us to Bitcoin. At the center of the Bitcoin industry are miners – people with powerful computers that manage the Bitcoin infrastructure and in return, generate Bitcoin rewards for themselves.

In the early days of Bitcoin, most any computer would do as a mining computer. Today, however, for Bitcoin mining to be cost-effective, miners must assemble large farms of specialized hardware in locations with low labor and electricity costs. A great place for such mines? You guessed it: China.

While China is an economical place to build toys and iPhones, Bitcoins are different, because of how any weakness in the Bitcoin infrastructure might impact the global economy.

The Chinese (as well as everyone else) are quite aware that perhaps the most serious weakness of the Bitcoin infrastructure is the 51% problem: if anyone controls 51% of the Bitcoin mining computers, then they can commandeer the entire Bitcoin infrastructure.

Now, before you sell all your Bitcoin in a panic, rest assured that Chinese mines account for substantially less than 51% of the total at this time. But don’t sit too comfortably, as miners group their mines into pools for greater efficiency – and if one of these pools approaches the 51% mark, then it too presents a risk to the entire system.

Assembling such dangerous pools, however, doesn’t really explain China’s interest in Bitcoin, at least not directly. Today, Bitcoin mining operations are ostensibly profit-generating businesses – and thus miners are simply entrepreneurs, regardless of whether they’re located in Dalian, China or Dayton, Ohio. And furthermore, taking over the Bitcoin infrastructure would hardly impact the global economy in any substantial measure.

Today.

Playing the Cyberwar Chess Game

Here’s where the speculation comes in. Hypothetically, if a nation state had a plan to either topple or take control of the global economy, and had the resources, patience, and technical capability to mount a long-term cyberwar with that goal in mind, how would they go about it?

Bitcoin would be a good place to start. If they could simultaneously support the spread of Bitcoin, thus making it a greater part of the overall global economy, while at the same time establish control over enough of the Bitcoin mines to make a sophisticated play for the 51% target at some point in the future, then they may be able to wrest control over the global economy from the likes of the International Monetary Fund, the World Bank, the US Federal Reserve, and the other establishment institutions who have controlled it since World War II.

The US-led power base in charge of the global economy would, of course, have something to say about a theoretical Bitcoin-driven takeover, and at best would be putting in place safeguards, both public and covert, to prevent such a calamity.

However, because of its cyberspying ability, our hypothetical enemy would likely know of these efforts to divert the economic takeover. What, therefore, can our enemy do today to lay the groundwork to neutralize US-led efforts to prevent a Bitcoin-driven takeover of the world economy?

Mount spear phishing attacks with US government workers’ personal information, perhaps?

The Intellyx Take

The theory laid out above is purely speculative, of course. I have no more information than anybody else. Furthermore, I am loathe to single out China as a potential perpetrator. Today’s cyberwar is being fought by a complex, anonymous coalition of parties, consisting potentially of multiple governments, organized crime elements, or others. China may be the largest, but is by no means the only participant.

Furthermore, any connection between the recent theft of government employees’ information and Bitcoin is tenuous at best. The point to this article is less to draw a realistic connection between the two, and more to illustrate how cyberwars work.

In fact, the ongoing cyberwar is subtle, nefarious, and complex. The aggressors and their motives may be difficult to determine. And furthermore, the tactics in a cyberwar may be akin to moves in a chess game, where the strategy centers on game play several moves ahead.

But make no mistake, in this ongoing cyberwar chess game, Bitcoin is no mere pawn. Bitcoin is the queen in the ranks of the cyberwarrior – potentially the most powerful piece on the board.

Play the game carefully, people.

Intellyx advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: confidential.

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More Stories By Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is ranked #5 on Onalytica’s list of top Digital Transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists.

As founder and president of Agile Digital Transformation analyst firm Intellyx, he advises, writes, and speaks on a diverse set of topics, including digital transformation, artificial intelligence, cloud computing, devops, big data/analytics, cybersecurity, blockchain/bitcoin/cryptocurrency, no-code/low-code platforms and tools, organizational transformation, internet of things, enterprise architecture, SD-WAN/SDX, mainframes, hybrid IT, and legacy transformation, among other topics.

Mr. Bloomberg’s articles in Forbes are often viewed by more than 100,000 readers. During his career, he has published over 1,200 articles (over 200 for Forbes alone), spoken at over 400 conferences and webinars, and he has been quoted in the press and blogosphere over 2,000 times.

Mr. Bloomberg is the author or coauthor of four books: The Agile Architecture Revolution (Wiley, 2013), Service Orient or Be Doomed! How Service Orientation Will Change Your Business (Wiley, 2006), XML and Web Services Unleashed (SAMS Publishing, 2002), and Web Page Scripting Techniques (Hayden Books, 1996). His next book, Agile Digital Transformation, is due within the next year.

At SOA-focused industry analyst firm ZapThink from 2001 to 2013, Mr. Bloomberg created and delivered the Licensed ZapThink Architect (LZA) Service-Oriented Architecture (SOA) course and associated credential, certifying over 1,700 professionals worldwide. He is one of the original Managing Partners of ZapThink LLC, which was acquired by Dovel Technologies in 2011.

Prior to ZapThink, Mr. Bloomberg built a diverse background in eBusiness technology management and industry analysis, including serving as a senior analyst in IDC’s eBusiness Advisory group, as well as holding eBusiness management positions at USWeb/CKS (later marchFIRST) and WaveBend Solutions (now Hitachi Consulting), and several software and web development positions.