It’s hard being a Bitcoin supporter when criminals are constantly damaging the digital currency’s reputation with their illicit activities, but like it or not, they come with the package. A significant chunk of the people who first adopted Bitcoin did so to support their illegal activities, and many of the currency’s top users do the same. It’s a shame too, because this is a potentially revolutionary technology that’s being held back by a bad reputation, and I’m worried that the same thing is going to happen to an equally revolutionary technology known as “smart-contracts.”
Some of the earliest adopters of the digital currency Bitcoin were criminals, who have found it invaluable in online marketplaces for contraband and as payment extorted through lucrative “ransomware” that holds personal data hostage. A new Bitcoin-inspired technology that some investors believe will be much more useful and powerful may be set to unlock a new wave of criminal innovation. That technology is known as smart contracts—small computer programs that can do things like execute financial trades or notarize documents in a legal agreement. Intended to take the place of third-party human administrators such as lawyers, which are required in many deals and agreements, they can verify information and hold or use funds using similar cryptography to that which underpins Bitcoin. Some companies think smart contracts could make financial markets more efficient, or simplify complex transactions such as property deals (see “The Startup Meant to Reinvent What Bitcoin Can Do”). Ari Juels, a cryptographer and professor at Cornell Tech, believes they will also be useful for illegal activity–and, with two collaborators, he has demonstrated how.