{"id":28762,"date":"2014-04-24T07:34:23","date_gmt":"2014-04-24T07:34:23","guid":{"rendered":"http:\/\/ci027cfe77a0122697"},"modified":"2014-04-24T07:34:23","modified_gmt":"2014-04-24T07:34:23","slug":"u-s-navy-preparing-bitcoin-battalion-1398324863","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/u-s-navy-preparing-bitcoin-battalion-1398324863","title":{"rendered":"U.S. Navy Preparing Bitcoin Battalion"},"content":{"rendered":"
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Bitcoin Battalion<\/h2>\n

Back in December we reported<\/a> that the United States Air Force has quietly been working on a Bitcoin payment gateway otherwise known as a \u201csnack machine\u201d (yes you read that correctly). We also discussed that \u201ccurrency is like another class of supply, a commodity required to execute the battle.\u201d<\/p>\n

Recently, United States sanctions<\/a> against the Kremlin for annexing Ukraine resulted in MasterCard and Visa suspending certain types of transactions in Russia (apparently due to the OFAC 50 rule<\/a>). OFAC or Office of Foreign Assets Control under the Department of U.S. Treasury maintains a list of different sanctions programs that it administers here<\/a>.<\/p>\n

It has been reported<\/a> that Visa did resume services with some Russian banks. I found an old SEC filing<\/a> that may (or may not) shed some light how Visa is able to continue its relationship with certain banks under sanction:<\/p>\n

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\u201c\u2026OFAC restricts financial dealings with Cuba, Iran, Myanmar and Sudan, as well as financial dealings with certain parties, such as identified money laundering fronts for terrorists or narcotics traffickers. While we prohibit financial institutions that are domiciled in those countries or are restricted parties from being Visa members, many Visa International members are non-U.S. financial institutions, and thus are not subject to OFAC restrictions. Accordingly, our payments system may be used for transactions in or involving countries or parties subject to OFAC-administered sanctions\u2026\u201d<\/p>\n<\/blockquote>\n

In any case, President Vladimir Putin now supports plans<\/a> for Russia to create its own national payment system. Headlines such as \u201cRussia Reconsiders Bitcoin?\u201dhave begun to sprout up and this week Russia will be hosting its first Bitcoin conference.<\/a><\/p>\n

US Army War College<\/h2>\n

This should come to no surprise to those who read Juan C. Zarate\u2019s<\/a>\u201cConflict by Other Means: The Coming Financial Wars\u201d<\/a> (PDF) published by the US Army War College Strategic Studies Institute Quarterly Parameters in its Winter 2013-14 Issue<\/a>. Mr. Zarate has been called \u201ca chief architect of modern financial warfare\u201d and is a Senior Adviser for the Transnational Threats Project and Homeland Security and Counterterrorism Program, CSIS Senior National Security Consultant and Analyst for CBS News. Mr. Zarate also authored the memoir \u201cTreasury\u2019s War: The Unleashing of a New Era of Financial Warfare<\/a>\u201d published by PublicAffairs.<\/p>\n

In \u201cConflict by Other Means: The Coming Financial Wars\u201d, Zarate writes that:<\/p>\n

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\u201cCountries such as Russia and China will continue to challenge the dominance of the US-led international system and the dollar itself. If such attacks succeed, they could weaken the ability of the United States to affect or move private sector decision making in line with national security interests, regardless of what other governments do.\u201d<\/p>\n<\/blockquote>\n

and further:<\/p>\n

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\u201cThe domain of financial warfare will no longer remain the sole province of American power. A wide array of state and nonstate actors may step up to wield economic power and influence in the twenty-first century.\u201d<\/p>\n<\/blockquote>\n

He discusses \u201cChallenges to U.S. Financial Power\u201d such as nontraditional currencies, Local Exchange Trading Systems (LETS), Community Exchange System (CES), bartering (e.g. ITEX) and of course Bitcoin:<\/p>\n

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\u201c{Bad} actors have new digital tools {such as} bitcoin (BTC) \u2026a digital currency \u2026{which}\u2026 uses cryptography rather than central authorities to issue and transfer money. The result is that transactions are cheap, accounts cannot be frozen (unless users keep bitcoins in a separate third-party online wallet service), and there are no prerequisites or arbitrary limits for use\u2026\u201d<\/p>\n<\/blockquote>\n

The Navy<\/h2>\n

\u201cRadical connectivity is blurring national lines and facilitating the transfer of virtual currency between otherwise disparate non-state actors.\u201d<\/em><\/p>\n

On March 19th (as amended April 10th), interested vendors began bidding on a Broad Agency Announcement (BAA)<\/a> project for the Technical Support Working Group (TSSWG) Combating Terrorism Technical Support Office (CTTSO) for the Navy Engineering Logistics Office of the Department of the Navy.<\/p>\n

Federal Business Opportunities (FBO) posting of Solicitation Number N41756-14-Q-3272<\/a> includes the keyword \u201cbitcoin.\u201d The BAA Includes \u201cR3861: Counter Threat Finance\u201d and \u201cR3830 Methods and Means to Systematically Discern and Display \u2018Precursors of Instability\u2019 In The Dark Web.\u201d These were introduced on January 30th in the unclassifiedPowerPoint presentationand corresponding \u201cAdvance Planning Briefing for Industry<\/a>\u201d (PDF) as part of a \u201cIrregular Warfare and Evolving Threats Mission\u201d which includes \u201coperational assessment, concept development, and independent validation of unique prototype capabilities to identify, confront, and defeat evolving threats.\u201d<\/p>\n

Some may find it unusual that the Navy was one of the original developers of the Dark Web. However<\/a>, \u201cTor was originally designed, implemented, and deployed as a third-generation onion routing project of the United States Naval Research Laboratory<\/a>\u2026for protecting government communications\u2026\u201d and provided funding from 2006 through 2010<\/a>. Though I don\u2019t find this any more unusual than the Internet itself starting out as a project from the (Defense) Advanced Research Projects Agency called ARPANET (see \u201cDARPA and the Internet Revolution\u201d [PDF]).<\/p>\n

The Dark Web has been part of Bitcoin\u2019s \u201czeitgeist\u201d since Adrien Chen of Gawker published his infamous piece on Silk Road on June 1st, 2011 \u201cThe Underground Website Where You Can Buy Any Drug Imaginable<\/a>.\u201d It would take another two years before Adam B. Levine of Let\u2019s Talk Bitcoin and I would uncover<\/a> that the Drug Enforcement Agency appeared to have infiltrated the Silk Road marketplace.<\/p>\n

Early in Bitcoin\u2019s history it was possible to send bitcoin via IP address (e.g. 172.16.254.1) rather than public bitcoin address (e.g. 1BTCorgHwCg6u2YSAWKgS17qUad6kHmtQW). In November 2009 Satoshi reposted a request<\/a> from a user to make Bitcoin anonymous and Satoshi discussed privacy and TOR in this regards:<\/p>\n

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\u201cWhen you send to a bitcoin address, you don\u2019t connect to the recipient. You send the transaction to the network the same way you relay transactions. There\u2019s no distinction between a transaction you originated and one you received from another node that you\u2019re relaying in a broadcast. With a very small network though, someone might still figure it out by process of elimination. It\u2019ll be better when the network is larger.<\/p>\n

If you send by IP, the recipient sees you because you connect to their IP. You could use TOR to mask that.<\/p>\n

You could use TOR if you don\u2019t want anyone to know you\u2019re even using Bitcoin.<\/p>\n

Bitcoin is still very new and has not been independently analyzed. If you\u2019re serious about privacy, TOR is an advisable precaution.\u201d<\/p>\n<\/blockquote>\n

Privacy is discussed in the original Bitcoin whitepaper<\/a> (section 10) which mentions how Bitcoin keeps public keys \u201canonymous.\u201d Satoshi likely used TOR when he announced Bitcoin, published the whitepaper and maintained his status as a Bitcoin developer because his identity is unknown which proves that someone who is skillful a genius probably could stay anonymous within Bitcoin.<\/p>\n

Bitcoin doesn\u2019t have a gatekeeper. Fundamentally no one needs to ask permission to use Bitcoin or run a Bitcoin client making most financial blockades or sanctions at their core ineffectual. If and how Bitcoin will be used in \u201cbattle\u201d is a dystopian future that remains to be seen. As the Navy notice observes, \u201cRadical connectivity is blurring national lines and facilitating the transfer of virtual currency between otherwise disparate non-state actors.\u201d<\/p>\n