By Art Bowker
C1 Contributor
In the last year there’s been an explosion of interest in bitcoins, a new digital currency. Briefly, they are created by computers solving mathematical equations used to record transactions. They don’t come in the form of paper and are not maintained in accounts kept by a financial institution. They are kept in digital wallets. Recently, I wondered if bitcoins or any cryptocurrency could be exploited in a correctional setting and was not surprised to see that individuals had discussed the mechanics of their use behind bars.
For starters, how much are bitcoins worth? The price has gone up and down a bit this last year, from a high over $1,000 to its current level of about $567 for one bitcoin. Within the last few weeks a flaw in how bitcoins are processed by exchanges came to light, which may have been exploited by hackers. This has caused a major fluctuation in the bitcoin market place, with one exchange appearing to close overnight. Some Russian cybercrime forums, aware of these issues and law enforcement’s interest in bitcoins, may be moving towards minting their own cryptocurrency as an alternative. So it’s not out of reach that criminals may adopt their own digital currency.
How does one possess bitcoins or any cryptocurrency? They are kept in digital wallets, which can be maintained on a desktop computer, a mobile device (such as an Android phone), or on a website. Also currently in development are hardware wallets, which are about the size of a USB thumb-drive. Bitcoins are transferred and deposited to these wallets, independent of any financial institution.
Some are calling their development a real breakthrough in the market place. Advantages include quick mobile and electronic payments; secure individual transactions that can occur anywhere, anytime; and identity or credit card theft is not possible with bitcoins. Depending on use, it’s possible to send a bitcoin payment without revealing one’s identity. Many see bitcoin’s development as the removal of government meddling in the market place as well as the removal of credit and bank fees associated with electronic transactions.
However, bitcoins may also have a dark side. Criminals are finding bitcoins a great way to transact illegal business, such as drug and weapons sales. Recently we saw arrests involving underground Internet sites called Silk Road and Black Market Reloaded, where individuals were openly selling drugs and weapons online. Bitcoins were the currency for this illicit marketplace. Bitcoins can also be used to launder money. They can obviously be stolen if one is not careful, and no doubt there will be investment fraud schemes involving bitcoins.
We all know that money is not allowed within prisons. Prisoners may have commissary accounts, which the authorities control to insure security within the institution. Money coming into the institution from friends or family gets deposited to these accounts. Bitcoins really are digital currency. Prisoners would need to have access to something that can hold digital information.
A desktop or laptop computer is not currently an option for prisoners. That leaves mobile devices, which also aren’t allowed in prison but are increasingly being smuggled into institutions. Examples of how they have been smuggled behind bars include in babies’ diapers, ramen noodle soup packages, footballs, soda cans and even body cavities. Burke and Owen (2010) noted cell phones were used to:
“intimidate and threaten witnesses; transmit photographs, including offensive pictures sent to victims; orchestrate crimes, such as gang activity; coordinate escapes; bribe prison officers; order retaliation against other inmates; text other prisoners; gain access to the Internet; and create security breaches.”
Noticeably absent from that list was their use to transmit digital currency. There has been a call to use technology to block cell phone signals, which has its own problems. Technology blocking cell phone signals would not prevent them from being used to hold and transmit cryptocurrency within the institution. Some are also thinking of providing Android tablets to prisoners to facilitate re-entry. I wonder if they have thought about bitcoin wallets being used with these devices.
Access to a website that holds a bitcoin wallet is also an option. However, the inmate needs a method to access the Internet and bitcoin wallets maintained on websites have an element of risk. This leaves the hardware device. However, they are still in development. Prototypes appear to be about the size of a USB thumb-drive, which can be easily smuggled and concealed in a prison setting.
A prisoner using bitcoins or other cryptocurrency to conduct financial transactions is possible. Remember these transactions could occur without the oversight of prison authorities. I would also add that if they can conduct these transactions within the prison, it’s highly possible that the transactions would extend to outside the institution’s walls. If bitcoins or some other cryptocurrency becomes popular in general society, we may see them also adopted behind bars. After all, they are already being used for illegal purposes on the outside.
For now, institutions would be well advised to check contraband devices (cell phones and USB devices) for bitcoin or other cryptocurrency wallets and to make sure that any approved devices are not permitted to have these wallets installed. Otherwise, I think bitcoins may find their way into correctional institutions. On that note, I think I left a cigar lit somewhere. Be safe out there.
References
Basenese, L. (2014, February 27). The Exact Date for Bitcoin’s Final Crash to $0.00. Wall Street Daily. Retrieved from http://www.wallstreetdaily.com/2014/02/27/bitcoin-2/
Bitcoin in prison. (n.d.). Bitcointalk.org. Retrieved from https://bitcointalk.org/index.php?topic=251136.0
Bitcoin - Open source P2P money. (n.d.). Bitcoin - Open source P2P money. Retrieved from https://bitcoin.org
Bowker, A. (2013, November 14). Law Enforcement is on a Tor Offensive. SciTech Connect. Retrieved from http://scitechconnect.elsevier
Burke, T., & Owen, S. (2010, July 1). Cell Phones as Prison Contraband. The FBI Law Enforcement Bulletin from http://www.fbi.gov/stats-services/publications/law-enforcement-bulletin/july-2010/cell-phones-as-prison-contraband
Cox, E. (2013, August 5). Gansler Proposes Tablet Computers for Inmates. Baltimore Sun. Retrieved from http://articles.baltimoresun.com/2013-08-05/news/bs-md-inmate-android-tablets-20130805_1_inmates-gansler-tablet-computers
Farrington, B. (2014, February 16). Prisoners’ Use of Smuggled Cellphones on the Rise. Corrections1.com. Retrieved from http://www.corrections1.com/contraband/articles/6871317-Prisoners-use-of-smuggled-cellphones-on-the-rise/
Jackson, W. (n.d.). Prisons Get a New Way to Stop Inmates from using Cell Phones. GCN. Retrieved from http://gcn.com/Articles/2013/09/05/prison-cell-phones.aspx?Page=1
Schwartz, M. (2014, February 18). Bye, Bitcoin: Criminals Seek Other Crypto Currency. InformationWeek. Retrieved from http://www.informationweek.com/security/vulnerabilities-and-threats/bye-bitcoin-criminals-seek-other-crypto-currency/d/d-id/1113864