If you think of national security as the combination of functions in a variety of domains, the domains themselves have something recent and disturbing in common. Namely, the adversariesโ use of cryptocurrencies to finance their activities.
What characterizes cryptocurrency operations is dependence on blockchains, encrypted ledgers to keep track of crypto transactions. According to Derek Claiborne, the director of national security initiatives at Chainalysis, deciphering blockchains leads to better understanding of threat actors โ where...
If you think of national security as the combination of functions in a variety of domains, the domains themselves have something recent and disturbing in common. Namely, the adversariesโ use of cryptocurrencies to finance their activities.
What characterizes cryptocurrency operations is dependence on blockchains, encrypted ledgers to keep track of crypto transactions. According to Derek Claiborne, the director of national security initiatives at Chainalysis, deciphering blockchains leads to better understanding of threat actors โ where theyโre operating and what theyโre doing.
As its name implies, Chainalysis provides tools to do so.
Claiborne names six of what he called โmain domainsโ that constitute the national security enterprise: military, intelligence, diplomacy, economics, law enforcement and cybersecurity. Whether funding illicit weapons, terror groups, mercenary forces, counterintelligence, cyber-based extortion or any other adversarial activity, understanding crypto currency flows โreally serves to supercharge your ability to understand the domain,โ Claiborne said in the series The Nexus of Cryptocurrency and National Security.
For example, โyou can employ blockchain analytics to track individuals using cryptocurrency and then gather intelligence on potential threats,โ he said.
The cybersecurity domain, Claiborne added, โin many ways is a kind of tipping point for the rest of the domains. It truly impacts all other domains.โ One reason is that ransomware attacks, which demand payment in cryptocurrencies, ultimately finance many of the other activities around the world.
Federal agencies trying to follow money can use blockchain analysis to detect โofframpsโ โ the points at which cryptocurrencies convert to hard currencies subject to seizure, Claiborne said.
Blockchain entries, regardless of what type of transactions they represent, donโt appear to be fundamentally decipherable. Theyโre simply long strings of integers resulting from sophisticated encryption.
On the other hand, blockchains are generally open source.
โYou and I could sit here and download the Bitcoin blockchain,โ Claiborne said. โWe could read it out here for the Federal News Network.โ
Intelligence surrounding them is also open source. That, Claiborne says, requires a lot of curation and the computing capacity to deal with it, something Chainalysis has been doing for a decade. He said that, plus the addition of artificial intelligence, enables the company to work with federal national security and law enforcement agencies to deal with threats and criminal activity using evidence from cryptocurrency blockchains.
Sheer volumes of data alone wonโt cut it, Claiborne added. โItโs important to have this data from a known and legitimate source, and also vetted and audited.โ He said Chainalysis has hundreds of employees doing just that, daily.
โChainalysis does a lot of work to put the AI, machine learning and heuristics behind [data],โ he said, โto cluster this information and be able to tell agencies whoโs who on the blockchain and identify patterns. Thatโs really the essence of it.โ
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