Tag Archives: Bitcoin

Decarbonizing Cryptocurrencies through Taxation

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2023/01/decarbonizing-cryptocurrencies-through-taxation.html

Maintaining bitcoin and other cryptocurrencies causes about 0.3 percent of global CO2 emissions. That may not sound like a lot, but it’s more than the emissions of Switzerland, Croatia, and Norway combined. As many cryptocurrencies crash and the FTX bankruptcy moves into the litigation stage, regulators are likely to scrutinize the cryptocurrency world more than ever before. This presents a perfect opportunity to curb their environmental damage.

The good news is that cryptocurrencies don’t have to be carbon intensive. In fact, some have near-zero emissions. To encourage polluting currencies to reduce their carbon footprint, we need to force buyers to pay for their environmental harms through taxes.

The difference in emissions among cryptocurrencies comes down to how they create new coins. Bitcoin and other high emitters use a system called “proof of work“: to generate coins, participants, or “miners,” have to solve math problems that demand extraordinary computing power. This allows currencies to maintain their decentralized ledger—the blockchain—but requires enormous amounts of energy.

Greener alternatives exist. Most notably, the “proof of stake” system enables participants to maintain their blockchain by depositing cryptocurrency holdings in a pool. When the second-largest cryptocurrency, Ethereum, switched from proof of work to proof of stake earlier this year, its energy consumption dropped by more than 99.9% overnight.

Bitcoin and other cryptocurrencies probably won’t follow suit unless forced to, because proof of work offers massive profits to miners—and they’re the ones with power in the system. Multiple legislative levers could be used to entice them to change.

The most blunt solution is to ban cryptocurrency mining altogether. China did this in 2018, but it only made the problem worse; mining moved to other countries with even less efficient energy generation, and emissions went up. The only way for a mining ban to meaningfully reduce carbon emissions is to enact it across most of the globe. Achieving that level of international consensus is, to say the least, unlikely.

A second solution is to prohibit the buying and selling of proof-of-work currencies. The European Parliament’s Committee on Economic and Monetary Affairs considered making such a proposal, but voted against it in March. This is understandable; as with a mining ban, it would be both viewed as paternalistic and difficult to implement politically.

Employing a tax instead of an outright ban would largely skirt these issues. As with taxes on gasoline, tobacco, plastics, and alcohol, a cryptocurrency tax could reduce real-world harm by making consumers pay for it.

Most ways of taxing cryptocurrencies would be inefficient, because they’re easy to circumvent and hard to enforce. To avoid these pitfalls, the tax should be levied as a fixed percentage of each proof-of-work-cryptocurrency purchase. Cryptocurrency exchanges should collect the tax, just as merchants collect sales taxes from customers before passing the sum on to governments. To make it harder to evade, the tax should apply regardless of how the proof-of-work currency is being exchanged—whether for a fiat currency or another cryptocurrency. Most important, any state that implements the tax should target all purchases by citizens in its jurisdiction, even if they buy through exchanges with no legal presence in the country.

This sort of tax would be transparent and easy to enforce. Because most people buy cryptocurrencies from one of only a few large exchanges—such as Binance, Coinbase, and Kraken—auditing them should be cheap enough that it pays for itself. If an exchange fails to comply, it should be banned.

Even a small tax on proof-of-work currencies would reduce their damage to the planet. Imagine that you’re new to cryptocurrency and want to become a first-time investor. You’re presented with a range of currencies to choose from: bitcoin, ether, litecoin, monero, and others. You notice that all of them except ether add an environmental tax to your purchase price. Which one do you buy?

Countries don’t need to coordinate across borders for a proof-of-work tax on their own citizens to be effective. But early adopters should still consider ways to encourage others to come on board. This has precedent. The European Union is trying to influence global policy with its carbon border adjustments, which are designed to discourage people from buying carbon-intensive products abroad in order to skirt taxes. Similar rules for a proof-of-work tax could persuade other countries to adopt one.

Of course, some people will try to evade the tax, just as people evade every other tax. For example, people might buy tax-free coins on centralized exchanges and then swap them for polluting coins on decentralized exchanges. To some extent, this is inevitable; no tax is perfect. But the effort and technical know-how needed to evade a proof-of-work tax will be a major deterrent.

Even if only a few countries implement this tax—and even if some people evade it—the desirability of bitcoin will fall globally, and the environmental benefit will be significant. A high enough tax could also cause a self-reinforcing cycle that will drive down these cryptocurrencies’ prices. Because the value of many cryptocurrencies rely largely on speculation, they are dependent on future buyers. When speculators are deterred by the tax, the lack of demand will cause the price of bitcoin to fall, which could prompt more current holders to sell—further lowering prices and accelerating the effect. Declining prices will pressure the bitcoin community to abandon proof of work altogether.

Taxing proof-of-work exchanges might hurt them in the short run, but it would not hinder blockchain innovation. Instead, it would redirect innovation toward greener cryptocurrencies. This is no different than how government incentives for electric vehicles encourage carmakers to improve green alternatives to the internal combustion engine. These incentives don’t restrict innovation in automobiles—they promote it.

Taxing environmentally harmful cryptocurrencies can gain support across the political spectrum, from people with varied interests. It would benefit blockchain innovators and cryptocurrency researchers by shifting focus from environmental harm to beneficial uses of the technology. It has the potential to make our planet significantly greener. It would increase government revenues.

Even bitcoin maximalists have reason to embrace the proposal: it would offer the bitcoin community a chance to prove it can survive and grow sustainably.

This essay was written with Christos Porios, and previously appeared in the Atlantic.

On the Dangers of Cryptocurrencies and the Uselessness of Blockchain

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/06/on-the-dangers-of-cryptocurrencies-and-the-uselessness-of-blockchain.html

Earlier this month, I and others wrote a letter to Congress, basically saying that cryptocurrencies are an complete and total disaster, and urging them to regulate the space. Nothing in that letter is out of the ordinary, and is in line with what I wrote about blockchain in 2019. In response, Matthew Green has written—not really a rebuttal—but a “a general response to some of the more common spurious objections…people make to public blockchain systems.” In it, he makes several broad points:

  1. Yes, current proof-of-work blockchains like bitcoin are terrible for the environment. But there are other modes like proof-of-stake that are not.
  2. Yes, a blockchain is an immutable ledger making it impossible to undo specific transactions. But that doesn’t mean there can’t be some governance system on top of the blockchain that enables reversals.
  3. Yes, bitcoin doesn’t scale and the fees are too high. But that’s nothing inherent in blockchain technology—that’s just a bunch of bad design choices bitcoin made.
  4. Blockchain systems can have a little or a lot of privacy, depending on how they are designed and implemented.

There’s nothing on that list that I disagree with. (We can argue about whether proof-of-stake is actually an improvement. I am skeptical of systems that enshrine a “they who have the gold make the rules” system of governance. And to the extent any of those scaling solutions work, they undo the decentralization blockchain claims to have.) But I also think that these defenses largely miss the point. To me, the problem isn’t that blockchain systems can be made slightly less awful than they are today. The problem is that they don’t do anything their proponents claim they do. In some very important ways, they’re not secure. They don’t replace trust with code; in fact, in many ways they are far less trustworthy than non-blockchain systems. They’re not decentralized, and their inevitable centralization is harmful because it’s largely emergent and ill-defined. They still have trusted intermediaries, often with more power and less oversight than non-blockchain systems. They still require governance. They still require regulation. (These things are what I wrote about here.) The problem with blockchain is that it’s not an improvement to any system—and often makes things worse.

In our letter, we write: “By its very design, blockchain technology is poorly suited for just about every purpose currently touted as a present or potential source of public benefit. From its inception, this technology has been a solution in search of a problem and has now latched onto concepts such as financial inclusion and data transparency to justify its existence, despite far better solutions to these issues already in use. Despite more than thirteen years of development, it has severe limitations and design flaws that preclude almost all applications that deal with public customer data and regulated financial transactions and are not an improvement on existing non-blockchain solutions.”

Green responds: “‘Public blockchain’ technology enables many stupid things: today’s cryptocurrency schemes can be venal, corrupt, overpromised. But the core technology is absolutely not useless. In fact, I think there are some pretty exciting things happening in the field, even if most of them are further away from reality than their boosters would admit.” I have yet to see one. More specifically, I can’t find a blockchain application whose value has anything to do with the blockchain part, that wouldn’t be made safer, more secure, more reliable, and just plain better by removing the blockchain part. I postulate that no one has ever said “Here is a problem that I have. Oh look, blockchain is a good solution.” In every case, the order has been: “I have a blockchain. Oh look, there is a problem I can apply it to.” And in no cases does it actually help.

Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it. (And “ransomware couldn’t exist because criminals are blocked from using the conventional financial networks, and cash payments aren’t feasible” does not count.)

For example, Green complains that “credit card merchant fees are similar, or have actually risen in the United States since the 1990s.” This is true, but has little to do with technological inefficiencies or existing trust relationships in the industry. It’s because pretty much everyone who can and is paying attention gets 1% back on their purchases: in cash, frequent flier miles, or other affinity points. Green is right about how unfair this is. It’s a regressive subsidy, “since these fees are baked into the cost of most retail goods and thus fall heavily on the working poor (who pay them even if they use cash).” But that has nothing to do with the lack of blockchain, and solving it isn’t helped by adding a blockchain. It’s a regulatory problem; with a few exceptions, credit card companies have successfully pressured merchants into charging the same prices, whether someone pays in cash or with a credit card. Peer-to-peer payment systems like PayPal, Venmo, MPesa, and AliPay all get around those high transaction fees, and none of them use blockchain.

This is my basic argument: blockchain does nothing to solve any existing problem with financial (or other) systems. Those problems are inherently economic and political, and have nothing to do with technology. And, more importantly, technology can’t solve economic and political problems. Which is good, because adding blockchain causes a whole slew of new problems and makes all of these systems much, much worse.

Green writes: “I have no problem with the idea of legislators (intelligently) passing laws to regulate cryptocurrency. Indeed, given the level of insanity and the number of outright scams that are happening in this area, it’s pretty obvious that our current regulatory framework is not up to the task.” But when you remove the insanity and the scams, what’s left?

EDITED TO ADD: Nicholas Weaver is also adamant about this. David Rosenthal is good, too.

EDITED TO ADD (7/8/2022): This post has been translated into German.

De-anonymizing Bitcoin

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2022/04/de-anonymizing-bitcoin.html

Andy Greenberg wrote a long article — an excerpt from his new book — on how law enforcement de-anonymized bitcoin transactions to take down a global child porn ring.

Within a few years of Bitcoin’s arrival, academic security researchers — and then companies like Chainalysis — began to tear gaping holes in the masks separating Bitcoin users’ addresses and their real-world identities. They could follow bitcoins on the blockchain as they moved from address to address until they reached one that could be tied to a known identity. In some cases, an investigator could learn someone’s Bitcoin addresses by transacting with them, the way an undercover narcotics agent might conduct a buy-and-bust. In other cases, they could trace a target’s coins to an account at a cryptocurrency exchange where financial regulations required users to prove their identity. A quick subpoena to the exchange from one of Chainalysis’ customers in law enforcement was then enough to strip away any illusion of Bitcoin’s anonymity.

Chainalysis had combined these techniques for de-anonymizing Bitcoin users with methods that allowed it to “cluster” addresses, showing that anywhere from dozens to millions of addresses sometimes belonged to a single person or organization. When coins from two or more addresses were spent in a single transaction, for instance, it revealed that whoever created that “multi-input” transaction must have control of both spender addresses, allowing Chainalysis to lump them into a single identity. In other cases, Chainalysis and its users could follow a “peel chain” — a process analogous to tracking a single wad of cash as a user repeatedly pulled it out, peeled off a few bills, and put it back in a different pocket. In those peel chains, bitcoins would be moved out of one address as a fraction was paid to a recipient and then the remainder returned to the spender at a “change” address. Distinguishing those change addresses could allow an investigator to follow a sum of money as it hopped from one address to the next, charting its path through the noise of Bitcoin’s blockchain.

Thanks to tricks like these, Bitcoin had turned out to be practically the opposite of untraceable: a kind of honeypot for crypto criminals that had, for years, dutifully and unerasably recorded evidence of their dirty deals. By 2017, agencies like the FBI, the Drug Enforcement Agency, and the IRS’s Criminal Investigation division (or IRS-CI) had traced Bitcoin transactions to carry out one investigative coup after another, very often with the help of Chainalysis.

Stolen Bitcoins Returned

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/12/stolen-bitcoins-returned.html

The US has returned $154 million in bitcoins stolen by a Sony employee.

However, on December 1, following an investigation in collaboration with Japanese law enforcement authorities, the FBI seized the 3879.16242937 BTC in Ishii’s wallet after obtaining the private key, which made it possible to transfer all the bitcoins to the FBI’s bitcoin wallet.

Google Shuts Down Glupteba Botnet, Sues Operators

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/12/google-shuts-down-glupteba-botnet-sues-operators.html

Google took steps to shut down the Glupteba botnet, at least for now. (The botnet uses the bitcoin blockchain as a backup command-and-control mechanism, making it hard to get rid of it permanently.) So Google is also suing the botnet’s operators.

It’s an interesting strategy. Let’s see if it’s successful.

Wire Fraud Scam Upgraded with Bitcoin

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/11/wire-fraud-scam-upgraded-with-bitcoin.html

The FBI has issued a bulletin describing a bitcoin variant of a wire fraud scam:

As the agency describes it, the scammer will contact their victim and somehow convince them that they need to send money, either with promises of love, further riches, or by impersonating an actual institution like a bank or utility company. After the mark is convinced, the scammer will have them get cash (sometimes out of investment or retirement accounts), and head to an ATM that sells cryptocurrencies and supports reading QR codes. Once the victim’s there, they’ll scan a QR code that the scammer sent them, which will tell the machine to send any crypto purchased to the scammer’s address. Just like that, the victim loses their money, and the scammer has successfully exploited them.

[…]

The “upgrade” (as it were) for scammers with the crypto ATM method is two-fold: it can be less friction than sending a wire transfer, and at the end the scammer has cryptocurrency instead of fiat. With wire transfers, you have to fill out a form, and you may give that form to an actual person (who could potentially vibe check you). Using the ATM method, there’s less time to reflect on the fact that you’re about to send money to a stranger. And, if you’re a criminal trying to get your hands on Bitcoin, you won’t have to teach your targets how to buy coins on the internet and transfer them to another wallet — they probably already know how to use an ATM and scan a QR code.

I Am Not Satoshi Nakamoto

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/09/i-am-not-satoshi-nakamoto.html

This isn’t the first time I’ve received an e-mail like this:

Hey! I’ve done my research and looked at a lot of facts and old forgotten archives. I know that you are Satoshi, I do not want to tell anyone about this. I just wanted to say that you created weapons of mass destruction where niches remained poor and the rich got richer! When bitcoin first appeared, I was small, and alas, my family lost everything on this, you won’t find an apple in the winter garden, people only need strength and money. Sorry for the English, I am from Russia, I can write with errors. You are an amazingly intelligent person, very intelligent, but the road to hell is paved with good intentions. Once I dreamed of a better life for myself and my children, but this will never come …

I like the bit about “old forgotten archives,” by which I assume he’s referring to the sci.crypt Usenet group and the Cypherpunks mailing list. (I posted to the latter a lot, and the former rarely.)

For the record, I am not Satoshi Nakamoto. I suppose I could have invented the bitcoin protocols, but I wouldn’t have done it in secret. I would have drafted a paper, showed it to a lot of smart people, and improved it based on their comments. And then I would have published it under my own name. Maybe I would have realized how dumb the whole idea is. I doubt I would have predicted that it would become so popular and contribute materially to global climate change. In any case, I did nothing of the sort.

Read the paper. It doesn’t even sound like me.

Of course, this will convince no one who doesn’t already believe. Such is the nature of conspiracy theories.

Disrupting Ransomware by Disrupting Bitcoin

Post Syndicated from Bruce Schneier original https://www.schneier.com/blog/archives/2021/07/disrupting-ransomware-by-disrupting-bitcoin.html

Ransomware isn’t new; the idea dates back to 1986 with the “Brain” computer virus. Now, it’s become the criminal business model of the internet for two reasons. The first is the realization that no one values data more than its original owner, and it makes more sense to ransom it back to them — sometimes with the added extortion of threatening to make it public — than it does to sell it to anyone else. The second is a safe way of collecting ransoms: bitcoin.

This is where the suggestion to ban cryptocurrencies as a way to “solve” ransomware comes from. Lee Reiners, executive director of the Global Financial Markets Center at Duke Law, proposed this in a recent Wall Street Journal op-ed. Journalist Jacob Silverman made the same proposal in a New Republic essay. Without this payment channel, they write, the major ransomware epidemic is likely to vanish, since the only payment alternatives are suitcases full of cash or the banking system, both of which have severe limitations for criminal enterprises.

It’s the same problem kidnappers have had for centuries. The riskiest part of the operation is collecting the ransom. That’s when the criminal exposes themselves, by telling the payer where to leave the money. Or gives out their banking details. This is how law enforcement tracks kidnappers down and arrests them. The rise of an anonymous, global, distributed money-transfer system outside of any national control is what makes computer ransomware possible.

This problem is made worse by the nature of the criminals. They operate out of countries that don’t have the resources to prosecute cybercriminals, like Nigeria; or protect cybercriminals that only attack outside their borders, like Russia; or use the proceeds as a revenue stream, like North Korea. So even when a particular group is identified, it is often impossible to prosecute. Which leaves the only tools left a combination of successfully blocking attacks (another hard problem) and eliminating the payment channels that the criminals need to turn their attacks into profit.

In this light, banning cryptocurrencies like bitcoin is an obvious solution. But while the solution is conceptually simple, it’s also impossible because — despite its overwhelming problems — there are so many legitimate interests using cryptocurrencies, albeit largely for speculation and not for legal payments.

We suggest an easier alternative: merely disrupt the cryptocurrency markets. Making them harder to use will have the effect of making them less useful as a ransomware payment vehicle, and not just because victims will have more difficulty figuring out how to pay. The reason requires understanding how criminals collect their profits.

Paying a ransom starts with a victim turning a large sum of money into bitcoin and then transferring it to a criminal controlled “account.” Bitcoin is, in itself, useless to the criminal. You can’t actually buy much with bitcoin. It’s more like casino chips, only usable in a single establishment for a single purpose. (Yes, there are companies that “accept” bitcoin, but that is mostly a PR stunt.) A criminal needs to convert the bitcoin into some national currency that he can actually save, spend, invest, or whatever.

This is where it gets interesting. Conceptually, bitcoin combines numbered Swiss bank accounts with public transactions and balances. Anyone can create as many anonymous accounts as they want, but every transaction is posted publicly for the entire world to see. This creates some important challenges for these criminals.

First, the criminal needs to take efforts to conceal the bitcoin. In the old days, criminals used “https://www.justice.gov/opa/pr/individual-arrested-and-charged-operating-notorious-darknet-cryptocurrency-mixer”>mixing services“: third parties that would accept bitcoin into one account and then return it (minus a fee) from an unconnected set of accounts. Modern bitcoin tracing tools make this money laundering trick ineffective. Instead, the modern criminal does something called “chain swaps.”

In a chain swap, the criminal transfers the bitcoin to a shady offshore cryptocurrency exchange. These exchanges are notoriously weak about enforcing money laundering laws and — for the most part — don’t have access to the banking system. Once on this alternate exchange, the criminal sells his bitcoin and buys some other cryptocurrency like Ethereum, Dogecoin, Tether, Monero, or one of dozens of others. They then transfer it to another shady offshore exchange and transfer it back into bitcoin. Voila­ — they now have “clean” bitcoin.

Second, the criminal needs to convert that bitcoin into spendable money. They take their newly cleaned bitcoin and transfer it to yet another exchange, one connected to the banking system. Or perhaps they hire someone else to do this step. These exchanges conduct greater oversight of their customers, but the criminal can use a network of bogus accounts, recruit a bunch of users to act as mules, or simply bribe an employee at the exchange to evade whatever laws there. The end result of this activity is to turn the bitcoin into dollars, euros, or some other easily usable currency.

Both of these steps — the chain swapping and currency conversion — require a large amount of normal activity to keep from standing out. That is, they will be easy for law enforcement to identify unless they are hiding among lots of regular, noncriminal transactions. If speculators stopped buying and selling cryptocurrencies and the market shrunk drastically, these criminal activities would no longer be easy to conceal: there’s simply too much money involved.

This is why disruption will work. It doesn’t require an outright ban to stop these criminals from using bitcoin — just enough sand in the gears in the cryptocurrency space to reduce its size and scope.

How do we do this?

The first mechanism observes that the criminal’s flows have a unique pattern. The overall cryptocurrency space is “zero sum”: Every dollar made was provided by someone else. And the primary legal use of cryptocurrencies involves speculation: people effectively betting on a currency’s future value. So the background speculators are mostly balanced: One bitcoin in results in one bitcoin out. There are exceptions involving offshore exchanges and speculation among different cryptocurrencies, but they’re marginal, and only involve turning one bitcoin into a little more (if a speculator is lucky) or a little less (if unlucky).

Criminals and their victims act differently. Victims are net buyers, turning millions of dollars into bitcoin and never going the other way. Criminals are net sellers, only turning bitcoin into currency. The only other net sellers are the cryptocurrency miners, and they are easy to identify.

Any banked exchange that cares about enforcing money laundering laws must consider all significant net sellers of cryptocurrencies as potential criminals and report them to both in-country and US financial authorities. Any exchange that doesn’t should have its banking forcefully cut.

The US Treasury can ensure these exchanges are cut out of the banking system. By designating a rogue but banked exchange, the Treasury says that it is illegal not only to do business with the exchange but for US banks to do business with the exchange’s bank. As a consequence, the rogue exchange would quickly find its banking options eliminated.

A second mechanism involves the IRS. In 2019, it started demanding information from cryptocurrency exchanges and added a check box to the 1040 form that requires disclosure from those who both buy and sell cryptocurrencies. And while this is intended to target tax evasion, it has the side consequence of disrupting those offshore exchanges criminals rely to launder their bitcoin. Speculation on cryptocurrency is far less attractive since the speculators have to pay taxes but most exchanges don’t help out by filing 1099-Bs that make it easy to calculate the taxes owed.

A third mechanism involves targeting the cryptocurrency Tether. While most cryptocurrencies have values that fluctuate with demand, Tether is a “stablecoin” that is supposedly backed one-to-one with dollars. Of course, it probably isn’t, as its claim to be the seventh largest holder of commercial paper (short-term loans to major businesses) is blatantly untrue. Instead, they appear part of a cycle where new Tether is issued, used to buy cryptocurrencies, and the resulting cryptocurrencies now “back” Tether and drive up the price.

This behavior is clearly that of a “wildcat bank,” an 1800s fraudulent banking style that has long been illegal. Tether also bears a striking similarity to Liberty Reserve, an online currency that the Department of Justice successfully prosecuted for money laundering in 2013. Shutting down Tether would have the side effect of eliminating the value proposition for the exchanges that support chain swapping, since these exchanges need a “stable” value for the speculators to trade against.

There are further possibilities. One involves treating the cryptocurrency miners, those who validate all transactions and add them to the public record, as money transmitters — and subject to the regulations around that business. Another option involves requiring cryptocurrency exchanges to actually deliver the cryptocurrencies into customer-controlled wallets.

Effectively, all cryptocurrency exchanges avoid transferring cryptocurrencies between customers. Instead, they simply record entries in a central database. This makes sense because actual “on chain” transactions can be particularly expensive for cryptocurrencies like bitcoin or Ethereum. If all speculators needed to actually receive their bitcoins, it would make clear that its value proposition as a currency simply doesn’t exist, as the already strained system would grind to a halt.

And, of course, law enforcement can already target criminals’ bitcoin directly. An example of this just occurred, when US law enforcement was able to seize 85% of the $4 million ransom Colonial Pipeline paid to the criminal organization DarkSide. That by the time the seizure occurred the bitcoin lost more than 30% of its value is just one more reminder of how unworkable bitcoin is as a “store of value.”

There is no single silver bullet to disrupt either cryptocurrencies or ransomware. But enough little disruptions, a “death of a thousand cuts” through new and existing regulation, should make bitcoin no longer usable for ransomware. And if there’s no safe way for a criminal to collect the ransom, their business model becomes no longer viable.

This essay was written with Nicholas Weaver, and previously appeared on Slate.com.