Bitcoin: ‘Islamic State’s online currency venture

“Islamic State’s” latest ploy in its quest to carve out a state from nations in the Middle East and Africa illustrates a political project that encompasses all aspects of life, especially those which concern finance and economy.

Intent on transforming itself from a group of militants from disparate backgrounds to a recognized nation, the “Islamic State” is continuing to buildup state-like institutions and services, including schools, hospitals and now a treasury.

Its apparent use of the decentralized technology Bitcoin has come at nearly the same time as IS minted and released its own currency, the “gold dinar.” The group’s use of the two currencies, however, will likely serve different purposes.

Donations through digital transactions

The technology behind the digital currency Bitcoin makes it difficult to trace, with a single unidentifiable wallet – or account – tied to IS having received around $23 million (20.3 million euros) worth of Bitcoin in the past month.

The EU Institute for Security Studies (EUISS) published a report in June detailing the “Islamic State’s” use of digital currencies and encrypted platforms, noting that such practices makes it “particularly hard to trace” the flow of finances and black market goods.

The online currency Bitcoin is extremely difficult to trace

“Sadaqa (private donations) constitute one of ISIL’s main sources of revenue, and its supporters around the world have allegedly used digital currencies such as Bitcoin to transfer money quickly to accounts held by ISIL militants while minimizing the risk of detection,” wrote EUISS junior analyst Beatrice Berton, referring to IS by an alternate acronoym.

Thousands of dollars worth of Bitcoin has been sent to accounts purportedly affiliated with the “Islamic State,” with the one of the accounts registering its first transaction in 2012.

However, following a chain of transactions from the concerned account leads to another with more than $3 million (2.65

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