Experts tackle cryptocurrency for October CHDS Alumni Hour

Cryptocurrency and the technology that supports it have massive potential for transforming the way business transactions are conducted, but they also are vulnerable to criminal misuse and can result in environmental impacts so they need to be properly and effectively regulated.

Those were a few of the messages from faculty and alumni experts who discussed the complicated and rapidly evolving sphere of cryptocurrency during the Center for Homeland Defense and Security Alumni Hour on Oct. 21.

CHDS faculty and alumni cryptocurrency experts Dr. Bijan Karimi (top left) and Ryan Jerde (below left) appear with faculty members Dr. Rodrigo Nieto-Gomez and David O’Keeffe during the Oct. 21 Alumni Hour.

Cryptocurrency is generally defined as a digital or virtual currency valued by algorithm and operating in a decentralized system using cryptography backed by blockchain technology. Bitcoin is the most popular form of cryptocurrency, but there are others including Litecoin, Peercoin, Namecoin, Ethereum, Cadano, and EOS. As of August, the aggregate value of all cryptocurrencies was estimated at more than $1.8 trillion, with Bitcoin representing about 46.5 percent of that value.

Moderated by CHDS faculty member Dr. Rodrigo Nieto-Gomez, the Alumni Hour was held online and featured CHDS instructor and alum Dr. Bijan Karimi (Master’s Program 1401/02, UAPP participant), the Assistant Vice President of Business Continuity with the Federal Reserve Bank of San Francisco, and CHDS alum Ryan Jerde (Master’s Program 1603/04), who serves as Senior National Security Liaison for the U.S. Department of Homeland Security.

In response to a series of questions and topics from Gomez, Karimi and Jerde discussed a range of cryptocurrency issues, including:

  • The birth of cryptocurrency, which dates back to a white paper written on block chain technology by an individual or group under the pseudonym Satoshi Nakamoto more than a decade ago and the subsequent launch of Bitcoin. 
  • The benefits and potential of cryptocurrency and block chain technology, including cheaper transactions as a result of cutting out intermediaries, and the possible future use of the technology for real estate and health records, and the like, as well as the apparent security of the blockchain system which has reportedly never been hacked. 
  • The dangers and drawbacks of the cryptocurrency, including criminal use in ransomware, the volatility and unsecured nature of the cryptocurrency market largely because the currency is not supported by anything tangible, and the environmental impacts and costs of increased energy use during the “mining” of Bitcoin. 
  • The homeland security implications of cryptocurrency, including the potential destabilizing effects of what Jerde called a “disruptive” technology such as threats to the U.S. global economic influence. 

Karimi noted both the “tangible negative use” of the technology and the “promise of beneficial use,” which regulators and elected officials are trying to address in what he called an “entirely unregulated market.”

Jerde pointed out there are both relatively legitimate and illegitimate cryptocurrency market exchanges, and customers’ risk of getting bilked depends on where and how they conduct transactions.

While Jerde noted that subsequent investigations, including those involving the well-known “Silk Road” dark web affair, succeeded in “knocking down” cryptocurrency black markets over the last several years, he said those efforts had not resulted in achieving “general deterrence.”

Jerde’s CHDS Master’s thesis was entitled, “Follow the Silk Road: How Internet Affordances Influence and Transform Crime and Law Enforcement” (2017), and was nominated for an Outstanding Thesis Award.

Jerde’s thesis is available here:

Follow the Silk Road: How Internet Affordances Influence and Transform Crime and Law Enforcement

Both Jerde and Karimi agreed the technology should not be banned but properly and effectively regulated without hampering innovation.

But Jerde said it will be a challenge for regulatory and law enforcement agencies to keep up with the ever-changing technology, while also hoping aloud that regulation won’t be “too heavy-handed.”

“I’d like to stress that it’s hard to find the balance,” I don’t believe the technology is bad but there are so many instances where it’s used for bad things. I don’t think we’re going to get ahead of it until we get regulation. I definitely think regulation needs to move faster.”

Karimi said he hopes his own research on the subject, including that contained in his doctoral dissertation entitled “Cryptographic Currency and Economic Security: Threats, Opportunities, and Regulatory Challenges” (USC Sol Price School of Public Policy), will help homeland security officials get a “better sense of what’s coming,” and will prompt a more “cyber-aware workforce.”

He credited the CHDS network with helping him develop his research on the topic.

Karimi’ dissertation is available here:

“Cryptographic currency and economic security: threats, opportunities, and regulatory challenges”

The Alumni Hour was recorded and is available on the CHDS Alumni Network website.

INQUIRIES: Heather Hollingsworth Issvoran, Communications and Recruitment | hissvora@nps.edu, 831-402-4672 (PST)

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