Abstract:
Since their inception in 2009, cryptocurrencies have been used to carry out unlawful activities around the world. More recently however, various terrorist organizations have begun to become practitioners of this technology, albeit to varying extents. My thesis, Innovation in Terrorist Financing: Interrogating Varying Levels of Cryptocurrency Adoption in al-Qaeda, Hezbollah, and the Islamic State, endeavors to better understand the catalysts and obstacles associated with the impending adoption of cryptocurrencies by terrorist organizations. To address this question six hypotheses are proposed. First, terrorist organizations based in regions with high computing power will be more likely to use cryptocurrencies. Second, if there is less infrastructure present to facilitate the conversion of cryptocurrencies into fiat currency, terrorist organizations will be less likely to adopt the technology. Third, if cryptocurrency prices are volatile, terrorist organizations will be less likely to adopt the technology. Fourth, the more radical a terrorist organization is, the more likely it is to adopt cryptocurrencies. Fifth, the more anti-Western sentiment that exists in a terrorist organization’s doctrines, the less likely they are to adopt cryptocurrencies. And finally, sixth, if terrorist organization’s traditional means of financing their operations seem to be operating well, they will be less likely to adopt cryptocurrencies.These three hypotheses are tested in three case studies: al-Qaeda, Hezbollah, and the Islamic State. Analysis of these cases demonstrates a favorable outcome for only the sixth hypothesis, which has important and reformist implications for United States counter-terrorism policy.