According to the scholars from the Cornell University and the University of Maryland, Ethereum and similar platforms will make possible such criminal contracts as offering a cryptocurrency reward for hacking or for an assassination.

Professor Ari Juels of the Cornell University believes that smart contracts enabled by the blockchain are “in some ways, the perfect vehicle for criminal acts”. No lawyer can guarantee a trust between two criminals. However, a smart contract, or a “legally binding agreement that executes itself through software”, eliminates any need for a lawyer or another kind of human intermediary. It means people wishing to command a crime can compile a “smart contract” with a would-be perpetrator: when the job is complete, the payment is sent automatically.

Two examples are provided in a manuscript research paper The Ring of Gyges: Using Smart Contracts for Crime authored by Juels in collaboration with Elaine Shi, also from the Cornell University, and Ahmed Kosba, of the University of Maryland, and cited in a MIT Technology Review. If a reward is offered for hacking of a website, a cryptographically verifiable string added to the site can be used as proof for an Ethereum smart contract. If an assassination of a public figure is solicited, the hitman could send the information about the time and place of death in advance. When the details are published in several trusted news outlets, the software would release the money.

According to Nicolas Christin of the Carnegie Mellon University, it would not be surprising if criminals were among the first to use blockchain smart contracts: “Fringe businesses tend to be the first adopters of new technologies, because they don’t have anything to lose.” Bitcoin markets hidden in Dark web and bitcoin ransomware are among the few examples.

However, the scholars tend to be optimistic. Bitcoin crime is still insignificant in volume if compared with its cash-based counterpart. And writing or understanding smart contracts is much more complicated than carrying out bitcoin transactions. Finally, the researchers hope to find ways to develop the positive use for smart contracts and impede their criminal use.

Elaine Shi, of the Cornell University, is the head of the research project involving three American universities (the Cornell University, the University of Maryland and the University of California Berkeley) that were awarded a $3 million grant to explore cryptocurrencies and smart contracts.

The first release of Ethereum was launched two weeks ago. A number of observers, including the computer technology giant HP, believe that blockchain smart contracts could save companies billions of dollars.


Alexey Tereshchenko