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The Political Economy of Ransomware

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Ransomware is really good at extorting money, and it can also be good at extracting geopolitical concessions. On May 7, Colonial Pipeline paid nearly $5 million to restore its systems after DarkSide used encryption to hold hostage the pipeline, which supplies nearly half of the East Coast’s fuel to 50 million people. Then, late last month, the cyber insurance company CNA paid a staggering $40 million in ransom. The problem is that, although it may be comforting to believe that these events have nothing to do with geopolitics, next time around the hackers may want something more than bitcoins.

Many scholars and observers agree that coercion is inherently difficult in cyberspace, but ransomware is quickly emerging as a counterexample. Ransomware has been able to successfully extort victims not simply because of the use of cryptocurrency, which is more difficult to trace than cash, nor just because Russia offers safe havens to cyber criminals, as some…

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