Here are the parts where they talk about Bitcoin:
Enter Bitcoin, a digital currency based on a paper9 that was self-published on the Internet in 2009
by an author listed as Satoshi Nakamoto, and whose true identity and location has generated
much speculation but much less concrete information. Bitcoin utilizes a peer-to-peer network to
create multiple complete replicas of transactions conducted by people whose identities are
hidden behind public-private key encryption pairs.10
While e-gold was backed by actual gold, Bitcoin is fully virtual, backed only by the confidence
of the people who use it for transactions. A governmental entity attempting to shut down Bitcoin
servers in its territory would almost certainly find that even more servers would spring up,
Hydra-like, in other parts of the world. As of July 23, 2011, there were approximately 6.9 million
Bitcoins trading at a value of more than $13 per Bitcoin, corresponding to a total supply of over
$90 million.11
Perhaps unsurprisingly, the use of encrypted identities in Bitcoin has spurred the creation of an
online market that accepts payments only in Bitcoins and links anonymous drug buyers with
anonymous drug sellers.12 As Senators Joe Manchin (D-WV) and Charles Schumer (D-NY)
stated in a June 2011 letter sent to Attorney General Eric Holder and Drug Enforcement
Administration Administrator Michele Leonhart, “after purchasing Bitcoins through an
exchange, a user can create an account on Silk Road and start purchasing illegal drugs from
individuals around the world and have them delivered to their homes within days.”13
The potential Achilles heel of Bitcoin—that each server in the network contains a complete record
of all transactions—will almost certainly be addressed in future systems that distribute transaction
information so that no single server or small collection of servers contains a complete transaction
record. It is also possible to envision systems in which the transaction records are not only
distributed, but evanescent, so that even the collective information stored on all the servers in the
system at any given time would not enable a complete reconstruction of transaction history.
Later on:
Technology itself is a critical aspect of the solution in several respects. First, government
agencies need to maintain an understanding of the novel methods being used to move money. On
June 14, 2011, Bitcoin open source project lead Gavin Andresen gave a presentation to a CIA
conference on emerging technologies.48 Afterward, Andresen had little to say about the meeting
other that it “went well.”49 While there was ample speculation as to why Andresen was there,
even on Andresen’s own forum, the fact that the visit occurred shows that the importance of
understanding virtual currencies—and by extension, the wider set of methods that can be used to
mask illicit financial transactions—is understood in the intelligence community.
And finally:
For the United States to ensure its national and financial security, the ability to understand the
massive flow of digital information that is the global financial system today, from micro to
macro, and from baht to Bitcoins, is of fundamental importance. Where once the numbered
Swiss bank account, the wire transfer to a shell corporation, or, as in All the President’s Men, a
paper bag containing $25,000 in cash were primary means for covert financial activity, the
Internet and mobile phone networks are the potential setting for a vastly expanded set of new,
digital avenues for conducting hidden transactions.
Clearly, the banks are annoyed that we are trying to operate outside the regulated system.
