Bitcoin funding is a miniscule portion of the terror group's revenue.
Bitcoin allows anyone to send money to anyone else while enjoying a high degree of anonymity. It's already been used by pedophiles and drug dealers. Naturally, terrorists would be the next to build up a fortune of Bitcoin. At least, that's what a wave of scaremongering articles want you to believe.
Haaretz recently published the findings of Ido Wulkan, a senior web-intelligence analyst from S2T, a Singapore-based cyber intelligence company. Wulkan claimed to have found evidence that the Islamic State were using the deep web to source funding, and were taking donations via Bitcoin.
He was carrying out work for a client, "having to do with international jihad," according to Haaretz, and came across an Islamic funding site after it was referred to from a private Turkish forum.
The site, claimed Wulkan, said that its owners "live within the United States, and some are prominent with the community on both coasts." The site also described how "We are currently working with recent reverts to Islam and generally training brothers to struggle to establish a new Islamic front both in the US and around the world."
At the bottom of the page was an email address, apparently belonging to someone who calls themselves Abu-Mustafa, and a Bitcoin address where anyone can send donations.
That description matches exactly with a deep web site called "Fund the Islamic Struggle Without Leaving a Trace." The site is not, however, a "revelation," as Haaretz put it.
In fact, this site has been known to users of the deep web since at least 2013. It was so well known in fact, that a copycat site was set up in an attempt to steal gullible users' coins. During Operation Onymous, the multi-agency sweep of the deep web that took down Silk Road 2.0 and a slew of other drug markets, that fake jihadi funding site was shut down, and the original remains to this day.
I looked up the Bitcoin address of the funding site, and it has received around 5.04 bitcoins. That's just under $1200. Compare that to the $2,000,000 a day the group was making from oil, or the $20,000,000 made by the Islamic State through random payments last year—both figures according to The Economist—and it seems that Bitcoin makes up little more than pocket change for the terrorist group, if it is the ones receiving the bitcoins in the first place.
Granted, the Islamic State could have other bitcoin wallets that it is not advertising so publicly. Regardless, from all available evidence, the amount received to this particular Islamic funding site is truly minuscule.
Wulkan said he has concrete proof that this Bitcoin address belonged to the Islamic State, or at least supporters of it. That apparent proof isn't included in the Haaretz article, and besides, Wulkan claimed that the wallet has now been shut down by the FBI. For what it's worth, the site makes no explicit reference to the Islamic State, and was created before the caliphate was announced in June 2014.
A similar media frenzy gathered when an alleged Islamic State supporter suggested using Dark Wallet, an anonymity-focused Bitcoin wallet, to send funds to the group.
Anyway, these meager donations and mild suggestions of Dark Wallet use are hardly an indication of the "wider trend" of the Islamic State using the deep web and Bitcoin, as Haaretz claimed.
Undoubtedly, jihadis are using technology. Some were using and designing email encryption before the Snowden revelations, and it appears that at least one website is encouraging Bitcoin donations. But that does not mean, despite what a quick headline would like to make you think, that Bitcoin is really of much use to terrorists right now.