The year is 2021, and the nation is in crisis. North Korea has just tested a missile that will soon be capable of delivering a nuclear warhead to the continental U.S. The move took Washington by surprise as the project was likely funded via a new Chinese digital currency, which allowed North Korea to bypass the global banking system. In response, the National Security Council House has gathered in the White House Situation Room to formulate short- and long-term responses.

“Digital Currency Wars: A National Security Crisis Simulation” unfolded before a packed audience in Kennedy School Forum on Tuesday night. Hosted by the Economic Diplomacy Initiative and co-sponsored by the Belfer Center for Science and International Affairs, the exercise brought together administration veterans, career diplomats, and academics to dramatize a very real prospect — the rise of an encrypted digital currency that would upend the U.S. dollar’s dominance and effectively render ineffective economic sanctions, like those currently applied to North Korea.

Belfer Center Co-Director Eric Rosenbach played the U.S. national security adviser. With the usual Forum podium set up like the White House Situation Room, complete with red phone, he asked the center’s executive director, Aditi Kumar, in the role of the deputy national security adviser, to summarize the intelligence on the launch. The reply: “The CIA believes with a high degree of confidence that this missile can … deliver a warhead to the continental U.S. in six to nine months.”

The situation was hypothetical, but the proliferation of so-called virtual cryptocurrencies, like Bitcoin, poses real-world threats because they allow unmonitored movement of large sums of money on decentralized networks. “The fundamental nature of money is changing,” said Neha Narula, director of the Digital Currency Initiative, part of the MIT Media Lab, playing the assistant to the president for digital currencies, aka the Currency Czar. She then outlined various potential scenarios, like cyberattacks on individual banks and the international SWIFT (Society for Worldwide Interbank Financial Telecommunication) banking network, acts of aggression that can be secretly funded by cryptocurrencies, which cannot be easily traced.