In 2014, there was a scandal concerning Tokyo’s Mt. Gox exchange, which was hacked by an unknown group of crackers who stole $350 million worth in bitcoins. This is one of the biggest financial crimes in the history of cryptocurrencies. Mt. Gox ended up going bankrupt with users losing a lot of money in the process.
More recently, hackers have organized an attack and successfully moved $60 million worth of ether from the Decentralized Autonomous Organization (DAO), to an account controller by an unknown individual or a group. Although the funds were later recovered it was a good reminder that the cybercriminals are running rampant and that having a robust security system is a must-have in today’s world.
Bitcoin is the first cryptocurrency ever created. It started off in 2009 and has flag shipped the crypto market into existence. This has given a precedent for a lot of alternative bitcoins (altcoins) to come into play as well. The new technology brought a modern way of doing banking. The biggest draw for a lot of institutions is the redundancy of middleman institutions like banks and credit unions. However, not all of the financial markets support trading with cryptocurrency so it certainly has its cons as well.
All of this excitement has brought in a lot of fraudulent activities as well. Although the transactions are more or less transparent, the owner of the wallets is still anonymous therefore even if we know where the money got transferred it does not mean that we know who it ended up with. People have been utilizing these opportunities to whitewash the money in the countries where the regulation forbids trading with them. For example, what people usually do in the areas where it is illegal like Norway is that they basically buy BTC on the deep web, deposit it on casino sites accepting Norwegian players, spend a little bit of it, and then just cash out with fiat currencies on a third-party wallet like PayPal, Skrill, or UnionPay until finally transferring it to their native bank accounts.
Unlike every other currency, the crypto is not linked to any central bank. This decentralization allows the market to freely utilize the new technology without regulatory companies and/or institutions pushing their fees and agendas on the finances of users. The security of the transactions is made sure by using cryptographic methods with public and private keys being generated for each wallet and transaction. The digital currencies have come to accumulate in a huge amount of funds now netting around $267 billion.
Regulators and Security
A study funded by the Department of Homeland Security has found out that about 33 percent of bitcoin trading platforms have been hacked at one point or another. It is also not a secret that cryptocurrency is a favorite payment gateway for hackers with ransomware attacks utilizing bitcoin payments to keep their identity confidential and stay safe. The bitcoin made money laundering much easier. While the blockchain is essential in bitcoin formation, it also has a number of vulnerabilities that hackers are happy to utilize. There are many reported cases where the Bitcoin wallet was the main target of theft due to it containing the massive amount of money, scam theft, and defunct stock exchange.” Data breaches of different companies make the personal information of users available to hackers, which in term allows them to jack into the wallet and steal the contents. Apart from this, the keylogger virus is also a very popular method to steal the private keys for a bitcoin user’s wallet. It ultimately falls to the user to be aware of all of the different methodologies used by the malicious people to collect this data. One has to always stay clear and be aware of possible fake wallets floating around different application stores on smartphones. Recently, for example, Google has suspended 3 different fake cryptocurrency wallets.
Besides the usual trickery associated with stealing personal data, there is also malicious software that is designed to hijack the infected computer and utilize its resources to mine the cryptocurrency for the hacker. This results in the slowdown of the system to the crawl and in the end may even damage the hardware. While one personal computer may not be much, the hackers utilize so-called botnets, which are basically large networks of infected computers that operate in tandem, to start mining and quickly accumulate large amounts of processing power.
Obviously, bitcoin is not really at fault here. In the end, it almost always comes down to the individual culture of usage of computers and general safety. Do not click on random links and make sure to always stay protected by utilizing the antivirus software, never turn off the firewall, and do not go install sketchy software on your computers and other devices.
With the exponential increase in the number of devices connected to the internet or the Internet of Things (IoT), hackers are devising more ways to hijack the personal information of different users and accumulate enough to gain access to their accounts. Bitcoin only allows malicious users to transfer funds in anonymity.
Cryptocurrencies are always coming with the promise to change the world, however, bitcoin has proved its worth and is obviously here to stay. The United States government has already acknowledged bitcoin to be a property and thus is trying to regulate it as “property valuable to exploitation.” This means that the corporations can register as bitcoin users and thus make it harder for the criminals to make transactions using the cryptocurrency. However, as the popularity of bitcoin increases so does the criminal interest in stealing it. Due to this, the corporations utilizing blockchain technology are funneling more and more money into developing robust cybersecurity systems to protect themselves and their users. As the controversial cybersecurity expert, John McAfee, has stated “You can’t stop things like Bitcoin. […]. It’s like trying to stop gunpowder” however we can still protect ourselves from the undesirable results.