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Hacking for Bitcoins

2014-08-15 01:13

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Once touted as a single currency to rule them all, the peer-to-peer cryptocurrency known as Bitcoins have seen their reputation damaged by a number of high-profile examples of them being stolen, devalued, laundered, and used to illegal activities worldwide. While it could be argued that traditional currency has had its share of looters throughout history, the volatility of Bitcoins based on a smaller circulation quantity is cause for concern. Below, we highlight three dangers facing this new method of payment.

Bitcoins and The Black Market

Bitcoin’s decentralized nature is a double-edged sword for its security, simultaneously protecting user’s identities but making refunds and corrections nearly impossible. The anonymous nature and limited traceability of Bitcoins have also earned it an unpleasant mantle of becoming popular with black market activities as well. The ability to pay for illegal items on sites such as Silk Road fueled the fire of Bitcoin dissenters, and the ability to trace the blockchain back to the source of funds has provided a level of transparency which may no longer be comfortable for privacy advocates.

Botnet Mining

The power-hungry cryptographic calculations needed to generate Bitcoins can be done by anyone signed up to the service as a “miner”. However, since the process doesn’t stop the miner from using a single machine or ASIC miner, hackers have discovered ways to use the processing power of unsuspecting victims’ machines to mine and send Bitcoins to their own systems. In much the same way a botnet master directs a group of machines to inundate a single server in a DDoS attack, the botnet master directs the Bitcoins harvested by the botnet to collect more Bitcoins.

Ransomware and Theft

Bitcoins are also being acquired by hackers the old-fashioned way: theft. Malware known as “ransomware” encrypts the data of infected user machines and demand Bitcoins as ransom to decrypt it. For Bitcoin exchange which trade large volumes of Bitcoins, theft from virtual wallets is becoming an increasingly common and destructive force—Bitcoin trader Mt. Gox had $64 million in Bitcoins stolen and startup Flexcoin lost $620,000 in Bitcoins, leading both to bankruptcy.

There is little doubt that there is an appetite for a digital currency in the marketplace like Bitcoin, but their volatile nature and growing privacy problems may yet prove to be its undoing.


Source: snioctib-gnikcah/sgolb/tcennoc/moc.cetnamys.www

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