Bitcoin’s Security Challenges

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In 2013, Bitcoin soared in worth in part because it is popular among cyber criminals. As Sergey Lozhkin, senior security researcher with Kaspersky Lab, stated in an email interview:

Cyber criminals follow the money. Bitcoins are valuable and their value continues to grow.  Everything valuable on the Internet attracts cyber criminals of different types searching for security breaches and vulnerabilities.

The ability to avoid surveillance means cyber criminals are more easily able to avoid law enforcement when using Bitcoin. In fact, it was the cyber criminal underworld that put Bitcoin into the public eye. First, the website known as Silk Road, a place to purchase drugs and other illegal items using Bitcoins, was shut down by federal agents. Second, the developers of the ransomware CryptoLocker wanted a ransom paid in Bitcoin to release computer files. (And since many victims either didn’t know what Bitcoin was or didn’t have immediate access to the e-currency, the CryptoLocker developers had to change their tactics in order to make money.)

Beyond those two high-profile situations, 2013 saw a number of huge Bitcoin heists from exchanges, including the thefts at the Sheep Marketplace (96,000 bitcoins), GBL and Tradefortress. With the cash value of Bitcoin skyrocketing, these may turn out to be among the most financially costly thefts of the year, Brandt pointed out.

The crypto-currency known as Bitcoin was first introduced in 2009 in a paper published by Satoshi Nakamoto. As Kaspersky Lab described the e-currency:

Named "Bitcoin: A Peer-to-Peer Electronic Cash System," the paper defined the foundations for a distributed, de-centralized financial payment system, with no transaction fees. The Bitcoin system was implemented and people started using it. What kind of people? In the beginning, they were mostly hobbyists and mathematicians. Soon, they were joined by others – mostly ordinary people, but also cyber criminals and terrorists.

Since the introduction of Bitcoins in 2009, they have received a lot of attention: some of it good, some of it bad. Just like any other crypto-currency, they’ve been associated with numerous scams, hacks/thefts, defunct "stock exchanges," and reported losses of wallets containing massive amounts.

Kaspersky Lab’s experts explained that Bitcoin really began to hit its stride in 2013, in part because they are a secure, anonymous, way of paying for law-abiding citizens, especially for those who want to fly underneath the NSA’s surveillance radar.

Bitcoin as a currency, itself, seems to function as-advertised, according to Andrew Brandt, director of threat research at Blue Coat. The math surrounding the creation and transmission of value through the currency exchange network is scientifically sound.

As global commerce will only increase, e-currency in general, and in particular Bitcoin, could play a major role in how consumers and enterprises alike pay for goods and services. But first, it has to solve its security issues.

 

Related Topics : Unisys, Stimulus Package, Security Breaches, Symantec, Electronic Surveillance

 
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