Bitcoin’s Security Challenges

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One notable scam that Vankempen thought was worth mentioning is the Ubitex scam. He explained:

Ubitex was the first company to be listed on the now defunct Global Bitcoin Stock Exchange (GLBSE). The business model was simple – provide a service which allows anyone to buy and sell BTCs for cash while charging a small transaction fee. Sounds like a good idea. Ultimately you’re going to want to exchange your BTCs for cash and buy basic things like food, gas, etc. The service ended up raising around 1,100 BTCs before the founder disappeared with the Bitcoins.

The Ubitex scam has done its damage regarding the future of Bitcoin exchanges. In an interview with GLBSE’s founder James McCarthy, Wired wrote:

There have been a number of bitcoin exchanges to emerge in the UK, but they are at risk of being shut down by banks. Even if you manage to open a bank account to receive currency, if banks see lots of money shifting through an account they will investigate. "Banks are really worried about money laundering," McCarthy explains. "You may launch a service and it may become successful but if you are not following the rules you will have to either shut down or face prosecution."

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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