Bitcoin

Bitcoin, released to the world in 2009 by a person or people called Satoshi Nakamoto, is not backed by a central bank or a government and is seen as an alternative payment system. In February 2013, Bitcoin went into the mainstream as a monetary crisis threatened to bankrupt Cyprus, seen as a safer bet. Early adopters of Bitcoin have been richly rewarded as the price has soared – in one case, a young Norwegian bought a house from an $850,000 windfall on a US$22 investment.

NewsHong Kong
CURRENCY

Bitcoin value makes it worthwhile target for hackers

PUBLISHED : Thursday, 06 March, 2014, 6:43pm
UPDATED : Friday, 07 March, 2014, 5:13pm
 

A rise in the value of bitcoin is offering irresistible hacking opportunities to cybercriminals, according to a software security company.

While the virtual currency reels from a US$600,000 heist that forced Canada-based Flexcoin bank to close down this week, Goh Su Gim, from Finnish-based security software firm F-Secure, said Zero Access, a virus of the type known as a "Trojan horse", was a serious threat to the virtual currency.

He said the use of malicious viruses in bitcoin thefts had contributed to a rise in virus cases. "The [rise in] value definitely has something to do with hacking and malware activities," he said. "Over the past two years it has happened, yet nobody cared about bitcoin when people used to pay less than a dollar a coin. But when it's US$600, hackers are trying new things."

Zero Access has been used to implant bitcoin mining software into computers to siphon off bitcoins. It was one of F-Secure's 10 most commonly detected web-based attacks last year.

Between June and December, the virus had been reported in 3 per cent of hacking attacks, according to F-Secure research. Security analysts from F-Secure also detected other Trojan horses designed to "snatch and grab" coins from digital wallets.

The collapse of two bitcoin companies in the past week has raised further doubts about the virtual money's future as a viable alternative currency.

The theft of almost US$500 million in bitcoins from the Japanese exchange Mt Gox dragged the company into bankruptcy last week. It cited weak internal control that allowed opportunistic fraudsters to steal coins by manipulating transactions.

This week, the theft of 896 bitcoins by hackers forced Flexcoin, a Canadian bank specialising in bitcoin, to collapse.

"A lot of the recent attacks on trading platforms and bitcoin banks are the result of cybercriminals going after the high value of [virtual] money," said Leung Siu-cheong, a senior consultant at the Hong Kong Computer Emergency Response Team Co-ordination Centre.

Leung urged bitcoin companies to be transparent about internal security.

Kenneth Wong, risk assurance partner at PwC Hong Kong, agreed that a more valuable bitcoin had meant a rise in hacking attacks since late last year. "When the value of bitcoin went up dramatically, at the same time we saw the number of cyberattacks targeting bitcoin companies increase dramatically," Wong said.

"Before that there were denial-of-service attacks, but with the value came serious hacks."

Following recent high-profile attacks, some Hong Kong bitcoin users are keeping the cybercriminals at bay by storing the verification codes that allow them to access the currency only on pieces of paper.

 

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