Bitcoin’s rollercoaster ride takes another turn as cybersecurity takes centre stage

There is never a dull moment with Bitcoin. Whether it’s a knockback from financial regulators and governments or a security breach at a major processor a new development seems to emerge every week.

The currency has been fluctuating in value in the markets over the past year, peaking at USD1200 per ‘coin’ and currently standing at half the previous amount: USD612.6. This has led many to question the security and trustworthiness of the currency. One thing that cannot be contested is the volatility of Bitcoin to which there seems no end in sight. Whilst this may raise serious questions about bitcoin’s future as an alternative currency, it is important to note that Cybercrime is rife and nobody is safe. This includes Financial Institutions, Governments and Banks.

We take a look at some of the major security breaches over the past year for Bitcoin and other prominent financial casualties:

BIPS in Denmark
bipsDanish Bitcoin exchange BIPS suffered a major hack as a group of cyber criminals broke into the payment processor servers and wiped out around 1300 bitcoins. The hackers already had a failed attempt to hack BIPS but were later successful. At the time of the successful attack the bitcoins stolen were worth an estimated USD1m.

BIPS founder, Mr. Henriksen said: “All existing users will be asked to transfer bitcoins to other wallet solutions, Web Wallets are like a regular wallet that you carry cash in and not meant to keep large amounts in.”

Silk Road 2.0 setback
silkroadUnderground online black market website, Silk Road 2.0 has been on the receiving end of a major cybercriminal Bitcoin heist.

The exact number of bitcoins is still up for debate but a series of Bitcoin addresses that the Silk Road administrators have are believed to have some sort of involvement in the heist. The hackers stole 4474.26 bitcoins worth USD2.747m.

The underground marketplace has suffered a huge blow having recently launched in the midst of the previous version’s demise and alleged founder Ross William Ulbricht’s arrest.

Federal Reserve internal site
fedreserve
The Federal Reserve became the victim of a major security breach on its internal website last February. Since the attack serious questions have been raised about cybersecurity on the government agenda in the US. Whilst no critical functions of the US central bank were affected by the intrusion activist group Anonymous managed to access personal information of more than 4,000 US bank executives, which it published on the Web.

Cyber-security specialists believe that any organization’s computer systems can be breached, and it is up to an organisation like the Fed to prioritise its security needs, in order to protect its most sensitive information from attack.

South Korea credit card fiasco

koreanbosses

Last month credit card details from almost half of South Korea’s population were stolen and sold to marketing firms in one of the biggest data security breaches of the decade. Incredibly the data was stolen by a single computer contractor working for the Korea Credit Bureau.

In a statement the Financial Services Commission, Korea’s national financial regulator, said: “The credit card firms will cover any financial losses caused to their customers due to the latest accident.”The names, social security numbers and credit card details of 20 million South Koreans were copied by the IT worker. Managers at the marketing firms have been arrested and the three bosses of the credit card firms involved made a public apology for the breach.

Nobody is safe
These examples convey the enormity of cybercrime and the threat is poses not only to Bitcoin but any organisation in the world.

“Every system is going to have some vulnerability to it. You cannot set up a system that will survive all possible attacks. You have to defend against every possible vulnerability and the attackers only have to find one way in.” said Mark Rasch, director of Privacy and security consulting at CSC and a former federal cybercrimes prosecutor.

Bitcoin is currently being hit by denial-of-service attack attacks from unknown computer hackers sending “mutated” lines of code into the program that runs the virtual currency, a spokeswoman from its main trade organization said in a statement on Tuesday.

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