All the latest UK technology news, reviews and analysis


Why Bitcoins are the new black in cybercrime

04 Oct 2013

Since Bitcoins first appeared, the cryptographic digital currency has been a controversial topic for businesses, security experts and governments.

This is because, being powered by a self-perpetuating, self-regulating algorithm commonly listed as being the work of a coding and mathematical genius, Bitcoins have the potential to fundamentally change the way we do commerce.

The first key reason for this is that the algorithm and code that powers Bitcoins allows them to determine their own value and automatically regulate how many Bitcoins are being distributed to avid miners, in other words those who generate them. As well as being an impressive feat in its own right, as noted by numerous analysts and academics, this is huge, because in effect it removes power from banks and governments, by cutting them out of the equation so users can make and take payments without paying a cut to the bank or tax to the government.

V3 reporter Alastair Stevenson photo

The second reason is the currency's ability to facilitate instant payments and micro-transactions using mobile devices. These capabilities are huge because, as noted by pretty much every tech company under the sun, the next billion people waiting to be connected to the internet will access the web via smartphones. Considering the poor exchange rate of most developing regions' currencies and the cost of using third-party payment services, Bitcoins have the potential to become the international currency of choice for developing regions.

For this reason it's unsurprising that every day we hear fresh stories of more people setting up mining machines to collect the digital currency. In a normal situation, a user runs an algorithm on their computer to authenticate Bitcoin transactions. Those running the algorithm are in turn rewarded with Bitcoins.

The flipside is that all these strengths can also help cyber criminals, with the self-authenticating, unmoderated nature of Bitcoins making it very difficult to track transactions, creating an ideal platform for criminal groups looking to hide their movements from law enforcement. Earlier this month the popularity of Bitcoins in cybercrime was poignantly demonstrated during the FBI's Silk Road takedown. The FBI reported that the infamous cyber black market – which is well known to have facilitated illegal activities such as the sale of class A drugs – earned a massive 9.5m Bitcoins (£739m).

This was the price of a cryptographic currency, and in my mind it was a semi-acceptable one; criminals have always found ways to launder their ill-gotten gains and this is just the latest development. However, the last four weeks have shown that criminal interest in Bitcoins is evolving in alarming ways. Most recently this was demonstrated by Symantec when it sinkholed 500,000 of the 1.9 million zombie machines from the infamous ZeroAccess botnet. The intelligence gained from the operation showed that, despite earning far less money than they would with basic click fraud, the hackers behind the operation had repurposed ZeroAccess-enslaved machines into Bitcoin mines.

For me this is troubling as it shows that criminals are now as interested in illegally accruing Bitcoins as they are in using them to hide their money's movement from law enforcement. The reason for this remains unknown, though as noted by Symantec, and F-Secure chief research officer Mikko Hypponen, it's likely that the reduced risk of Bitcoin mining compared with other scams such as click fraud. Mining operations are less risky because they have little real impact on a victim aside from a slightly increased electricity bill. For this reason, I can see Bitcoin botnets being the new vogue item in cybercrime circles – a state of affairs which will only serve to cast further doubt upon Bitcoins' legitimacy and hamper non-criminal users from enjoying the benefits of crypto-currencies.

  • Comment  
  • Tweet  
  • Google plus  
  • Facebook  
  • LinkedIn  
  • Stumble Upon  
Alastair Stevenson
About

Alastair has worked as a reporter covering security and mobile issues at V3 since March 2012. Before entering the field of journalism Alastair had worked in numerous industries as both a freelance copy writer and artist.

View Alastair's Google+ profile

More on Security
What do you think?
blog comments powered by Disqus
Poll

Green IT poll

How important is it to your business that a cloud provider uses renewable energy like solar or wind to power their data centres?
20%
6%
4%
2%
68%

Popular Threads

Powered by Disqus
Galaxy S5 vs Nexus 5 head to head review front

Galaxy S5 vs Nexus 5 video review

We compare Samsung and Google's top devices

Updating your subscription status Loading
Newsletters

Get the latest news (daily or weekly) direct to your inbox with V3 newsletters.

newsletter sign-up button
hpv3may

Getting started with virtualisation

Virtualisation can help you reduce costs, improve application availability, and simplify IT
management. However, getting started can be challenging

ibmv3may

Converting big data and analytics insights into results

Successful leaders are infusing analytics throughout their organisations to drive smarter decisions, enable faster actions and optimise outcomes

ExactTarget Marketing Automation Consultant | Contract | £450 pd

ExactTarget Marketing Automation Consultant | Contract...

Business Analyst / Systems Analyst

Business Analyst / Systems Analyst – Reading - £40000...

Revit BIM Manager for Architecture Practice

A friendly Central London Architecture practice seeks...

Systems Development Manager - Andover - £60k

Systems Development Manager - Andover - £60k Our...
To send to more than one email address, simply separate each address with a comma.