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In the past few weeks,a widespread and coordinated international cyberattack seized control of hundreds of thousands of computers in 150 countries. Those affected by the cyberattack would see a window pop up on their screen telling them that their files were inaccessible, then demanding victims pay a ransom lest their files get deleted. But the ransomers in this attack werent demanding gold bars, a parachute or sacks of unmarked bills delivered to a secure location. They wanted Bitcoin.

Bitcoin is what is known as a cryptocurrency, a digital currencythat is distributed without any kind of centralized bank. The mechanism of distribution is complicated you can read a full rundown here but basically, Bitcoin relies on its users distributed computing power to ensure the viability of transactions.Running the software to keep track of transactions takes resources, and users who do so are motivated by the possibility of earning Bitcoinsfor their computers assistance in keeping track of the Bitcoin ledger.

Its boosters see Bitcoin as having many strengths compared to regular, fiat money: Cryptocurrencies have no central bank managing and issuing them, and are mostly anonymous when transactions occur. (This latter point is arguable, as Ill discuss momentarily.) And unlike fiat money, which usually moves across the world via banks or financial agencies, cryptocurrencies can move around through digital wires unhindered by processing fees or taxes.

The perceived strengths of Bitcoin as an alternative to fiat money that it moves around pseudonymously, and thus is much harder for feds to track or seize accounts are also its weaknesses. Indeed, these characteristics have made Bitcoin the currency of choice for ransomware hackers as well as illicit online marketplaces like the now-shuttered Silk Road or AlphaBay, which allow buyers and sellers to trade black-market goods like drugs and credit card numbers alongside quotidian, traditional online marketplace goods like clothes and books. Yet the ethereal aspects of Bitcoin you dont need to store it in a bank, and it doesnt exist on paper, but is merely a string of numbers means that its the ideal tool for a digital ransom.

I think [Bitcoins] association with malware and ransomware signals that it has a problem, because Bitcoin investors and developers and pardon this terrible term bitvangelists dont want that,Julian Gottlieb, an associate professor of politics at the University of Oregon who studies cryptocurrencies, told Salon.

Institutional investment gives cryptocurrencies like Bitcoin a patina of legitimacy, Gottlieb explained. In Japan right now, because of some economic stagnation, theres been an effort for investors to diversify their portfolios, and theyve been encouraging people to diversity portfolios and invest in Bitcoin, he said.

Bitcoins value, currently around $1700 USD per coin, rises and falls depending on how many people invest in it meaning, how many buy Bitcoin in exchange forreal money (or fiat money, if you prefer arguably, all currencys value is virtual and imagined).

So, is Bitcoin to blame for enabling these digital ransomers? Many Bitcoin enthusiasts scoff at this idea. Becky Metivier, in a blog for Sage Data Security, argued that Bitcoin is not to blame for ransomware. Metivier points out that poor security policies and practices are just as much to blame for ransomware as encryption and bitcoin.

Because of its association with ransomware, Bitcoins benefits have been obscured by a cloud of misconception, Metivier writes.

Part of that misconception is the notion that Bitcoin is really anonymous. Because all transactions are recorded in the blockchain basically an ever-growing ledger Bitcoin offers some ability to track transactions.Bitcoin is pseudonymous, not anonymous, saysCharles Bovaird, Lead Markets Writer for CoinDesk, a cryptocurrency news site. The cryptocurrencys transactions involve transfers betweenbitcoin addresses, which arestrings of letters and numbers.Every time a bitcoin transaction takes place, it gets recorded on the blockchain, where it is linkedto the addresses involved.

Over time, a bitcoin address can develop user history. If one of these addresses is associated with several transactions,it makes it easier to track the user of that address, he added.

Outside of enthusiasts, who share information about cryptocurrencies in many different online forums and news site, the average person might only hear about Bitcoin when its in the news for something like a cyberattack or ransomware story. Bitcoin has shown its promise for a lot of illicit activities, like hacking for pay, large scale heists online. . . the semi-anonymity of the technology does lend itself to that, said Gottlieb.

Gottlieb sees a problem in the way that the news cycle works around Bitcoin:Since it is decentralized, there is no central voice to defend the currency when a news story portrays it in a negative light.

If Chase Bank were hacked, they would have a PR community, Gottlieb said. But [Bitcoin] is a fractionalized community theres no way to respond to something like this en masse.

One might draw a similarity to Occupy Wall Street: Because of its inherently decentralized nature, one bad apple say, a man climbing a public art structure and refusing to come down reflects poorlyon the entire organization, with no point person in the PR department to run damage control.

For his part, Gottlieb sees Bitcoin as having more populist possibilities that go far beyond its potential as a tool for cybercriminals. The same thing that makes it possible for hackers to hold digital assets hostage and extract wealth from people with Bitcoin also allows it to be a potential source of power for activists in authoritarian regimes, he said. It can keep people anonymous, protect their identity.

See the rest here:
Recent ransomware attacks raise the question: Is Bitcoin only for cybercriminals? - Salon