Bitcoin, the world’s largest crypto-currency hit a record high and traded above US$ 2170 each. This unexpected surge was caused by fears of another malware attack on governments, banks and financial establishments, healthcare providers and major corporations.
These entities believe it is better to stockpile Bitcoin and ensure access to critical data by paying ransom in case of any ransomware attacks rather than deprive innocent citizens of vital services.
Will Bitcoin become a currency for cybercrime?
This is a question most critics of Bitcoin, the world’s largest crypto-currency are now asking. The May 12, 2017 global attack by ransomware WannaCry and its variants heralded a new era for the innocuous Bitcoin. Overnight, this little-known mode of payment gained world headlines.
Cybercriminals targeted computers across the globe with WannaCry ransomware, demanded ransom of US$ 600 payable in Bitcoin. Major government organizations, banks and corporate giants stood to lose vital data unless they met ransom demands.
News reports indicate, cybercriminals collected around US$ 60,000 worth ransom in Bitcoin from companies whose databases were hijacked by WannaCry.
Bitcoin: Not new to controversy
International Police Organization, better known as Interpol, is investigating use of Bitcoin in various major crimes. Interpol along with European Union Police (Europol) and investigating authorities worldwide are probing possible uses of Bitcoin in terror funding in Indonesia.
These agencies, in collaboration with the US Financial Crimes Enforcement Network (FinCEN), Group of Seven (G-7) and law enforcers across the globe are actively looking at Bitcoin being used to fund activities of major terrorist networks including Islamic State in Iraq and Syria (ISIS) and Al Qaeda, to name a few.
Federal Bureau of Investigation has at least four convictions regarding criminal use of Bitcoin to its credit. The first involves Ross Ulbricht, who was sentenced to life for selling illegal drugs worth US$ 1 billion in exchange of Bitcoin in 2015.
During the same period, three Bitcoin related frauds were detected and criminals brought to justice. Laundering of money from drug and illegal weapons trade, terror funding, industrial espionage and transfer of funds to countries under UN sanctions through Bitcoin are under investigation worldwide. Bitcoin is also accepted by casinos encouraging gambling in countries where gaming is illegal.
Reasons for Bitcoin’s notoriety
As mentioned earlier, Bitcoin is a crypto-currency. It does not owe its existence to any nation, government, bank or physical authority. Bitcoin lives and flourishes in cyberspace only.
It came into existence in the digital world on February 3, 2009 and is believed to be brainchild of a computer programmer named Satoshi Nakamoto. Bitcoin is bought and sold on an open-source digital process called Blockchain.
It is created automatically by a process called Mining- meaning maintaining tabs on Bitcoin flow to ensure seamless transactions. Bitcoin can be bought and sold with conventional money, which gives it the value. But unlike regular currency, Bitcoin can be stored in electronic software and hardware wallets only.
The entire process occurs online, ensuring 100 percent guaranteed anonymity for buyers, sellers and other beneficiaries of Bitcoin. Due to its nature, Bitcoin can be extensively used for tax evasion and other illegal purposes.
There are no known ways to find who owns Bitcoins and nature of funds with which they were bought. Meaning, criminals and terrorists using Bitcoin cannot be detected easily.
Ransonware and Bitcoin
No connection between the two existed before May 12, 2017. The WannaCry outbreak was the world’s largest ransomware attack till date. Cybercriminals demanded ransom be paid in the Bitcoin equivalent of US$ 600.
This was not the first time that any cybercriminal has demanded Bitcoin for ransomware attack: In 2016, Indian companies had paid ransom in Bitcoin to Lucifer ransomware attackers.
WannaCry disrupted several key services. High profile companies targeted by WannaCry added to notoriety of Bitcoin.
Bitcoin ransoms were demanded from…
Cyber security company Kaspersky said, Russia was worst hit by WannaCry since most computers in that country used older versions of Microsoft Windows. Some victims of WannaCry were high profile.
This included the UK’s National Health Service, whose computers were targeted by the ransomware. Consequently, thousands of patients across the UK had to go without treatment since their medical history and records were not accessible till the ransom was paid.
Spain’s telecom services provider Telefonica, Brazil’s national petroleum corporation Petrobras and the country’s social security system were hit. A major player in European rail network, Deutsche Bahn of Germany was affected by WannaCry.
In India, the government ordered closure of over 70 percent Automated Transaction Modules (ATMs) operating on older Windows systems, for fears of the malware attack.
An estimated 500,000 computers and databases worldwide were affected as cybercriminals pressed their demands for ransoms in Bitcoin.
Warnings from monetary authorities
While Bitcoin exchanges, investors and aficionados of the crypto-currency may gloat over the recent surge in prices, it is worthwhile to remember that the US Federal Reserve has warned about its use for crime.
US Federal Reserve governor, Jerome H. Powell had warned that digital currencies would become global targets for cyberattacks, cyber counterfeiting and cyber theft. “Central banks could face difficult trade-offs between strengthening security and enabling illegal activity.
Advanced cryptography could reduce vulnerability to cyberattacks but make it easier to hide illegal activity.” Regulators in different countries are divided over legalizing Bitcoin.
Yet, they agree unanimously that Bitcoin and crypto-currencies may soon emerge as tender of choice for criminals, terrorists and rogue regimes.
Current scenario and speculation
According to media reports, the current surge in Bitcoin prices is due to high demand for the limited edition crypto-currency. Only 13 million Bitcoin are currently in circulation worldwide.
Due to its high price and digital nature, Bitcoin is not popular among currency speculators. However, the demand from banks and companies to pay ransoms may lead to speculation, forcing governments and regulators to enforce curbs on its trading.
Detractors however aver that WannaCry and its perpetrators sounded the long pending death knell of Bitcoin. They point out, FBI has successfully cracked Bitcoin related crimes.
An alliance of Interpol, Europol and other law enforces worldwide would render escaping with Bitcoin difficult. A global ban on Bitcoin would deter any ransomware attacks planned in future.