Bitcoin – Digital coin of unknown origin

Cryptocurrency is a form of digital currency that has gained traction over the last decade. Picture: https://coinmetro.com

Just as there are many places in the physical world that are dangerous to visit e.g. Beirut, on the Internet there are places or sites where I would not recommend you venture into without appropriate protection or guidance and even then extreme caution.

Both the Deep web and Darknet exists as a part of the Internet not searchable by search engines like Google, Yahoo and others.

Not for the fainthearted it has spawned many illegal activities over the years, one of the more infamous is the Silk Rd, a digital black market platform established in 2011 and well known for trafficking in illegal drugs among other things.

The Internet has always been an electronic haven for extremists to dwell and anonymously communicate with like-minded individuals and now with its global reach, mobile and broadband high speed connectivity, the dark places and minds of mankind has found a new digital form.

For any transaction, financial coin is required and Bitcoin has gained tremendous attention in recent years.

Bitcoin is a form of cryptocurrency or digital money.

Cryptocurrency can be classified as virtual currency or alternative currency to facilitate transactions.

The entire process relies on a real-time ledger of the transaction in blockchain.

Bitcoin is the first kind of cryptocurrency which was invented by an anonymous person or group named Satoshi Nakamoto in 2009.

He or they have never been identified to date and yet the algorithms are well designed and Bitcoin exists today.

Valued at virtually nothing over 10 years ago the exchange rate today is about $US11,830 for one Bitcoin!

Should you question the validity of this cryptocurrency it is legal tender in Japan and legal in many countries being acceptable on par with their own currency.

Bitcoin is created as a reward for the process called Bitcoin mining.

Miners use open source software to complete two tasks for ‘Bitcoin mining’; 1) miners authenticate the validity of new Bitcoin transactions that are remaining to be recorded on a public ledger, and 2) miners should decode an encrypted, unique ID, produced by the Bitcoin formula, to compute the confirmed records to public and for that they are awarded or discover Bitcoins.

The growing list of records of these transactions are called “blocks”; every block contains a hash pointer to the previous block which acts as a link, this chain of blocks is called “blockchain”.

A blockchain is a public ledger for all Bitcoin transactions.

Why doesn’t everyone do this?

The difficult ingredient is the massive amounts of energy and computing power required. What made Bitcoin popular is anonymity; unfortunately, criminals also prefer anonymity.

Bitcoin made the process of money laundering much easier.

The use of Bitcoin for payment for illegal activities has also risen including suspected terrorism for which governments have no control over as they do with standard currencies through central banks.

There is also a rise in the number of hackers who use ransomware attacks on a target organisation, wanting a ransom paid in the form of Bitcoins to release hacked computer files they’ve encrypted.

Back to origins, the blockchain is essential in Bitcoin formation. Since blockchain is decentralised and on a network computers (not on one server), it cannot be controlled by a single entity or government and so it has no single point of failure, however, there have been major security breaches in recent years as sensitive data such as, account details, name and address of Bitcoin owners had been exposed to malicious hackers on Bitcoin Exchanges.

Cybercriminals are now designing malware that uses personal computers of users to mine cryptocurrencies; these infected systems let the malware use their computing power, without the user’s knowledge.

By hijacking a computer or phone, a hacker assigns the job of mining on those devices.

Enormous amounts of computing power that is required to solve complex mathematical problems are involved in the mining process and authenticating a transaction which ultimately leads to the generation of cryptocurrency as a reward.

Bitcoin, of course, isn’t the sole reason for cyber attacks.

With the exponential increase of devices that are connected to the Internet, otherwise called the IoT (Internet of Things), hackers have more ways of accessing information systems than ever before.

We are all progressively exposed to cyber  attacks and with Bitcoin; it has become easier for cybercriminals to make profit while remaining anonymous.

Every cryptocurrency comes with a promise to turn the world around but only  a few survive; however, Bitcoin may be here to stay.

As the popularity of Bitcoin increases so do the new threats pertaining  to the exploitation of bitcoins for various criminal schemes.

Cybersecurity specialists need to perceive the impact that Bitcoin has on their profession and the way it might influence their way of conducting business.

We cannot stop the growth of Bitcoin, but we sure can try to protect ourselves from its undesirable effects.

As a cybersecurity pioneer, John McAfee, wryly observed, “You can’t stop  things like Bitcoin. It’s like trying to stop gunpowder.”

  •  Ilaitia B. Tuisawau is a private cybersecurity consultant. The views  expressed in this article are his and not necessarily shared by this newspaper. Mr Tuisawau can be contacted on ilaitia@cyberbati.com

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