Bitcoins Crime

Whether you think Bitcoins are the currency of the future or a passing gimmick, you cannot deny that some folks have already made millions. So with the attraction of “easy” money comes crime. And the crime is getting bigger and more sophisticated.

At first it was the petty crime. People would offer to sell something for Bitcoins and not pay. Or offer to sell Bitcoins and never deliver. You get this in almost every online marketplace. It erodes the trust in the system and is common. Most internet savvy folks know how to avoid the worst of it. Since Bitcoins is still confined mostly to techies, it has been even less of a problem. Sites quickly sprang up that listed trusted sellers, buyers and sites as well as those not to do business with. The system was self policing in short order. bitvest

Now that the stakes have been raised, we have a much higher level threat to the Bitcoins system. Trojans and viruses have been written to target the Bitcoins wallet. The Bitcoins wallet is currently stored in a common directory and is un encrypted. So anyone with access to your computer can “take” your Bitcoins in a matter of seconds. The virus looks for that directory and sends off the information to the criminal. For the virus to get into your computer, you would have had to invite it. It was attached to a program that claimed to be helpful to Bitcoins mining. People downloaded it to see if it helped and were infected. Normally this is something that very few of us would willing do. But in the Bitcoins world, everyone was striving for an advantage. Time was compressed as people jumped at every opportunity in this “gold rush” type of atmosphere.

In early June a person lost $500,000 worth of Bitcoins to this method. The person had downloaded several things and was not sure when or how the trojan was installed. He found a few malware items when he ran a virus check. The trojan was more then likely invited into his computer and seeing as how Bitcoins are so new a virus software would be unlikely to want to protect the Bitcoins wallet. The transaction was noticed on the Bitcoins network and a unidentified person posted about their successful crime on Twitter. People have called for the Bitcoins community to band together and reverse the transaction. The feeling is this would create a dangerous precedent as what other transaction could then be reversed. Who proves that a serious offense was committed? As of the writing of this, the money has not been recovered.

Once again Bitcoins and Bitcoins users are learning to adapt. The latest version of the Bitcoins software will encrypt the wallet behind a password. Again, people are identifying which software’s and applications are safe and which ones are not. The system is self correcting again. Big money and the recent press for Bitcoins is going to bring the unsavory side of commerce to Bitcoins again and again but with all the computing power and technological know how that is in the current Bitcoins community, I doubt that adaptation will be very far behind.