Concerns about the Bitcoin hacking this week increased since there is an escalating fear that hackers may be using the digital currency as a way to destabilize the system and hoard the currency for themselves until the exchange rises again.
This week, platforms supporting the Bitcoin currency were hacked by a massive Distributed Denial of Service. The DDoS is a cyberattack wherein hackers direct a giant surge of traffic to the website. This disables actual users and members to log into their accounts because the website can no longer accommodate the traffic.
The value of Bitcoins, as you well know, depends on the confidence of its users since it is not backed by the Central Bank or any form of government. Ever since the attack, a report from CNN Money said that confidence in the currency fell sharply. As news spread about the cyberattack, the digital currency’s value dipped from $147 on Wednesday to $115 the next day.
More than Just a Cyberattack
Mt. Gox, one of the most popular Bitcoin exchange platforms that claimed to hold 70 percent of all the currency’s trade, said that the Bitcoin hacking may also be used by hackers to buy Bitcoins at a lower price and then wait for the panic they created to die down. Once the confidence of users is back on the currency, the Bitcoins they are holding will naturally have a higher value than the money they paid for it.
Operators from the company said that the hackers are trying to create a “panic selling” of the Bitcoins.
This is not the first time the currency came under attack in its four-year history. In 2011, Mt. Gox temporarily suspended operations when a hacker was able to get into a user’s account and sell all his Bitcoins. According to Ars Technica, the value of the Bitcoin at the time of the hack was $17. Shortly after word got out of the Bitcoin hacking, the value of the currency dropped to mere pennies.
Mt. Gox is not the only platform that has been attacked by hackers. Bitcoin Central, Paytunia and Instawallet have also been attacked. In fact, all platforms have posted a notice on their sites, saying that their operations have been temporarily suspended. The platforms ask users to report if they have lost any Bitcoins in their accounts too, so the site can replace them.
Safe and Secure
In the future, the proponents of the currency hope that service providers and exchange platforms can make the currency more secure and safe (a bit like what PayPal did with their services). As long as the currency keeps on growing, cyber criminals will keep on attacking it.
And although most people in the Internet community are still wary about this currency, there is a growing interest that this might be the currency of the future.
However, if Bitcoin hacking like the one last week will happen regularly, then there is a good chance that this digital currency will die a slow and painful death (at least, for its users).