Could it be the end for Bitcoin- a mere five years after its conception? In latest developments, it appears that the largest Bitcoin exchange in the world, MtGox, has simply disappeared along with the CEO, Mark Kepeles who resigned this week. Furthermore, a leaked crisis strategy draft for MtGox, reveals that large amounts of Bitcoin have gone missing.
“At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet,” the document stated.
But it’s not just fraud that has plagued Bitcoin, it has been the subject of various cyber attacks, namely DDoS for some time. In a statement, Raj Samani, EMEA CTO for McAfee said: “The news that MtGox has gone offline is yet another example of the volatility facing virtual currencies… [While] it’s true that no currency is immune to attacks by criminal enterprises – both traditional and virtual currencies face other risks such as hyperinflation – however, with a history of cyber-attacks on Bitcoin exchanges, it is hoped that mitigation strategies will be implemented in the future. Failure to do so only undermines confidence in the exchange and ultimately the currency.”
Samani cites the use of DDoS attacks in particular have made things difficult for MtGox and Jag Bains, CTO DOSarrest, a DDoS mitigation firm, agrees:
“The very nature of a “virtual currency” is of course going to be attractive to cyber criminals who see it as an easy target,” he said. “After all, they only have to steal digital information from a computer. The targets are diverse and the blame is shifting as to who is the weakest link, but at the end of the day, the attackers are winning with what is all too often considered a crude tool. It begs the question: Is DDoS still to be considered a blunt instrument? From what I have seen here and analyzing attacks in other sectors, the answer is a resounding no.”
In a joint statement on the Coinbase blog, key Bitcoin community members said:
“This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. MtGox has confirmed its issues in private discussions with other members of the bitcoin community.
We are confident, however, that strong Bitcoin companies, led by highly competent teams and backed by credible investors, will continue to thrive, and to fulfill the promise that bitcoin offers as the future of payment in the Internet age.”
So, while it doesn’t appear to be the end just yet, according to both Samani and Bains, those using Bitcoin or similar virtual currencies in business or their day to day life should be wary of the risks involved.
“There’s no doubt that the stakes are high when it comes to Bitcoin- on the one hand, there could be a lot to gain as adoption and popularity rises; and on the other, there is the regulatory uncertainty and likely insurance issues to consider. The best advice is to review the options and decide if the benefits outweigh the potential risks,” Bains concluded.
