Bitcoin in danger of losing this ignominious title

Bitcoin is well-entrenched as the preferred payment for cyber-criminals like the WannaCry hackers who have hit more than 300,000 computers over the past week, but cryptocurrencies offering more anonymity are threatening to displace it.

A key reason for bitcoin's dominance in the nefarious online underworld, say technologists and cybercrime experts, is its size - the total value of all bitcoins in circulation is more than twice that of the nearest of hundreds of rivals.

That makes it easy for victims to access enough to pay the ransoms demanded, and for hackers to cash out of it via online exchanges to spend money in the real world.

Bitcoin was set up in 2008 by someone - or some group - calling themselves Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Money is sent from one anonymous online "wallet" to another with no need for a third party to validate or clear the transactions.

In the WannaCry attack, the addresses of three anonymous bitcoin wallets were given to victims, with a demand for ransom payments from $300 worth of bitcoin, with a promise the affected machines would be decrypted in return, a promise that no evidence has shown will be kept.

But since the way that Bitcoin functions is via the blockchain - a giant, virtually tamper-proof, shared ledger of all bitcoin transactions ever made - payments can be traced, if users do not have the sophistication to take further steps to cloak themselves using digital anonymity tools. "In the initial days of bitcoin, people...didn't realise they were recording for posterity on the blockchain every financial transaction that ever took place," said Emin Gun Sirer, a computer science professor at Cornell University.

Bitcoin addresses are anonymous, but users can be traced through IP addresses or by analysing money flows.

If criminals using bitcoin want to stay truly anonymous, Gun Sirer said, they have to go through a number of additional, complex steps to make sure they do not get caught.

Source: Khaleej Times