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Gone are the days when you have to lock the doors and the windows to protect your wealth. In the era of bitcoins, you have to get yourself digitally aware to keep your money safe.
The rise and rise of bitcoins value have created a new type of fraudster who is not only educated but highly skilled and sophisticated in technology.
Bitcoin has become popular from the day of its inception. Not only it is an alternative to the fiat money but this digital money offers cross border payment at significantly low cost. Secondly, it offers privacy in the transaction that is made without the interference of the intermediaries, government, or any other institution backed by the state.
Another attribute of the bitcoin is its resistance to inflation, counterfeiting, resistance to confiscation, and resistance to censorship.
All these specialities of bitcoin have gained spectacular acceptability and led to the rise and rise of bitcoin among investors and traders.
The acceptance of bitcoin has fulled the rapid growth in the value of Bitcoin, that one Bitcoin value is equivalent to 9500$.
Having spoken about the stability and other attributes of bitcoin it does not make it 100% free from fraudulent and scammers. Also, these thieves are getting entice by the nature of bitcoin that once the deal gets confirmed it is non-reversible whereas this is quite a possibility in fiat money
With the rise and rise of bitcoin, its market capitalization has reached $150 billion. Today one bitcoin equal to $9500, it is further speculated that it will rise and touch $10000 for a Dollar. If with this speed the rise and the rise of bitcoin happens then, naturally, it will appeal both the side of the society, the investors, and finagler.
Usually, scams happen only when there is a loop in the system or with a person who is new in the system and needs much to learn about the trade. Therefore before you get in this trade do join Bitcoin courses to learn more about the rise and rise of bitcoin.
Bitcoin courses will not only enable you to learn the trade but also they will recommend you 3 ways to earn bitcoin.
The chiseller also wants to make money from bitcoin but not by honest means but by nefarious methods. They target investors who are pretty unprepared or unware.
Now let me introduce you, how this currency work.
Bitcoin is digital money and the most trusted cryptocurrency in the world. There are many others in the market namely Ethereum, Ripple, EOS, and Litecoine. However, their growth is not like the rise and rise of bitcoin.
Let me take an example, a simple payment between you and your friend.
When you want to make a transaction to your friend, you only need to know his or her address and then send it directly to her without involving any third party or regulatory body. You and your friend will know about this transaction while a public ledger on internet cloud will get updated. The entire transaction happens over the internet.
Still, look confused.
Well, let me explain this a little deeper.
Bitcoin is digital money it happens between two computers using the internet. This communication is called peer to peer transactions.
In cryptocurrency, you don’t need bank accounts. You need a personal computer or mobile phone, an Internet and software which is open-source software. The software that you installed on your computer is called a wallet. When you install it, It will generate for you, your first bitcoin address.
Now you share this address to the person whom you want to pay or visa versa. It just works like an email. You create an email account share it with your friend and he sends you an email from his account.
Therefore unlike email where you are using only one account for communication, in cryptocurrency, every transaction requires a new address. The wallet on your machine will help you to generate much more address when you do more transactions.
That’s right now you get things more clear. Let us understand a little bit more.
Once you commit a transaction, a record is created and is stored in a diary called a block. You can also say a digital diary free from forging. A family of a block is known as a blockchain. Every blockchain is shared with every other node on the network. Nodes are nothing but computers on the internet network.
No one can alter a record once enter in a digital ledger after a confirmed transaction. Without getting much in the technology of cryptocurrency is much safer because it uses cryptography and the hash value.
Now you must be wondering if digital money is so secure that its balance sheet is uneditable and nobody can alter or makes a change, so from where does the fraudulent get entry.
Therefore let us see the history of scam and vulnerability how it took place.
Cryptocurrency is not regulated by the government and in its absence, there is no standard platform, individuals are free to use their code.
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Most of the bitcoin users are using old software and have not upgraded their software. This gives a way to attackers to attack the network through distributed denial of service (DDoS). The DDoS slows down the machines on the network and causes a delay in the purchase. As a result, the buyer cannot transact bitcoin on the network.
The example of Mt. Gox, when attacked by DDoS between April 2011 to November 2013, resulting in very few large transactions.
One assumption is that traders motivated by profit induced DDoS attack, this resulted in the trading conditions in their favour while trying to prevent the trader to purchase bitcoin as the price began to rise. The DDoS attack slowed the rise and rice of bitcoin price by preventing the buyer from purchasing the bitcoin so that they can get time to make a larger purchase from a smaller exchange by blocking the bigger exchange like Mt.GOX.
The idea behind the attack was that their lower bid would attract sellers who would not sell on larger exchange temporarily.
The other point could be that attackers could demand a higher price from the lower exchange in the event of a larger exchange being not available.
The other situation is that when there is a fall in the price the DDoS attack is used to slow down the sales. This is done to limit the sales and stop the price fall. The intention behind such attacks may be the reason that the attackers are holding the bitcoins and the fall of the price would cause them the bigger loss.
The other assumptions behind the DDoS attack were the competition among the exchanges. Mt. GOX had a large share of customers in cryptocurrency. New entrant and smaller exchanges could be behind the attack as they wanted to gain market share.
All the above cases discussed has nothing in concrete as proof. Nothing could be established as the reason for the attack of DDoS.
As a result of DDoS attack, Mt.Gox filed bankruptcy, declaring that they have lost 8,50,000 Bitcoin
Bitcoins worth 450 million Dollar,
Selfish Mining Attack:
Another jargon that you must be thinking and now you have to come to term with it. The effort worth the time to read and understand if you are so interested in knowing the rise and rise of bitcoin.
Now let me put it in most layman language.
Bitcoin mining is said to adding a transaction to the public ledger distributed across computer on the network. Miners are the people who secure the network and protect it from attacks.
Mining is a complex computational math problem, It is not possible to do manually, solving the problem requires a specialized computer with high computation power. Not everybody can do mining it requires a specialized skill.
The incentive of doing mining is rewarded in bitcoin and it is 25 bitcoin per hash for the users who are doing the mining and discovering the block.
More the miner and more the network gets secure.
If miners are the one who secures and protect the network then who is responsible for selfish mining? This what you must be thinking correct.
Straight to the answer. There is always good people and bad people in every place we know right.
So the cryptocurrency is also not spared. The rise and rise of bitcoin value always had an appeal that influenced the good and the bad ones and they both are always trying to acquire more and more bitcoins. The large majority of the people are honest but few are not.
These miners come together to form a pool and connive others to earn more bitcoins. They withhold the successfully generated block from broadcasting to the network. Ideally, they should have broadcasted as soon as they discovered the new block. By not broadcasting they have created their private chain of blocks and continued building on it while the rest of the miners were working on the previous existing block.
The selfish miner attempted to keep themselves ahead of one block. Nodes always accept the most accumulated proof of work as the valid blockchain. The selfish miner can release his blockchain at any time when his blockchain is longer than the rest of the existing blockchain followed by others.
Due to this practice of releasing the block at an opportunistic time, the existing blockchain followed by the rest of the group is discarded and the selfish miner collects all the rewards while the effort of the rest of the group is wasted.
Wallet Vulnerability :
What is a bitcoin wallet?
The Wallet in a bitcoin is an account. It stores a pair of keys in the account. One key is the public key and the other is the private key. The private key is used to access to the coin and the public used to generate the addresses.
Where is the wallet stored?
The are multiple ways you can store the wallet. you can store in computer, smartphones or trusted online.
The wallet can be only compromised if the seed is revealed to the hackers.
So how they can be stolen?
Number of ways through a Phishing email, hardware hacking, installing keyloggers, fake wallet, through the Trojan attack, clipboard
Let us understand each of them.
Attackers send email as if it coming from the service you are availing from. They will try to gather all your sensitive data like wallet number, your private key number and other details that are significant to them to hack. They pretend in a manner as if they are representative of the very company you availing the service. Once you leave the detail with them, the sooner they get information, all your valuable is lost from your account.
Take the example of Silk Road Scam, it was a black market for drugs and other shady business. The government decided to auction the bitcoin recovered from these dark practices. Things did not go the way the government wanted. To contact the potential buyer and to find if they were interested to participate, an email was sent with “bcc” where everyone could see who other potentials were.
The copied contact list of the potential buyer was sold, this generated a wave of an email soliciting information from the potential buyer by pretending that they are from Government. In this way, the phishing email was generated to steal bitcoin from the potential buyer.
The Bitcoin wallet is thought to be the most secure place where bitcoin users can store bitcoin and digital currencies but they possess risk.
Trezor hardware devices were faulty, they could be easily hacked. Kraken Labotry part of Kraken Bitcoin exchange, based out of Sanfrancisco discovered the fault and alerted the users.
According to their finding, the attackers could compromise the devices with 15 minutes. Trezor is widely used as a cryptocurrency wallet. It was discovered that the defect was a manufacturing defect and the company hid the information from its customer.
According to them the attackers could extract the hardware chips or attached a connecter device and then broke the inbuilt security protection This protection secures the key from the reading of the external device. In this case, the key seed gets exposed to the hacker.
Many hardware is already compromised before they are purchased.
It is malware. In this type of attack, the attacker installs the software program in your machines. This software starts recording the impulse of the key and starts forwarding to the attackers. Being an undetectable program running on your computer or smartphone pose a real danger to your bitcoin stash.
So how they make inroad in your device.
It could be an infected email. The moment you click it gets installed on PC or phones.
It could be from external devices that you used in your computer or phones.
And it could be that you downloaded an infected unknown software.
The attacker, in this case, is only after your bitcoin wallet, address and password that protects it.
Fake wallet :
The rise and rise of bitcoin has made headlines in all major news outlets and created interest in individuals from all over the world and provided them with alternative currency.
On google play store, lookout identified three apps that were fake apps. Not less than 8 fake wallets identified on the apple store. These fake apps imitated some of the bitcoin most used wallet like Coinbase, Breadwallet, Armory, Green address and Bitgo.
The seller was tricked and by using the fake apps he shared the attackers’ address with a buyer. The payment for the good purchased went the attacker’s address.
These apps were identified as Bitcoin mining, Blockchain Bitcoin Wallet – Fingerprint” and “Fast Bitcoin Wallet.”
Google had removed them from their store not before they were downloaded many times for many months together.
The rise and rise of bitcoin percentage have increased very high the scammers wanted to exploit the seller and take advantage of the increased value.
Big Spender Vulnerability
You must be thinking Oh God! All the Fraudster have jumped here in the cryptocurrency world.
May be your thought is correct, robbers and scammers don’t go to hermit they go where there is money.
The last of all vulnerability we shall see and not any more the idea behind it to educate you more before you step in the world of cryptocurrency and take advantage of the rise and rise of bitcoin.
What is big spender vulnerability how it affects the bitcoin users?
Well, in this type of the attack, the attacker secretly cancels the transaction without the user knowing it and the cost of executing it is quite low.
In this, the user’s balance shows an increase for the incoming transaction and makes him erroneously believe that the pending transaction is confirmed. The attacker then cancels the transaction by using what ZenGo call is RFB(replace by Fee). This feature allows the attackers to send some bitcoins with the low transaction and then send the same bitcoins with higher transaction fees.
The second transaction with higher fee gets confirmed first then the original transaction with this lower fee. This how the transaction gets replaced.
In this fraud, the attacker confused the user but he does not steal all his bitcoin in the wallet.
Now we have seen and identified many of them one by one.
You must now have made an opinion in your mind though bitcoin a have many advantages like ease of cross-border payment, privacy, decentralization and no regulatory. With all this risk why there are the rise and rise of bitcoin value increasing.
Digital money is not the only currency that faces the risk of being stolen, the commodity and the fiat money also shares the equivalent risk.
Don’t you read the news that gold shops being robed and the bank being looted? then don’t you keep gold in-home or you don’t do anything with currency notes.
Many people bank accounts are hacked, many lost their money debit/credit in a fake transaction.
Have these institutions not arranged for protecting their assets and valuables? Yes, they did. We also know they are still in the process of analyzing what could be next potential threats and how they can remedy it.
Yes in similar manners steps are being taken by the bitcoin community to identify lope holes and find solutions.
People are using the existing technology to see where and how they can protect the cryptocurrency and let the rise and rise of bitcoin grow in value.
As we have seen the different threats now we explore the potential ways to protect the digital currency and the rise and rise of bitcoin to explode.
Protection from DDoS
Update Software & OS: Keep the software upgraded and updated to the latest version. Use antiviruses of the latest version from well-known vendors. Apply all security patches that are necessary to block entry of malware.
Validate all visitors on your desktops or smartphone that you use for storing bitcoin keys. Do not allow unknown outsider in-order to protect it from getting injected with SQL injection that introduces malware in your machines.
Use https:// the entire site. It is much more secure:
Do not allow people to the admin page otherwise they will misuse your machine.
If you have a team then you can also purchase web-based firewall (WAF) that protects your application from all kind of DDoS attack.
Protection from Selfish Mining :
In a hoard of earning more rewards in the form of bitcoin the selfish miners’ mines the block and withhold them and release it at the appropriate time favouring them, forcing the honest miner’s efforts to go waste denying them the earning of bitcoins.
In General practice, honest miners would release the block to the distributed network as soon as he discovered it and earn the bitcoin reward and this is the accepted practise. The rise and rise of bitcoin value have forced these selfish miners to do malpractice and hurt the very essence of the blockchain technology of being decentralised.
Since these miners are a sophisticated programmer and the nature of blockchain being opensource and are not regulated therefore they cannot be identified and eliminated.
However, researchers and experts have suggested some solution to the existing problems like introducing a penalty for withholding the blocks. The others have suggested a solution like Zeroblock. In this type of prevention, if a selfish node is withholding their block privately more than the scheduled expected time calculated by honest miner nodes, selfish miners block will expire and will be rejected by honest nodes.
There are also other proposition and works from researchers and experts to make it free from selfish mining.
The hardware should be purchase from a reliable vendor. If possible direct from the manufacturer or trusted agent. All Kind of security measure must be kept in mind before use.
You can also store in the USB stick and keep it away from being exposed to the internet all time. Use it only when required.
You can store in the desktop which properly patched with the latest version from OS & antiviruses and keep it away from the internet or from being online. This is called cold storage. The access to the desktop can be done via another computer online. This reduces the risk largely.
How to Protect from Phishing and Key Loggers:
Use up to date Antivirus: Use antivirus of the vendor that is best in the industry
Use internet firewall: Use firewall which comes with web filtering, malware detectors, and intrusion detection and prevention.
Install a password manager.
Keep your computer updated with the latest version of OS and other software
Do not download any program or unknow email.
Avoid downloading website on your computer, not from reliable resource.
Now we have seen the mechanism on how to protect the cryptocurrency after knowing all the vulnerability. We can always have a strategy to protect and mitigate risk. There is no full-proof protection anywhere wether its Bitcoin, fiat money or commodity money.
We can only analyse and take all respective measure. This also true for Cryptocurrency.
With these understandings, the investors have always been enthusiastic and invested heavily in digital Currencies, which led to the rise and rise of bitcoin.
I am sure by now all the air of doubt from your mind might have vanished and you like to participate in the growth and the rise and rise of bitcoin and build a handsome fortune for yourself.
very good article on bitcoin..