Bitcoin

Bitcoin’s Ransomware Problem And Bernie’s ‘Bitcoin Bounty’

City held hostage.

Hospital held hostage.

Businesses held hostage.

Thank you, bitcoin.

And one of the many reasons why, among plenty of other issues, this virtual currency had no credibility in the mainstream financial ecosystem.

Those three situations listed above are all very much a reality in today’s world where, sadly, cyberattacks have become as common in the news flow as reporting on the weather. And two of them made pretty big news this week — news that’s scary enough to make anyone a little bit more fearful of how digital currency ransom game is attempting to make a mockery of major institutions.

Let’s start with the city.

Ironically, the story that broke this week comes less than a year after a New Jersey police officer from the same city was nabbed for selling bitcoin mining equipment. But this time, the case is a bit more serious since it has to do with hackers using bitcoin ransomware to prevent local government employees from accessing their own computers.

As it’s been reported, city officials worked to get things back up and running, but there were at least a few computers that had already been impacted by the ransomware hostage heist. The result? Having those government computers hacked in return for roughly $730 in bitcoin. But unlike some cases (like the hospital that forked over the bitcoins before consulting law enforcement), in this instance, the city called upon law enforcement for help, scaring off the hackers.

The nuts and bolts of the the hospital story began last month in Los Angeles with $17,000 worth of bitcoin being paid to hackers who took down a computer system — which, of course, included vital medical records. This is the type of malware that’s been most often monopolizing the headlines across the U.S.

In fact, in 2015, the FBI received roughly 2,453 complaints related to ransomware malware attacks, amounting to $24.1 million in losses for victims.

“Definitely a growing threat,” FBI Special Agent Chris Stangl told The Washington Post. “Success breeds more activity.”

While the initial ransomware demands are often small amounts, it adds up. And it also compromises another key factor: data security.

“Ransomware has been around for a long time, but we’ve never seen a concerted manual effort by hackers to break into a network, hang out for a year, spread to all the machines and then install it everywhere,” Val Smith, CEO of Attack Research, a cybersecurity firm, told The Post. “This is a major shift in effort.”

And the hospital?

Another case of bitcoin ransomware left one Kentucky hospital in an “internal state of emergency.”

If this sounds a little like déjà vu, it’s because it is becoming a trend that’s all too common across both the private and public sectors. Just this week on March 21, PYMNTS reported about a town that was being held hostage via a bitcoin ransomware attack.

But this one is even odder because the hackers only asked for four bitcoins.

Yes. Four. So using the prior day’s price of bitcoin, that’s somewhere north of $1,200. Hackers hitting desperate times? Or just testing the waters?

The malware cited in this case is known as the “locky” strain of malware, which encrypts essential files and documents, and deletes the originals if demands are not met. A backup can only be restored once the hacker restores access to the files. For this case, the hospital’s entire network was hacked, which led to all of its desktop computers being shut down.

Yikes. Not what you want to hear from a hospital.

“We have a pretty robust emergency response system that we developed quite a few years ago, and it struck us that as everyone’s talking about the computer problem at the hospital maybe we ought to just treat this like a tornado hit, because we essentially shut our system down and reopened on a computer-by-computer basis,” David Park, an attorney for the Kentucky health care center said in an interview with Krebs on Security.

Increasingly, it seems, the hospitals, or the businesses or even city governments end up forking over the bitcoin simply because the risk is too high not to.

And that’s how today’s biggest organizations have become victims of the modern-day bank robbers.

They just ditched the masks, black bags and unmarked bills for computers, sophisticated coding and some bitcoin.

But all was not lost in the world of bitcoin. There were a few other interesting stories that came from the bitcoin news ecosystem this week.

Bitcoin Buying Goes Bricks and Mortar

Want to buy bitcoin in a store?

Well, thanks to a Paris-based startup called Bitit, that just got a little bit easier. The company recently launched with one simple mission: letting consumers buy bitcoin from thousands of physical stores.

Why, they’d want to, well, we still have no idea.

100,000, for now, according to the company. Basically, all a consumer has to do is walk into a store that sells these bitcoin cards (like prepaid cards) and they can have themselves a piece of the bitcoin ecosystem. Bitcoins can also be bought online through Bitit’s website.

So what retailers will Bitit sell through? Like bitcoin itself, that part is still a mystery, as the company cannot publicly report where they have made deals.

“We have a vision to democratize bitcoin for all,” Bitit CEO Nicolas Katan told VentureBeat. “Bitcoin is a really great technology. But the problem for now is that it is complicated and difficult for people to access.”

But those who want to buy tons of bitcoin? This isn’t the way to do it, as any consumer can buy $25 worth of bitcoin without filing out paperwork, and can get up to $500 following a bit of paperwork that confirms who they are. After that? It gets more complicated.

“Our value creation is how we manage the risk,” Katan said in the interview.“When you say bitcoin and credit card, you think: fraud.”

Yep, he read our mind.

Wirex Makes PayPal To Bitcoin Possible

Wirex, formerly E-Coin, has added a feature to make purchasing bitcoins through PayPal a bit easier by linking an E-Coin Virtual debit card to the transaction, which can then be used to buy bitcoin.

Talk about frictionless – NOT.

As part of this deal, Wirex enables users to buy bitcoin in these countries: Bahamas, Bahrain, Botswana, Bulgaria, Chile, Croatia, Estonia, Georgia, Gibraltar, Honduras, Iceland, Indonesia, Israel, Italy, Jordan, Kazakhstan, Latvia, Lesotho, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Moldova, Morocco, Mozambique, Oman, Philippines, Romania, San Marino, Saudi Arabia, Senegal, Serbia, Slovakia, Slovenia, Turkey, United Arab Emirates and Uruguay.

“This is one of our first parts of offering a hybrid banking platform. Besides offering the easiest way to use bitcoin through our debit cards we wanted to incorporate popular payment methods. Our next steps are offering mobile banking, and the ability to send money across borders for very low fees,” Tim Frost, VP of Marketing and Business Development at Wirex, said in an interview.

The Bernie Sanders Bitcoin Challenge

For this week’s Bitcoin Tracker, we’ll leave you with an odd story. Because, after all, it’s bitcoin. This week, a story surfaced about a bitcoin angel investor (yes, it’s a real thing) who offered U.S. presidential candidate Bernie Sanders $100,000 in bitcoin.

But there’s a catch. Roger Ver, the investor (and creator of Bitcoin Bounty Hunter), said he would only do so if Sanders debated with an Iraq war veteran on a talk show with the host Adam Kokesh.

Odd, right?

This offer was posted via YouTube after Sanders made comments about wealthy Americans giving up their citizenship (something Ver has done). And in the video, Ver goes on to call out Sanders for his stance on taxes for the wealthy. And in return for the debate on television? Ver said he will use the money he saved by not having to pay taxes when he denounced his U.S. citizenship. Bitcoin certainly brings out the oddballs.

So is Bernie feeling the bitcoin? Probably not, but an interesting story to top off the week in bitcoin news.

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the November 2019 AML/KYC Report, Zillow’s Justin Farris tells PYMNTS how the platform incorporates stringent authentication without making the onboarding and buying experiences too complex.

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