New year. New worries?
Amid the wild price swings that have bedeviled bitcoin and other cryptos, there’s always the specter of traders and their money being soon parted – not by losses when the coins change hands, but by losses tied to hacking.
As in disappearing bitcoins. As in hackers reaching even beyond the bitcoin and grabbing other personal information, using the virtual currencies as bait, lure and conduit to theft.
All of those dangers lurk amid a backdrop where bitcoin grabs more attention than ever, where liquidity is improving (as the number of holders and traders grow) and where liquidity makes it ever easier to take the (digital) money and run.
So even as regulators debate the ways and whys of defining the markets and even defining the cryptos themselves (asset or currency? Fish or fowl? Feast or famine?), the bad guys are there, as always.
Forget South Korea, though that nation has dominated the news this week (will they curb or not?), and forget about whether China wants to stifle mining. The cryptos will be here in some form or another. And where there’s money to be made, there are folks who will look to make gains of the ill-gotten kind.
In an interview with PYMNTS, Deep Instinct’s Roei Amit, cyber intelligence expert, and Shimon Noam Oren, head of cyber intelligence at the firm, weighed in on some of the dangers lurking amid the frenzied trading.
Amit said that bitcoin is “more popular among the general population, and hackers are using it as targets for hacks instead of using it as a currency." Similarly, as Ethereum or bitcoin cash gain favor, those cryptos may also find a place in hackers’ arsenals.
Contrary to common opinion, bitcoin is not always completely anonymous, Amit continued – rather, it might be thought of as offering “pseudo-nimity.” In reality, there are several ways that one’s real identity is connected to the cryptocurrency, right at the point of transaction. As an example, Amit said, think of the individual who buys a digital coin in an offering with a credit card. The card offers entrée into all sorts of personal information, as you might guess, and to banking and other types of financial accounts.
As flows get better, hacking becomes more attractive, agreed the Deep Instinct duo. Said Oren, “liquidity is good for the hackers. As the cryptocurrencies become more and more liquid … they will be seeing less of the hackers actually using them within their ecosystem … as payment” or ransoms, because wider-spread ownership will lead to more stringent regulation. But the interest will shift, he said, toward attacking digital wallets and fake ICOs. Malware campaigns that target institutions might be in the offing.
Amit said that red flags abound in an arena where there is not much regulation, and where promises of staggering returns “and minimum risk” continue to draw individuals. Those outsized pitches are likely attempts to siphon off money.
And, fittingly, against this backdrop comes the news that ICOs are indeed in need of a jaundiced eye. The global regulatory body IOSCO (which in turn counts as its members the SEC and Britain’s Financial Conduct Authority) said Thursday that speculation raises the specter of risk, and are events where “investors are putting their entire invested capital at risk.”
We’d be remiss in missing another Thursday headline, where Telegram, an encrypted messaging service, boosted its target for its ICO, already the largest ever. That would be $850 million raised this month via private sale and another $1.2 billion slated through public sale in March.
To borrow a phrase from the 1968 Democratic National Convention, the whole world is watching. March is a month that will see joint proposals from France and Germany to regulate bitcoin. The proposals will come at the G20 summit scheduled that month in Argentina, Reuters reports.
Ah, March. Beware the ides, as they say.