Bitcoin fraud gets connected
Bitcoin, and other digital currencies such as Litecoin and Peercoin, will change the way we exchange money. But they come with a major flaw: they can also be used to turn infected computers into devices that “print” money.
The beauty of the algorithm behind Bitcoin is that it solves two main challenges for cryptocurrencies – confirming transactions and generating money without causing inflation – by joining them together. Confirmations are given by other members of the peer-to-peer network, who in return are given new Bitcoins for their labour. The whole process is known as “mining”.
When Bitcoin was young, mining was easy. You could earn Bitcoins by mining on a home computer. However, as the currency’s value grew (from $8 to $1000 during 2013) – more people applied to do it, and, in response, mining became (mathematically) harder and required more powerful computers. Unfortunately, those computers don’t have to be your own. Some of the largest botnets run by online criminals today are monetized by mining. Any infected home computer could be mining Bitcoins for a cybercrime gang.
Using botnets to mine is big business. The second-largest botnet in the world, ZeroAccess made tens of thousands of dollars a day by using the infected machines to mine for cryptocurrencies. This is especially effective when the infected machines have a high-end GPU chip on its video card.
Mining botnets such as these do not require a human user – just processing power and a network connection. The internet of things will bring millions more connected computers on to the web, embedded in devices such as cars and rubbish bins. And not all of them will have to have as high a spec as even a Windows PC to mine money: Litecoin, for example, uses more memory-intensive algorithms that can be run on a regular CPU rather than on high-end GPUs.
The mythical internet-connected fridge may at last have found an – admittedly criminal – reason to exist.
Originally published in Wired UK 12/2013
On 28/11/13 At 08:19 AM