This is part of “Blockchain Decoded,” a series looking at the impact of blockchain, bitcoin and cryptocurrency on our lives.
The Winklevoss twins aren’t the only ones getting rich off cryptocurrency. Criminals are raking it in too.
Thanks to the meteoric rise of bitcoin over the past year, you’ve probably heard of cryptocurrency, or digital money that uses blockchain encryption technology for transaction security. By mid-December, the value of one bitcoin reached more than $19,000. It’s since fallen below $7,000, though it’s recovered some ground over the past week.
Bitcoin is the best-known cryptocurrency on the market. However, there are more than 1,500 cryptocurrencies out there, some with goofy names like Dogecoin, PinkDog and Californium.
Before you get too excited about using or trading this new form of money, be aware that cryptocurrencies are rife with criminal activity. Cryptocurrency, for instance, is the preferred form of payment when hackers lock up your computer for ransom, such as in last year’s widespread WannaCry attack. Likewise, there are viruses that turn computers into slave machines mining for cryptocurrency. Hackers have also created malware disguised as cryptocurrency apps, tricking folks who think they’re cashing in on the trend.
“It’s usually being used for something illegal,” said Steve McGregory, the application and threat intelligence director at security firm Ixia. He estimates that 99 percent of illegal activities online use cryptocurrency.
This is cryptocurrency’s dark side, which sometimes gets lost in the hype over the rocketing value of bitcoin and its brethren. But just as digital currency has turned into a hot new investment vehicle, it’s given hackers and cybercriminals new opportunities for exploitation.
Even old-school cons have taken a new blockchain twist, with consumers excitedly buying new forms of cryptocurrency only to find they’re little more than hot air and false promises.
“With cryptocurrency, it’s like choose-your-own adventure,” said Rick Holland, a cybercrime researcher at security company Digital Shadows. “People can pick so many routes to target victims now.”
Hide the money
The reasons that cryptocurrency has become a trusted, valued form of money are the same reasons it has become an invaluable asset for cybercriminals, who want to get paid for their efforts.
All cryptocurrency transactions use a mix of public and private keys to keep payments secure and, in some scenarios, completely secret. You can see where the money goes and which wallets its headed to. But if you can’t link the wallet to a person, the identity remains secret.
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That anonymity allows cybercriminals to sell information from massive breaches, such as the 145.5 million Social Security numbers stolen from Equifax or data from 3 billion hacked Yahoo accounts, without worrying about law enforcement tracking who’s buying or selling it. Likewise, the WannaCry hackers demanded victims each pay $300 worth of bitcoin to get their devices back to normal last year. Criminals even use cryptocurrency to pay for online classes that teach ways to use stolen credit card numbers.
“The cryptocurrency world allowed bad guys to start collecting in ways that made them less vulnerable to being identified or caught,” said Michael Kaiser, the former executive director of the National Cyber Security Alliance.
That cover has helped boost the ranks of cybercriminals, despite the nascent efforts of governments to crack down. For example, the European Union and the UK are working to crack down on the anonymous nature of cryptocurrency, out of concern that it helps terrorist groups and their money-laundering efforts.
“We should be looking at these very seriously precisely because of