Major global ransomware shines a light on benefits and threats of Bitcoin

The ‘NotPetya’ malware which hit countries in Europe, Russia, US and Australia came only a few weeks after the alarming ‘WannaCry’ knocked out NHS systems all over the UK. Despite some differences in technicalities, in both cases, criminals were demanding ransom to be paid in bitcoins. This shows that they are way ahead in the understanding and handling of cryptocurrencies, an important fintech tool which banks, IT companies and governments are still trying to get their heads around – and in many cases in the past have underrated how compelling its secure and anonymous nature can be.

For years, financial and governmental institutions have been putting efforts into narrowing the information gap left by international bank transactions. Bitcoin, the most famous digital currency, came across as very convenient for those attempting to fight this system. Bitcoin allows the fraudsters to enjoy the money without ever converting it into cash, while digital currency holders are nearly impossible to track.

Dealing with Bitcoin is simple and straightforward: Bitcoin transactions can be seen and traced by anyone in the network.  However, there is no possible way of identifying buyers or sellers: digital currencies are designated to a numerical identity only. “Users don’t touch the Bitcoin directly. Think of it as a raw tech with layers on top. People won’t know they’re using it, but they’ll know that the cost and speed of transactions will make what we use today look very out of date.” Said Paul Gordon, founder of UK Digital Currency Association, to the Guardian.

There is no central bank or institution controlling the handling of Bitcoin. The currency is issued through mining, a process where users in the Bitcoin network process transactions themselves and are given a Bitcoin block for doing so. Bitcoin transactions are processed through what is called a ‘blockchain’, a sequence of virtual financial transfers, from one account to another, all generated from a single point. The operations are publicly displayed in their system, although it is impossible to spot the exact point when the ransom money reaches the criminals’ wallets.

Using the currency is becoming easier and easier. Last year, Japan recognised virtual currencies as valid and some major retailers have already embraced it, such as Overstock.com, TigerDirect, Gap, JC Penney, as well as local coffee places in London and  more widely in England.

Despite being a difficult concept to grasp, hackers and dealers on the dark web market have been using Bitcoin since its creation in 2009, and it is easy to understand why: it facilitates anonymity and is decentralised, meaning there is no central bank producing it or taxations. At this moment, Bitcoins are worth more than £1,300 each and recent research showed that six million people worldwide possess a virtual Bitcoin wallet. But still, the ‘dark web’ seems to have the upper hand in the current scenario: authorities only take action once the damage is already done.

In light of the two recent major attacks, IT giant Microsoft has criticised governments over their “hoarding of cybersecurity vulnerabilities” and is urging authorities and companies to adopt the Digital Geneva Convention: Just as the Fourth Geneva Convention recognised that the protection of civilians required the active involvement of the Red Cross, protection against nation-state cyberattacks requires the active assistance of technology companies” said the company in a statement in early February.

Cyber security is unfamiliar territory and it is clear enough that regulators urgently need to cooperate to contain the threats. Hackers and virtual currencies have shown how easy it is to break any boundary when it comes to cyber space.