The cryptocurrency is more commonly seen as a revolution of currency and monetary system because the technology mechanism of cryptocurrency, or to say blockchain, has built a secure foundation to make cryptocurrency not possible to be forged, or to be stolen, or to be destroyed as easily as traditional currencies.

However, is that true? The vulnerability of cryptocurrency is an issue and it is not only concerned with Internet security of states, but also involves individuals who are exposed to potential dangers without being aware. It would be interesting to discuss some types of risk including scams and virus attacks, taking Bitcoin as an example of cryptocurrency.

Surprisingly, in contrast with the difficulty of mining Bitcoins for ordinary people, it is very easy to buy Bitcoins even you have no premier knowledge of cryptocurrency. There are so many online platforms to buy and trade Bitcoins, and some platforms provide products that can be purchased with Bitcoin. Coinbase claims to be the world’s easiest way to buy Bitcoins, which is available in 32 countries including both well-developed countries and small countries with poorly developed financial system (Dibrova, p47, 2016).

In some cases Bitcoins are traded as commodities, or people invest on Bitcoins with expectation of its raising value. The customers mostly buy Bitcoins not directly from the producers – the miners but from a third-party platform, then here comes the risk, how much is the platform reliable? There is still no universal standards of supervision and regulation of Bitcoins, not to mention a platform guaranteed secure.









The trading platform or the website are involved with phishing. It claims that you could buy Bitcoins through their website but once you get a free e-wallet and transfer “real money” to the website, your money is gone. You may not get any Bitcoin or they claim you have Bitcoins on your account but you don’t.

One of the cases is the MtGox, which claimed it handled around 80 percent of global Bitcoin transactions, its boss Mark Karpeles was arrested in Tokyo on 3rd August 2015. He stole several million dollars from clients by manipulating data and initially said the hackers pilfered the losing Bitcoins. It was questionable that MtGox’s Bitcoin deposits were even real in the first place (Hiroshi. 2015). Actually sometimes the scams are just wearing a coat of “Bitcoin”, it just use the name of Bitcoin to attract people’s attention and willingness to give them the money.

Risks: Phishing and Virus

The Bitcoin wallet is also a target of phishing activities. A large-scale phishing scheme aims to steal Bitcoins and obtain blockchain wallet details, and researchers found it easier to steal Bitcoin than normal cash. Jamie Moles, principal security consultant at Lastline said: “There has been an uptake in bitcoin usage by victims of ransomware over the past 12 months and many of these individuals are barely technical enough to get bitcoin up and running in order to pay a ransom and save their data – potentially just the kind of person who could fall for a well-crafted phishing email and unlikely to be protected by any significant APT detection solution.” (Rene, 2016) The Bitcoin phishing is nearly risk free and it is on the rise, however most of the users have not enough technical knowledge to handle and protect themselves.

Even the Bitcoin is anonymous, there are ways using metadata to track the payment and users. However, it is possible to eliminate the chance of being found. There is a company called Bitcoin Fog providing service to mix up the different user’s Bitcoins in their pool and the users get paid back to other accounts from the mixed pool. It is like a “Bitcoin bank” where you deposit and withdraw Bitcoins without leaving tracks (Uri Rivner, Etay Maor. 2014). The Treasury Department's Financial Crimes Enforcement Network (FinCEN) and anti money-laundering unit are concerned that Bitcoin is operating outside of these regulations, even though it is effectively carrying on the same type of business, just using Bitcoins instead of a nationally recognized fiat currency.

Doing so is at the very edge of illegal activity, but so far it has not been completely regulated under any legal framework. U.S. law requires money service businesses such money transmitters and check cashing services to register with the U.S. Treasury Department Financial Crimes Enforcement Network (FinCEN) and to obtain state licenses, but experts say FinCEN rules’ application to bitcoin trades are sometimes not clear (Elliot Maras, 2016). Paxful is a peer to peer market of trading Bitcoins with alternative payment methods like paypal. It is known to be a breeding ground for scam artists and is used as a method to cash out from hacked paypal accounts (KTPX, 2016).

Another secure threat is the various kinds of Bitcoin virus. Earlier this year, the Bitcoin payment service provider BitPay warned users for “Trojan virus”, which will affect purchases of the cryptocurrency. It targets a Window machine’s clipboard and changes the address of the recipient into the address of the perpetrator of Trojan virus, so the fund will be transferred into the attacker’s account rather than the original recipient’s (Samburajm 2016). Luckily this virus has not compromised any payment systems but users should bother to keep a keen eye to check the details of addresses every single time when they make a transfer!

Hackers steal Bitcoins in attack on digital currency exchange.The hackers made off with 119,756 bitcoins, said Zane Tackett, Bitfinex's director of community and product development. That's the equivalent of more than $65 million at current prices (Jethro, 2016). The service provider were under attack from organized hackers but could do nothing quickly to track the stolen Bitcoin. The loss of Bitcoin will be burdened by the users.

Bitcoin ransomware is one of the most widespread viruses. Once infected, it encrypts users’ files and demands Bitcoin payment to decrypt them. Targets were usually sent the infected document via en email. There are different visions of ransomware virus too. Cryptolocker came out in 2003 and hijacked over 500 million users (Mark, 2014). Similar viruses include CoinVault and Bitcryptor, the former’s private key has been captured by the dutch police so it is possible to decrypt the files, but the method of removing the latter is still not found. The Locky virus is another new cryptolocker-type ransomware. At least half a million victims until February 2016. Locky encrypts Bitcoin wallet files if users have them, making it impossible to access the Bitcoin users may have stored. Sometimes victims are willing to pay the ransom if the price of the ransom is less than the value of Bitcoins in their encrypted wallets (Cammy, 2016). Even sometimes paying the ransom is the only way to decrypt, it is suggested that you should not pay because you may still not get back your documents after the payment.



However, Bitcoin virus is still an unfamiliar issue to the public. The information gap among regions in different parts of the world exists. If we search “bitcoin virus” in Google, there are 33000 results of news; if we search “比特币 病毒”(bitcoin virus) in Baidu, the largest Chinese search engine, there are only 753 results of news; if we search “비트코인 바이러스” (bitcoin virus) in Naver, the largest Korean search engine, there are only 289 results of news. Unfortunately, the spread speed of knowledge seems to be not as fast as the spread of virus.

Credits：
Monroe ZHANG

Sources:
Mark Ward. (2014, August 6). Cryptolocker Victims to Get Files Back for Free. BBC News. Retrieved from http://www.bbc.com/news/technology-28661463

Jethro Mullen. (2016, August 3). Hackers Steal Bitcoins Worth Millions in Attack on Exchange. CNN Money. Retrieved from http://money.cnn.com/2016/08/03/technology/bitcoin-exchange-bitfinex-hacked/

Heather Nauert. (2015, November 25). ISIS Parks Its Cash in Bitcoin, Experts Say. Fox News. Retrieved from http://www.foxnews.com/tech/2015/11/25/isis-parks-its-cash-in-bitcoin-experts-say.html

Cammy Harbison. (2016, February 19). New ‘Locky’ Ransomware Virus Spreading at Alarming Rate: Can the Malware Be Removed and Files Decrypted? Idigital Times. Retrieved from http://www.idigitaltimes.com/new-locky-ransomware-virus-spreading-alarming-rate-can-malware-be-removed-and-files-512956

Rene Millman. (2016, June 22). Bitcoin Phishing is Easy, Nearly Risk Free and On the Rise. SG Magazine UK. Retrieved from http://www.scmagazineuk.com/bitcoin-phishing-is-easy-nearly-risk-free-and-on-the-rise/article/504731/

KPTX. (2016, September 28). CEO and CTO of Popular Bitcoin Exchange Arrested. Deepdotweb. Retrieved from https://www.deepdotweb.com/2016/09/28/ceo-cto-popular-bitcoin-exchange-arrested/

Samburaj Das. (2016, April 18). Bitcoin Payment Processor BitPay Warns against Trojan Virus. Cryptocoins News. Retrieved from https://www.cryptocoinsnews.com/bitcoin-payment-processor-bitpay-warns-trojan-virus/

Elliot Maras. (2016, May 23). Arrests and Prosecutions Reveal Big Vagaries in Bitcoin Selling Regulations. Cryptocoins News. Retrieved from https://www.cryptocoinsnews.com/arrests-and-prosecutions-reveal-big-vagaries-in-bitcoin-selling-regulations/

Hiroshi Hiyama. (2015, August 23). Bitcoin CEO’s Arrest Leaves Trail of Unanswered Questions. Yahoo News. Retrieved from https://www.yahoo.com/news/bitcoin-ceos-arrest-leaves-trail-unanswered-questions-070415714.html?ref=gs

Uri Rivner, Etay Maor. (2014, February 24 to 28). The Complete Bitcoin Thief Tutorial. RSA Conference. Retrieved from https://www.rsaconference.com/writable/presentations/file_upload/hta-r02-Bitcoin-is-here-how-to-become-a-successful-Bitcoin-thief_.pdf

Dibrova, A. (2016). Virtual Currency: New Step in Monetary Development. Procedia-Social and Behavioral Sciences, 229, 42-49.

Senate, U. S. (2013). Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies. Committee on Homeland Security and Governmental Affairs Hearings held November, 18-19.

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