Bitcoin prices cross the $1000 milestone on Mt Gox


One of the side effects of skyrocketing Bitcoin prices is increasing theft

As the end of the month nears Bitcoin is trading near all-time highs of $1000 on the Mt Gox exchange having hit a bit earlier $1073. Discrepancies between the different exchanges are back in place with BitStamp quoting the crypto-currency at $950 with the daily peak at $968 so far. While miners and speculators keep arguing with skeptics whether the currency is a bubble waiting to burst or a revolutionary crusader against fiat paper money, the popularity of Bitcoin does not go unnoticed.

During the month of November the price of the digital currency has grown five-fold and in the past couple of weeks we’ve witnessed several cases in which vast amounts of Bitcoins have been hijacked by cyber criminals from their lawful owners. We are going to look in more detail at the last one, which can hardly go unnoticed.

As reported yesterday by Arstechnica.com, Denmark-based exchange BIPS (Bitcoin Internet Payment Services) has suffered from a couple of consecutive DDoS (denial-of-service) attacks over three days and in effect of the second one 1,295 Bitcoins were stolen. BIPS has shut down its services following the theft discovery. All the layers of protection have failed due to the compounded damage not yet repaired from the first attack.

The Verge reports that BIPS stated attackers were coming from Russia and neighboring countries. That brings into the limelight a hypothetical story. How would the community react to recent reports about a Chinese Army military unit that has been ravishing through a wide range of industries in the US. In the beginning of November the cyber security company Mandiant and a congressional panel have identified a People’s Liberation Army unit as the culprit behind several attacks on US soil that stole very sensitive information from government and corporations alike.

If the US government and several major corporations are unable to protect their data from such attacks what makes people think that any website online can store their digital money safely.

Bitcoin absolutely must remain safe from hacker attacks in order to gain widespread adoption. Every hijacking story will be reiterating the words of the founder of BIPS Kris Henriksen, which he expressed in a forum post – “Web Wallets are like a regular wallet that you carry cash in and not meant to keep large amounts in. Hence we offered a paper wallet as a cold storage alternative for those who wanted a safe storage solution.

Sounds kind of nuts for an all out digital currency, doesn’t it? In a few words – if you have lots of it, store it physically! Not what one would expect from a currency which was once claimed to be impregnable to theft.

Here are links to the full articles on Ars Technica and The Verge.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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Bitcoin prices cross the $1000 milestone on Mt Gox

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