Let’s put this straight to bed, virtual currencies are not a new phenomenon. Cash money is, in itself, nothing more than a promise to pay the recipient or ‘bearer’ of your fiver that very sum if required to do so as a means to settle the debt that you spuriously incurred when ‘buying’ one too many bags of Percy Pigs.
The well-worn phrase ‘that’s not worth the paper it’s printed on’ is essentially wholly accurate as the cotton paper banknote is in itself next to worthless and is merely an extension of the barter system that currencies essentially replaced. While the death of cash has long been mooted, as debit and credit card usage creeps up year on year, it is the emergence of a new type of digital currency, dubbed the Bitcoin, that has caused a real stir.
Whereas cash and credit is deemed a legitimate form of exchange, backed up by multinational banks and governments, the Bitcoin occupies a far more murky and legally uncertain territory. Created in 2009, the currency solely relies on the concept of peer-to-peer exchange and was an erstwhile favourite method of transaction of the elusive legions that occupy the ‘dark web’ – a shady underbelly of drug dealers, gamblers or indeed anyone craving an anonymous means of exchange.
Unscrupulous characters looking to turn a quick buck will always target the easy win
Yet in recent months the Bitcoin has gained traction and crept into the mainstream and, as a result, its value has soared. One Bitcoin is worth $200+ today, up from just $13 in January.
This boom has unsettled observers who argue that the unstable currency is in a state of unsustainable hyperinflation and is a result of dwindling faith in the traditional banking system. Either way, its rise to prominence has caught the attention of some unsavoury types.
Just last Friday, the MTGox exchange, which deals with the majority of Bitcoin trades, came under attack from hackers who were seemingly intent on unsettling the Bitcoin market into a state of panic-selling which reduced its value. By manipulating the market, the hackers were attempting to sell high and buy low so that when the price of the Bitcoin crashed they could effectively cash in and turn a massive profit.
If this wasn’t enough, a Trojan virus has been spreading via Skype which hijacks computers and forces them into mining for Bitcoins. The virus, which at its peak was being accessed over 2,000 times an hour, is designed to bypass the tedious and lengthy process of mining for Bitcoins (essentially cracking code to create new Bitcoins) by getting the hijacked computers to do the work on behalf of the hackers.
These attacks are indicative of the issues that surround the Bitcoin, and in fact any wholly digital currency, and when coupled with waning privacy and security concerns among consumers (33 per cent don’t worry about online privacy) , coinciding with an increased receptiveness to the likes of the virtual wallet (47 per cent of consumers are interested) there is a perfect storm waiting to happen.
Unscrupulous characters looking to turn a quick buck will always target the easy win. A valuable and untraceable virtual currency is especially vulnerable, but even more so when it gets into the metaphorical hands of the unsuspecting masses.
Cash, for now at least, remains king.
Bitcoin hack attacks reveal very real dangers of virtual currencies
